After serving Sam's China for twelve years, Wen Ande is about to retire. The third quarter report of Wal Mart previously showed that Sam China showed strong resilience.
According to an internal letter sent by Zhu Xiaojing, president and CEO of Wal Mart China, Andrew Miles, vice CEO of Wal Mart China and president of Sam's Club, will retire on January 31, 2025. Now Jane Ewing, senior vice president of operations of Wal Mart International, will act as his deputy and report to Zhu Xiaojing.
Andrew Miles, who is about to retire, joined Wal Mart China in 2012 as COO (Chief Operating Officer) of Sam's Club, was promoted to President of Sam's Club in 2017, and served as Deputy CEO and President of Wal Mart China since 2020.
During the period when Wen Ande took over Sam's China, there were also several years of fierce competition among domestic membership based supermarkets. Facing competition from old rivals Costco and domestic supermarkets such as Hema, Sam's has been exploring localization. Wen Ande once told 21st Century Business Herald reporters, "Competition makes us stronger, and only when we become better can our members benefit more from us and their lives become better
Sam under the leadership of Wen Ande: expanding territory and opening up new frontiers
According to public data, Van Andel, 62, worked for Watsons before joining Wal Mart.
The candidate to replace Van Ander is from Wal Mart International Department. Jane Ewing joined Wal Mart globally in 2012, and has successively served in the procurement, operation, human resources and other departments of Wal Mart's US and international departments. In 2017, Jane Ewing served as the Chief Human Resources Officer of Wal Mart International. In 2020, he was transferred to senior vice president of global sustainable development of Wal Mart. In January 2024, he will return to Wal Mart International as senior vice president of operations, in charge of operations, supply chain, real estate and other departments.
Previously, under the leadership of Wen Ande, Sam China continued to expand its territory.
As of November 2024, Sam's Club has over 50 stores in the Chinese market, mainly concentrated in first tier cities and economically developed regions such as the Yangtze River Delta and Pearl River Delta. These stores have also become an important cornerstone for Sam's expansion in the Chinese market. However, Sam did not stop there. In recent years, Sam's Club has been testing the waters and expanding in the second, third, and fourth tier markets. According to the expansion plan, new stores will be opened in Hefei, Chengdu, Dongguan (already open), Shaoxing, Jinjiang, Wenzhou, Jiaxing, Wuhan (already open new stores) and other places in the next few years.
After conquering the land, Sam also faced some challenges. Over the past two to three years, Sam's China has been frequently exposed for issues related to food safety and big data manipulation. Some of its previously dominant product categories, such as fruits, have also been seen by some market participants as declining in business performance, which may reflect some of the "negative effects" brought about by rapid expansion.
On November 19, Wal Mart released its third quarter financial report of fiscal year 2025. As a global retail giant, Wal Mart once again demonstrated its steady growth trend. Wal Mart's three major business departments, namely Wal Mart America, Wal Mart International and Sam's Club, all achieved revenue growth.
According to the financial report, Wal Mart's revenue reached $169.59 billion, up 5.5% year on year, and its operating profit was $6.7 billion, up 8.2% year on year. After adjustment, earnings per share reached $0.58, up 13.7% year on year, further demonstrating Wal Mart's effectiveness in optimizing cost structure and improving profitability.
Among them, Wal Mart successfully attracted a large number of consumers by virtue of its significant price advantage in the face of continuous inflation pressure in the American market. Data shows that Wal Mart's transaction volume in the U.S. market rose by 3.1%, the overall customer price increased by 2.1%, and the sales of comparable stores in the U.S. increased by 5.3% year on year, far exceeding Wall Street's expectations of 3.9%.
In the domestic market, Wal Mart's Sam's Club has become a highlight of growth. Data shows that in the third quarter, Wal Mart's net sales in China reached 4.9 billion US dollars (about 35.5 billion yuan), up 17.0% year on year. The achievement of this result is mainly due to the strong performance of Sam's Club and e-commerce business. As of mid November 2024, Sam's Club's sales reached 90.6 billion yuan. Excluding global purchasing business, Sam's China's sales amounted to approximately 85 billion yuan, exceeding last year's total sales.
Where is the 'winning magic weapon'?
In the field of membership based supermarkets, Sam's Club is undoubtedly an undeniable presence.
As a high-end membership store under Wal Mart, Sam, by virtue of his unique business model, precise selection strategy and strong supply chain advantages, has firmly established himself as the "Big Brother" in the industry and become the target of many competitors to imitate, but so far no one can match him.
Sam's Club China Chief Procurement Officer Zhang Qing once told 21st Century Business Herald reporters, "No matter how high the sales and gross profit are, if the product has no differentiation or membership value, it must be withdrawn from Sam." This concept deeply reflects Sam's emphasis on membership value and pursuit of product differentiation.
In terms of localization exploration, Sam's Club conducts in-depth market research and analysis based on the needs and consumption habits of consumers in different regions, and then combines its own supply chain advantages to provide members with products and services that meet local market demands. This localization strategy not only enhances Sam's competitiveness in the local market, but also increases member satisfaction and loyalty.
Backed by Wal Mart's supply chain advantages, Sam has significant advantages in cost control and commodity quality. As one of the largest retail giants in the world, Wal Mart's supply chain system has been quite mature and perfect. Although Sam and Wal Mart operate separately internally, they can share suppliers and logistics resources. This complementary advantage enables Sam's to far surpass domestic peers in supply chain and cost control.
The business logic of membership based supermarkets lies in their precise positioning of business models, clear layout, and seamless connection between various links. Compared to traditional hypermarkets, the business model of membership stores places more emphasis on inventory turnover speed, refined supply chain management, unique product selection, and precise target audience positioning. This unique operational approach requires companies to reconfigure and optimize their supply chain to provide high value-added products and services, thereby amplifying member value and maintaining a competitive advantage.
However, it cannot be denied that under the membership model, the success of a company does not solely rely on the speed of opening stores and the expansion of the number of stores, but more importantly, it has a deep supply chain capability. This ability is not only reflected in the precise control of commodity procurement, inventory management, logistics and distribution, but also in the keen insight and rapid response to changes in market demand. Only with such deep supply chain capabilities can enterprises stand undefeated in fierce market competition.
In the Chinese market, competition among membership based supermarkets has become increasingly fierce. As a leader in the industry, Sam's Club under Wal Mart has always maintained a leading position with its strong supply chain advantages and unique commodity selection strategy. However, with the entry of domestic and foreign companies such as Costco and Hema, market competition has become more intense.
Retail expert and founder of Shanghai Shangyi Consulting, Hu Chuncai, told 21st Century Business Herald reporters that membership based supermarkets such as Sam's and Costco provide a significant proportion of imported goods, which gives them unique competitiveness. And due to its reliance on Tmall with trillions of yuan in transaction volume, Hema's supply capacity for imported goods is not weak, even stronger than the two American companies mentioned above.
In addition, other Chinese companies are also trying to impact Sam's through different paths. For example, Ye Guofu teamed up with Pang Donglai to carry out a "radical reform" of Yonghui Supermarket, and achieved significant results after the reform of two stores in Zhengzhou, with a significant increase in daily sales. This renovation has attracted widespread attention in the retail industry, and has also strengthened Ye Guofu's confidence that the renovation of Yonghui Supermarket is a feasible breakthrough in the retail industry's transformation period. Juncai International, a subsidiary of Miniso, has acquired 29.4% of Yonghui Supermarket's shares for 6.3 billion yuan, further increasing its investment and layout in the retail industry.
In the future, challenges and opportunities coexist in the Chinese retail market. In the field of membership based supermarkets, competition among enterprises will become more intense, but at the same time, it will also drive the progress and development of the entire industry. After the replacement of the new coach, the market position of veteran player Sam will continue to be tested.