US retail giant Walmart upholds a firm belief in the potential of Chinese economic growth, according to its Asia CEO Scott Price.
Speaking at the Asia-Pacific Economic Cooperation (APEC) CEO Summit, Price said that he expects that China will drive more than half of the world’s retail growth over the next decade.
This is largely due to the emergence of the Chinese middle class, as well as the shift from a primarily manufacturing based economy to one based on services. Events like Singles Day, China’s biggest online shopping date, have shown that there is a huge demand in the country for good retail.
Retail sales figures in the country were up by 10.9% year on year in September and 11% in October, and on Singles’ Day the ecommerce giant Alibaba earned a record $14.3bn in sales in just 24 hours: an increase of 60% on 2014.
Walmart itself owns Yihaodian, a Shangai based e-commerce business which, according to Price, had “a great Singles’ Day”, though he did not reveal sales figures.
Price also referred to a “gamut of opportunities” that can be found in supposed O2O, or ‘Online to Offline’ retail, which sees customers paying over the internet and picking items up in a store.
“We think online-to-offline is critical,” he said, as “customers look for convenience, and convenience is not just one mode.”
Despite this enthusiasm, O2O is currently unprofitable in China, as retailers are more interested in getting as much of a market share as they can. However, a recent report from HSBC predicted that “profits should emerge as the market matures.”
According to HSBC, the online portion of O2O revenues increased by 80% on year in the first half of 2015, reaching $47bn. In tangent, China’s retail sector is becoming less fragmented and consumers are purchasing more frequently, indicating that there may well be great promise for O2O in the future.
Price also referred to the future potential of brick and mortar stores, a required component of O2O. A number of online retailers have invested in a physical presence recently, such as the Amazon book store which opened earlier this month.