Wal-Mart axes senior jobs, stores

A Wal-Mart store in Beijing. The US retailer said it is making "good progress" toward opening around 110 new stores in China between now and 2016. [Photo / Agencies]

Wal-Mart Stores Inc, the world's largest retailer, has dismissed around 20 mid- and senior-level executives and closed stores in China as part of a restructuring aimed at countering growing pressure from local rivals and online retail sales.

The company said the measures will optimize the organization.

"As we have previously stated, we are transforming our business to meet the needs of a rapidly changing market and customers. Reorganization has been a necessary business reality," it said in a statement, adding that the jobs cuts have been agreed by mutual consent, with the company paying compensation in line with the laws and regulations.

The retailer also said it had shut some outlets and was remodeling dozens more as the overhaul continues.

It insisted, however, it was making "good progress" toward opening around 110 new stores across China between now and 2016, within a plan that also includes new distribution centers, and creating what it called "a highly efficient supply chain and enhanced compliance process".

Wal-Mart, based in Bentonville, Arkansas, is facing stiff competition in China, and earlier this year also had to withdraw donkey meat products from sale in its stores after they were found to contain fox DNA.

Among the executives being sidelined are vice-presidents from its hypermarket business Wal-Mart China and its wholesale arm, Sam's Club China, according to two Wal-Mart China employees, who asked not to be named. Others have been removed from divisions including merchandising and innovation, they said.

Many of the dismissed have at least 15 years' working experience, according to local media reports.

"This is a sign that Wal-Mart is facing more competition as well as cost pressures," said Ben Cavender, principal of the Shanghai-based China Market Research Group.

"This looks like an attempt to streamline their operations, to cut costs and become more efficient."

The current overall economic climate as well as the fallout from bad publicity from its own and other food safety scandals are also hurting the brand, said Cavender, while at the same time competitors are becoming more efficient and competing more aggressively.

Jason Yu, general manager of consumer information organization Kantar Worldpanel China, said the US retailer has seen a relentless growth in competition from local retailers as well as from e-commerce.

He said e-commerce now accounts for a 3 percent share of total fast moving consumer goods sales and continues to record incredible growth.

"This is achieved at the expense of modern trade retailers, especially in the first- and second-tier cities," he said.

Other Wal-Mart restructuring efforts included its integration of nearly 30 purchasing offices into eight regional purchasing offices in November 2012.

The company reported a 0.8 percent fall in China sales during the quarter to Oct 31, which it attributed to government austerity measures and deflation.