On a recent weeknight in Shanghai, customers packed one of the city\u2019s six Sam\u2019s Clubs, scouting for deals among the wide aisles stacked to the ceiling with groceries and merchandise.<\/p>\n
\u201cAt least half our family\u2019s stuff is bought here,\u201d said Peter Xu, a 34-year-old shopper at the front of a long queue for free samples of Chaoshan beef noodles.<\/p>\n
Sam\u2019s Club<\/a>, Walmart\u2019s warehouse chain, is one of China\u2019s fastest-growing foreign retailers, with 56 stores in the country and plans for 60 by the end of the year, said a person familiar with its expansion. This compares with seven China stores from Costco, the dominant warehouse club operator in the US.<\/p>\n Even as economic momentum has slowed in China, Sam\u2019s Club\u2019s income from memberships there grew more than 40 per cent year on year in the first quarter, as consumers flocked to the warehouses for their low prices and bulk purchases.<\/p>\n China<\/a>, one of Walmart\u2019s three international growth markets alongside India and Mexico, may be its most fraught. The world\u2019s second-largest economy is grappling with weak consumption at a time when trade tensions with Washington have risen.<\/p>\n The company not only has stores in China but also purchases billions of dollars of goods there to feed its primary business in the US.<\/p>\n Sam\u2019s Club has \u201cinculcated itself into the fabric of Chinese life in a way that people would probably forget it\u2019s an American company\u201d, said Bryan Gildenberg, managing director at Retail Cities, a consultancy.<\/p>\n The warehouse club business was pioneered in the US in the 1970s<\/a>. Customers pay annual fees for entry into utilitarian big-box stores carrying a limited assortment of several thousand products sold in bulk at a modest mark-up.<\/p>\n Walmart entered China in 1996, five years before the country joined the World Trade Organization, with a Walmart-brand hypermarket and a Sam\u2019s Club in the southern city of Shenzhen.<\/p>\n An urbanisation wave in the early 2000s led to a Chinese supermarket boom, but it has lost steam in the past decade with the rise of digital retail. Walmart, France-based Carrefour and even domestic bricks-and-mortar retailers such as Suning have struggled to keep up with local app-based commerce, some of which has been subsidised by the government.<\/p>\n Walmart has closed dozens of its hypermarkets in China since 2020, leaving about 280. The Arkansas-based company has exited other markets entirely<\/a>, including the UK, Japan and Argentina.<\/p>\n But with Sam\u2019s Club, Walmart has found a way to expand in China by deploying warehouses as both shopping destinations and ecommerce delivery hubs. The chain accounts for 80 per cent of Walmart\u2019s sales in the country, according to Oliver Chen, a retail analyst at TD Cowen. <\/p>\n Walmart\u2019s sales in China rose 17 per cent to $20bn in its latest fiscal year. Eight of the Sam\u2019s Club stores are forecast to each register half a billion dollars in sales this year, Christina Zhu, chief executive of Walmart China, told investors in April. A Walmart spokesperson declined a request for an interview with Zhu and would not comment on the company\u2019s business in China. <\/p>\n Even as China\u2019s economy cools, the company believes there are opportunities to sell to the millions of middle and upper-middle-class consumers who can afford the membership fees, which start at Rmb260 ($36) a year. Goods range from sea cucumbers and Fuji apples from Gansu province to toys such as Land Rover monster trucks and Mickey Mouse swimming sets.<\/p>\n \u201cThere are definitely still groups of consumers out there who want to be surprised, who want the treasure hunt experience,\u201d said Weiwei Xing, a Hong Kong-based partner at Bain & Co focusing on consumer products.<\/p>\n \u201cA member [in China] told me she doesn\u2019t have to shop around for the best prices\u2009.\u2009.\u2009.\u2009because\u2009.\u2009.\u2009.\u2009she trusts that Sam\u2019s Club is always going to have the lowest prices on whatever it is that her family needs,\u201d Kathryn McLay, chief executive of Walmart International, told investors in April.<\/p>\n Half of Walmart\u2019s China sales are online, compared with less than 20 per cent in the US. To fulfil ecommerce orders, China CEO Zhu described Sam\u2019s Club locations as \u201cmother clubs\u201d that stockpile goods for networks of eight to 15 delivery hubs serving dense neighbourhoods within a three-mile radius.<\/p>\n One curb on Sam\u2019s Club\u2019s China growth is a shortage of affordable and suitable land, which is owned by local governments and a crucial source of fiscal revenue.<\/p>\n Walmart executives are also dealing with strained US-China relations that have worsened with US President Donald Trump\u2019s steep tariffs on Chinese goods. About a third of Walmart\u2019s US merchandise is imported, with China a leading source<\/a>.<\/p>\n![\"Staff](\"https:\/\/www.ft.com\/__origami\/service\/image\/v2\/images\/raw\/https%3A%2F%2Fd1e00ek4ebabms.cloudfront.net%2Fproduction%2Fdcf29abf-8dca-48c4-a795-5a365fe6d82d.jpg?source=next-article&fit=scale-down&quality=highest&width=700&dpr=1\")
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