Walmart

Walmart and China Beiguo

In Business by libertythebest

International Business

Wal-Mart Vs. Beiguo Supermarket

China, Hebei, Shijiazhuang

How

Wal-Mart will eventually

 Overtake

Beiguo Supermarket in Shijiazhuang, China

Shijiazhuang – Wal-Mart Business Research Trip

China Business Research

China Business Research

Contents

Preface

Introduction – A matter of time

The Survey – Success lies within people

Survey Results – Tabulated Outcome

The Location – Precision matters

Pricing – Strategy in numbers

Convenience – the way people like

Preference expressed – why

In the shop – the experience

Navigation – availability and visibility of products

The Customer – service and promotions

Survival Strategy – New Ideas

The Verdict – Wal-Mart vs. Beiguo

Conclusion – Time announces the victor

Preface

Beiguo is a big brand in retail and merchandising in China, locally owned and well established, it has many years of retail experience in China, and by far the number one choice of the bona fide Chinese consumer especially the ones oriented more to the traditional Chinese culture, by contrast Wal-Mart is also a big brand in retail and merchandising on the international market, well established and relatively well experienced in retail business, however without the traditional niche focus on consumers in China as Beiguo does, this research paper focuses on the two companies competition, in a relatively modest town – Shijiazhuang, and seeks to establish the notion that eventually, Wal-Mart will supersede Beiguo and take over the large market share in Shijiazhuang city.

Introduction – A Factor Of Time

Wal-Mart finally decided to venture into Shijiazhuang town later on than previously planned, to say they were logistical problems or it was a tactical move would be too early a judgment, Beiguo has long established its presence in Shijiazhuang, it is the most popular brand in supermarkets across China, which includes this modest town hereby the main focus between the competition of these two companies – Shijiazhuang town. To say Beiguo has sunk its roots deep down into the market share of this town and will forever rein, as the champion would be too early a judgment.

The market place in Shijiazhuang seems to be on a moderate and slowly evolving scheme, which will change the long held beliefs about Shijiazhuang consumers, the continued Chinese change in demography, buying power favoring the young age, steady rise in modernization, the affluence of rapid marketing in mobile phones, which is more at par with Wal-Mart’s focus on the trendy are just some of the trading winds that are going to shift to Wal-Mart’s advantage. It’s a big bet on time and a lot of factors that will eventually lead to a long term success to Wal-Mart in Shijiazhuang, The success story is slowly gaining traction and despite a lot of challenges and facing the big competition from Beiguo, the strides will gain momentum.

Many elements are already in place to ensure Wal-Mart’s strategic take over, it’s only the short-term feasibility drawbacks that spell Beiguo’s superiority. A survival of the fittest combined with the master of all out comes – time and chance. This research, will dwell on the main factors that Beiguo and Wal-Mart are competing on, combine the data with a consumer survey to find out current perspectives and use all the information gathered to predict the winner on the long term. The verdict lies in one point – It’s a factor of time.

The Survey – Success lies within People

As this is a local research, there is no any better way to find out information than to ask the people, they are the consumers, they know the town very well. They shop in these two shops at a regular basis and the views and opinions of the consumers will shade more light to the outcome of this competition than any other research data. It is the people who have the buying buyer and the ones who will determine the winner. The overall market force in the consumers will be the judge.

The survey is designed in a casual fact-finding way, with carefully hidden questions to find out where the consumers will keep buying on the long term, which shop they like the most and what one shop has to do to win over the other, this balanced the survey so as to look on both sides, weigh the options and outcomes and establish a final result. On the last part of the survey, consumers were asked to high light what they prioritize the most in their shopping decisions, this is the main gist between these two shops, maximizing the quality of the consumers shopping experience.

Taking the survey results and comparing with what is happening on the ground gave some focus on which one is doing better and what the short term and long term effects will be. The twenty-three questions from the survey will be discussed in this paper, and each one further examined to probe the final outcome.

Disclaimer

The survey was done to random ten people selected in Shijiazhuang, this small sample may not represent all the 4 million people who stay in Shijiazhuang town, it is a general guide to found out the views of the people, no matter how small the numbers, their views contribute, however this may affect the final results of the research, as the small number cannot fully represent the many.

Survey Results- Tabulated Outcome

  Yes No
Do you know Wal-Mart Location? 8 2
Do you know Wal-Mart has cheaper prices? 6 4
Is Wal-Mart better at convenience? 7 3
Do you prefer Beiguo? 4 6
Does beiguo has better shop experience? 3 7
Wal-Mart has better availability of products? 5 5
Wal-Mart has better visibility of products? 4 6
Wal-Mart is better to navigate? 3 7
If same location, would you prefer Wal-Mart? 9 1
Wal-Mart has better customer service? 7 3
Beiguo has your favorite promotions? 2 8
Same prices you prefer Wal-Mart? 6 4
Order home deliveries from Wal-Mart? 8 2
Do you think Wal-Mart will survive in 10 years? 7 3
Do you want to work in beiguo? 5 5

The Location

In any battle of the supermarkets and shopping industry in general, the first and most important factor is the location, which is why it was made the first question in the survey,

Beiguo in general, has long since established its presence in Shijiazhuang, it is one of the oldest shopping supermarkets in the town, almost all locals know its location since they were born, it is assumed everyone knows where Beiguo supermarket is located. Hence in this regard, it has the upper hand, they managed to be strategically located to where most of the town population is flocked, targeting the huge number of people who pass through the busiest road intersection in town, this by default makes it a local stop by favorite for many locals, if not all.

Wal-Mart is located in the middle of the town, where most working class people are flocked during the day, and where many people pass by when travelling in and about in town, it is not exactly where as large numbers of people pass by as in the case of Beiguo but there is a steady and significant amount of traffic. The other shops around Wal-Mart also create an attractive zone for the price conscious consumers, as there are many other shops that sell a lot of different merchandise at huge discounts. Hence to a certain extent Wal-Mart location is strategic and has a certain amount of appeal.

In the survey Wal-Mart is the one in question, whether many people even know where it is located, and eight out of ten people responded positively. This shows around two in ten people don’t know where Wal-Mart is located; this is a big disadvantage but not a permanent one.

Entrance To Wal-Mart Shijiazhuang

A significant amount of traffic into the shop can be seen in this photo, despite 20% of respondents not knowing where it is located.

Pricing – Strategy in numbers

Beiguo and the pioneer supermarkets in Shijiazhuang have already led and established general price guideline for most of the goods consumers buy. It is without question the majority of the consumers are now used to the prices in Beiguo shops. However it is surprisingly unknown to many that Wal-Mart is keeping its long held stance from the day of its establishment – To provide the lowest prices, always. The question in the survey did seek to find out if the consumers are aware of this.

60% of the respondents are aware of the cheaper prices in Wal-Mart, which leaves 40% unaware of this huge decision making factor. Beiguo is riding on its well-established momentum that makes consumers unaware of other better deals existing outside of its confines. Price is a big factor in consumers buying behavior, when people realize that they can save a lot by simply switching to better prices, most, if not all consumers will switch to the better prices. Wal-Mart has a greater momentum in logistics and supply chain management than Beiguo; it can keep its prices low and maintain a competitive advantage without losing its grip in the market. This is a huge eye opener for the consumers; one that can determine the winner once the majority of the consumers are aware Wal-Mart has better prices.

It is only because the consumers are not well vested in Wal-Mart’s better prices strategy, but on the long run, when bit-by-bit many people become aware, the change will eventually happen. It takes a long time for people to change a habit or behavior, this is where Wal-Mart is betting upon, and will eventually win. From the survey, it can be deduced that of the 8 people who know Wal-Mart location, only 6 are aware of the cheaper prices, this shows around 20% of people who already know Wal-Mart are still to really compare prices and enjoy Wal-Mart even more – hence there is a big room for more consumers to come to Wal-Mart.

Convenience – The way people like

In this question, the definition of convenience was left to the respondent to determine in what way they deem something to be convenient, whether it was in location or the arrangement of goods or the car parking, it was not stipulated to any particular factor. The main objective in this question is to find out how many will respond and chose which over which.

It turns out 7 out of 8 people who visited Wal-Mart responded to it as more convenient. This shows Wal-Mart has a greater convenience score according to the consumers. Out of the ten people asked, only 3 suggested Beiguo as more convenient. This is an abstract figure to just establish a consumer’s general view on what they define as convenient, it does not necessarily point out at what exactly.

It is a point break question, to give the respondent a moment of reflection, giving out an opinion without much reason but solely based on preference, this has an added effect of giving out reason on the next question that follows. Humans have a tendency to provide more information when their own opinions have been asked without point of reference. This will provide more honest and open answers than a long list of logic questions without opinionated answers. Giving the chance for a respondent to highlight why their preference is like that, so as to give direction to which shop is doing better at what hence find out the points from the respondents themselves. A matter of preference expressed, leading to giving out reasons.

Preference expressed – why

60% of respondents said they preferred Wal-Mart, leaving 40% to Beiguo, since this was an open ended question, the survey provided an optional further explanation as to why the respondent preferred the shop.

Why Beiguo

The main reasons stated by those who prefer beiguo are the local ownership and close proximity to areas of affluence, together with the Chinese Culture well accommodated in the shop.

Why Wal-Mart

Those who prefer Wal-Mart are in favor of the open space environment, hustle free shopping and mostly better savings. These are the main factors that influenced choosing Wal-Mart over beiguo and largely allegiance to the international brand

In the Shop – The shopping experience

70% people chose Wal-Mart as the better shopping experience, this is the same number of those who stated Wal-Mart as also the one with better convenience, it shows Wal-Mart as the one offering better and greater customer service and delivery, judging on these two factors, convenience and experience. The remaining 30% favored Beiguo as better shopping experience, which also shows beiguo does have a significant footing in consumers who still favor it besides the existence of way better shopping experience as described by the majority favoring Wal-Mart.

Navigation – availability and visibility of products

Both Wal-Mart and Beiguo scored the same score in the availability of products, it shows both companies are doing well in source and supply for consumers demands of all the different products, however Beiguo has an upper hand in both visibility and navigation of products. Only 40% said Wal-Mart has better visibility and 70% said Beiguo is better to navigate, these numbers are in favor of beiguo mainly because the consumers are way more familiarized with the structure and lay out of the shop, than they are to Wal-Mart. Since Wal-Mart is relatively new, most consumers are still to get to know the shop as it matures hence it is not yet easy to navigate and locate different products across the many different categories on offer. This is another disadvantage that is not permanent to Wal-Mart, as the time goes on, more people will get to know the shop and familiarize with it just like what happened to Beiguo.

Customer service and promotions

In this regard, Wal-Mart already set standards, which Beiguo Is not familiar with, both customer service and promotions scored way more, with a big difference than Beiguo. 70% prefer Wal-Mart customer service, and 80% also like the promotions, Wal-Mart is flexing its huge competitive advantage – understanding the customer need of good service and promotions, offering valuable deals and irresistible products on offer, maintaining their international motto “better prices, always”. This is the main attractive feature of Wal-Mart. When this greater advantage is coupled with fine-tuning the customer service to suite the Chinese culture in Shijiazhuang, it will eventually take over the market share.

Survival Strategy – New Ideas

A noble idea for one to succeed over the other is to bring in new innovative ideas, that will win the consumers rapidly and make them stay to the company for a long time, this can be done by the rewards program and discount coupons. Some of these ideas Wal-Mart is already putting in place, and gaining consumers loyalty.

Another good idea neither Beiguo nor Wal-Mart has established is to do online and home delivery of ordered goods, some people don’t buy often because of the physical presence required to do so, if this is replaced by online orders many more customers will start buying and more frequently, the future of shopping is also going digital and one of the supermarkets can take advantage of this phenomena.

In the survey 80% opted to buy online from Wal-Mart, which shows a big opportunity that can be utilized, 60% still preferred Wal-Mart even if the prices are the same with Beiguo. A staggering 90% prefer Wal-Mart if it was located in the same place with Beiguo. However only 50% opted to work at Wal-Mart, which is the same number for beiguo. The main question, if Wal-Mart will survive in Shijiazhuang in next ten years, 70% are optimistic that it will make it.

The verdict

Business Research

Business Research

For Wal-Mart to take over beiguo, it has to increase the number of locations, create and connect with the appeal of Chinese culture oriented buyers, maintain the low price strategy and it will eventually win, together with the ease of shopping experience, the superiority will go towards Wal-Mart, As the consumers prioritize all these details and become aware of its presence, they will shift and beiguo will lose, its all just a matter of time.

Happy Wal-Mart Shopping experience, low price, convenience and up to international standard customer service, are some of the tactics, Wal-Mart will win in Shijiazhuang, its just a matter of time.