Walmart to expand number of stores in China Walmart, the world's largest retailer by revenues, said on Thursday it plans to increase its total store count in China by up to 80 stores over the next three years, up from 400 now. China has proven a tough market for western supermarket chains, including Carrefour and Tesco , in spite of the rise in the number of people living in cities and switching from traditional markets to giant box stores. Walmart has been forced to adapt from US customers who stuff large weekly purchases into their cars, to the Chinese preference for daily shopping for a few fresh items. It is seeking to reverse slippage in store traffic as well as in its share of the hypermarket sector in the world's most populous nation. As the Arkansas-based company seeks to expand in smaller cities, with 110 new stores, it plans to increase stocks of imported food and to centralise further its sourcing and distribution, in an effort to control quality. "The most important area for us in China initially is to get our fresh departments running the way we need them to operate for our customers," says Greg Foran, Walmart's China chief executive. I see too many of our customers having to inspect our product . . . It's an opportunity for us to get it right. Problems for western chains range from competition with homegrown supermarkets to the lack of reliable refrigerated distribution networks to razor-thin margins, in a country where shoppers spend less than $25 per supermarket visit. Walmart plans eight dry goods distribution centres and a further eight fresh and frozen food centres, from which it can co-ordinate daily deliveries to stores, according to Mr Foran. That will allow Walmart to trim its list of about 100 distributors across China - in some cases, two or three in a city - and exert more control over sourcing. "Years ago it would have been impossible to think about how to reduce the number of suppliers and further centralise the purchasing because China was growing out so quickly," says Doug McMillon, president of Walmart's international business, adding: "I think we did what made sense at the time." Even as it tightens its grip on its supply chains, Walmart is accelerating expansion into smaller cities. Supermarkets and hypermarkets already command more than 80 per cent of the market in China's biggest and wealthiest cities, leaving more space for expansion in places such as Xinyu in Jiangxi province (population 839,000, average income $10,600 a year), or Tianmen in Hubei (population 1.3m, average disposable income $2,600 a year). The international traders haven't done well penetrating smaller cities, so this is a necessity for Walmart Oceanne Zhang, Shanghai-based analyst for Kantar Retail "The international traders haven't done well penetrating smaller cities, so this is a necessity for Walmart," says Oceanne Zhang, a Shanghai-based analyst for Kantar Retail. Centralisation would improve efficiency and help with quality control, she adds. Walmart has already weathered one food quality scandal in China. Bo Xilai, the disgraced politician, detained several local executives in 2011 after a probe revealed normal pork had been mislabelled as more expensive organic pork at stores in the inland city of Chongqing. The company also has had to integrate its purchase of Taiwanese-owned chain Trust-Mart, completed in 2012. Although that acquisition doubled its store numbers in China, Trust-Mart's decentralised corporate culture was the opposite of Walmart's. Mr Foran says that up to 30 planned store closures stem in part from overlaps between Walmart and legacy Trust-Mart stores. It also expects growth in sales from its e-commerce arm, Yihaodian, in which it raised its stake in 2012 to tap into rapidly expanding online shopping in China. "The focus we have is a willingness to change as customers change," says Mike Duke, global chief executive, fresh from a visit to the Walmart stores in the industrial city of Taiyuan.