On March 26, Sam's Club once again topped Weibo's hot search due to a price discrepancy on the same chicken leg product, following a similar controversy in June last year over an 80% price difference on cakes. Despite positioning itself as a mid-to-high-end membership club and 'paradise for the middle class,' Sam's has repeatedly faced accusations of double standards in pricing, drawing public scrutiny.

In the previous month, Walmart's 2024 annual report showed total revenue of $173.4 billion, up 5.7% year-over-year, with operating profit of $7.3 billion. Among these results, Sam's Club performed notably well in the Chinese market.

Comparing fiscal years 2023 and 2024, Sam's contribution to Walmart's revenue rose from 12.84% to 13.8%, with revenue increasing from 73.556 billion yuan to 84.345 billion yuan. Sam's Club and China are both key growth engines for Walmart's performance.

Against the backdrop of ongoing closures of Walmart hypermarkets and negative public opinion, Sam's Club has managed to open new stores against the trend, achieving top rankings in both revenue and profit. This foreign retail brand, which entered China earliest and most deeply, has gradually completed its 'closed-door cultivation,' developing a retail model rooted in the U.S. yet deeply understanding the Chinese market, aiming to lead strongly again with a new business format.

All of this is closely tied to Zhu Xiaojing, who leads Walmart China. Whether during her tenure at Fonterra or Walmart, Zhu has demonstrated management wisdom and execution courage to turn the tide. This outwardly gentle female president has, over four years, used her philosophy and methods to guide Walmart China through the pains of transformation and the turbulent seas of commerce.

Image source: China Chain Store & Franchise Association

However, the chill in the retail industry is also approaching Walmart. Yonghui Superstores projected a loss of 1.34 billion yuan last year; Alibaba is eager to divest from RT-Mart, which lost 378 million yuan in the first half of last year; and Hema, the pioneer of new retail, has even undergone a founder change...

The offline shopping scene is in a 'deep winter,' while online e-commerce and local life service platforms are also seeing customer traffic and popularity siphoned off by new entertainment players. The risk of hitting reefs has become a 'Sword of Damocles' hanging over the retail industry.

Whether the professional managers pushed to the forefront can once again set the industry ceiling remains a huge question mark.

A New Leader Who Has Lasted Four Years

Similar to Hema's 'godfather' Hou Yi, Zhu Xiaojing also has experience working for two major corporate giants.

Having long worked in the Chinese operations of foreign brands and in the management of local brands, Zhu Xiaojing has navigated between two business environments, grasping the pulse of foreign brands' 'acclimatization' issues, which has become her core competitive advantage for reaching high positions.

Born in Beijing in 1973, Zhu Xiaojing later enrolled at Beijing Foreign Studies University to study Western studies. Before that, she was a quintessentially Chinese girl.

In that relatively closed-minded era, Zhu, with her background in Western studies, yearned for the other side of the ocean more than most. After graduating, she went to the United States to pursue an MBA at Columbia University.

With her MBA and the halo of a prestigious university, she received numerous offers from corporate giants. She worked as a strategic consulting advisor at McKinsey's New York office, leaning toward theoretical research in management. Perhaps theory itself wasn't thrilling enough, so the already somewhat famous Zhu decided to venture into the corporate world.

The impressive Zhu Xiaojing received an olive branch from Honeywell.

Zhu made her debut as Vice President of Strategic Business Development for Honeywell Greater China and Director of Global Strategic Development.

Born in China, achieving fame abroad, spanning two continents, with diverse growth environments and industry experience, Zhu Xiaojing became a sought-after talent for multinational management.

At that time, Fonterra, the dairy giant from New Zealand, faced a booming Chinese market and urgently needed to pivot and restart. One task was to clean up the botulism scandal left by her predecessor, and another was to rapidly expand business horizontally.

All of this required a new administrator trusted by both Chinese and foreigners, and Zhu Xiaojing was the best choice.

In 2016, Zhu Xiaojing officially took over as President of Fonterra Greater China, leading the formulation and implementation of the company's overall strategy for consumer brands, foodservice, and farm operations in the region.

As Fonterra's official introduction states, Zhu deeply understands the development trends of consumer brands, commerce, and the dairy industry in the East, West, and Greater China, making her one of the most clear-headed in the industry. During her tenure at Fonterra, China business scale tripled and operating profit quintupled, with Fonterra Greater China accounting for a quarter of the group's product sales.

However, while she was cutting through the Chinese market, local brand Beingmate suffered losses due to constant adjustments and a deteriorating industry environment. Fonterra, which had a deep cooperation with Beingmate, was directly affected. Zhu, who was directly responsible for the cooperation and served as a Beingmate director, quickly became the scapegoat.

When there are losses, someone must take responsibility. Ultimately, Fonterra and Zhu Xiaojing parted on bad terms.

Fate sometimes favors the talented. At that time, Walmart China had changed its CEO two years prior, and CEO Chen Wenyuan was already considering retirement. Zhu, in her cooling-off period after leaving Fonterra, became the first choice again and was quickly promoted to the top position.

Growing up in a cross-cultural environment, Zhu Xiaojing is more like a localized skin for multinational companies, with a deep understanding of Chinese culture and precise control over the Chinese market.

Transitioning from the dairy industry to retail, Zhu Xiaojing parachuted into Walmart China as CEO.

Looking back, since entering China in 1996, Walmart has been operating in the country for nearly 30 years and has changed CEOs seven times. Since 2012, Walmart has seen a 'curse' of changing CEOs every two years.

From Gao Fulan to Ke Junxian, then Chen Wenyuan and now Zhu Xiaojing, the frequent changes highlight Walmart's anxiety about the domestic market, and long-term strategic wavering once led to market crises and even dense store closures.

Zhu Xiaojing became the best card Walmart could play.

Four years have passed, with hypermarkets closing and Sam's Club rising, Zhu Xiaojing has led Walmart China on a path of self-renewal and self-transfusion, breaking the two-year CEO change rule.

The 'perfect match' between China's retail platform and the cross-industry management queen is more like 'huddling together for warmth.'

The Helmsman of Traditional Retail's 'Self-Transfusion'

Doing big business is like surfing; you must ride the wave and go with the flow. Sometimes a keen sense of smell is more important than hard work.

For Zhu Xiaojing, Fonterra was a stage to maximize her personal abilities and a concrete expression of her management style. As an academic, Zhu sees the market most clearly.

As early as 2019, Zhu publicly stated in an interview that consumption upgrading and downgrading exist simultaneously. When the trend of consumption stratification had not yet fully emerged, and giants like JD.com and Alibaba were betting on consumption upgrading, Zhu had already grasped the lifeline of future consumer market development.

This directly led to two key focuses in Zhu's management: channels and digitalization.

First, channels. Before Zhu, Fonterra was just a foreign brand with a say in dairy ingredients in China, with consumer dairy and more detailed foodservice businesses just starting or blank. However, not expanding horizontally means weaving a cage for oneself, ultimately leading to self-imprisonment.

What Zhu wanted to do was to tackle the consumer C-end market and B-end foodservice business, using diversified channels to drive supply chain improvements and ultimately build a higher moat.

Second, digitalization. China's unique development environment has made it one of the most digitized and fastest-adopting markets in the world, with disruptive effects of digitalization happening almost daily.

For Fonterra, which started its consumer business relatively late, digitalization became a sharp weapon for Zhu to penetrate competitors' strongholds. Only by fully deploying digitalization from the start could Fonterra stand firm in the rapidly changing future market.

Thus, horizontal channel expansion and comprehensive digitalization allowed Fonterra to quickly 'break out' in China, with multiple products ranking first in both online and offline sales.

Four years later, the old foundation of 'digitalization + multi-channel expansion' still keeps Fonterra profitable.

However, after leaving Fonterra with great skills, Zhu Xiaojing took over Walmart China, facing not a startup from scratch but more like a rescue mission to turn the tide.

Upon taking office, Zhu encountered the global pandemic, and the large physical hypermarkets, which accounted for a significant portion of assets, urgently needed transformation, testing the leader's courage and determination to 'cut flesh from the palm.'

Image source: Modern Express

Decisive Zhu Xiaojing quickly came up with her underlying logic after reflection: differentiation.

To maximize differentiation, facing two business formats—hypermarkets and Sam's Club—Zhu adopted a posture of offense on one front and defense on the other.

On one hand, Walmart China showed a comprehensive strategic contraction of hypermarkets. After closing 13 stores in five months in 2021, store closures became the main theme for Walmart hypermarkets. In 2023 alone, Walmart China closed 15 stores.

On the other hand, Zhu took a different path, replacing the growth engine with the more niche Sam's Club as the future star format, to absorb the high-end customer flow that had abandoned the hypermarket model.

This aligns with Zhu's own judgment years ago: consumption stratification. The era of casting a wide net is gone; only by refining the track can one stand firm in a highly volatile market. The future Walmart focuses on high-end customer flow, high average transaction values, and locks in customers and repurchases.

In concrete terms, Zhu still chose the foundation of channels and digitalization to achieve differentiation.

In summary, products emphasize customization to create unique differentiated products; packaging emphasizes visualization and standardization, focusing on supply chain costs and consumer experience; and pricing introduces regular discounts. With accumulated differentiation, Zhu continues to tell the story of consumption stratification.

On the other hand, digital channels have also made Walmart shine.

Through differentiated renovation of offline stores, Walmart stores have taken on additional functions like window displays, indirectly providing offline network support for e-commerce business. Livestream e-commerce has become increasingly important in Walmart's strategy, with instant retail as the main differentiated direction. Walmart China's hypermarket e-commerce sales now account for nearly half of total sales.

In her four years leading Walmart China, compared to Carrefour's defeat and exit, and Yonghui and RT-Mart's sluggishness, Walmart's transformation path has 'seen the light.'

With hypermarkets gone and Sam's Club rising, Zhu Xiaojing has led Walmart through four difficult years of transformation. The 'difficult but correct' reform has gone from 'acclimatization issues' to 'top-tier business format.' Success may not rely solely on the manager's personal charm, but it is still significant.

The 'Middle-Class Sanctuary' Gathering at Bright Summit

Although Walmart's transformation is resolute and showing promise, the volatile market quickly stirs up storms.

Even as an industry giant, Walmart is fraught with crises.

As the first foreign retail enterprise to enter China, Walmart's cleverness lies in targeting the huge potential and policy dividends of the early Chinese market.

Walmart exploited the gap when China's retail and chain formats had not yet started, becoming a 'guest of honor' for governments and developers, securing extremely favorable land policies such as 20-year leases with 5 years of rent exemption, reaping huge profits.

However, over 20 years, the retail landscape has changed; in a fiercely competitive environment, Walmart's customer traffic and popularity have been continuously diluted.

In 2021, Shenzhen Honghu Store, the first store of historical significance for Walmart, announced closure. In 2023, the Walmart supermarket in the basement of New World Department Store's Dawang Road branch also saw empty shelves due to rent issues.

Even the star retail Sam's Club faces problems, with price issues, false sales, and food safety issues occasionally poking at the public's nerves.

Under the theory of consumption stratification, the relationship between low-end customers and wholesale market vendors is unbreakable, and even Pinduoduo has begun to encroach on this customer segment. Terminal traffic is being absorbed by e-commerce platforms like Douyin, Taobao, and JD.com. The only segment left for deep cultivation is the high-end customer flow that values quality-price parity.

This move has attracted many retailers in the short term, with membership store models being embraced, and the retail industry seeing various factions gathering at Bright Summit.

In April 2023, Gaoxin Retail launched its first M Membership Store, stating it did not plan to be profitable within three years, aggressively entering the high-end membership store format, with plans to reach 15 stores by 2024. Hema also began laying out Hema X Membership Stores and eventually introduced comprehensive discounting into the second half of the warehouse club competition. Costco has already opened 7 stores in mainland China.

Multiple players are accelerating entry, even going all out and losing money for attention. Lin Xiaohai of Gaoxin Retail directly stated that there are no profit targets, only indicators for membership numbers and renewal rates.

Membership stores are in a period of rapid expansion, with the market accelerating.

However, blindly following the trend of membership stores is not a panacea for traditional supermarket transformation. Frequently 'exploding' membership stores have been pulled off their pedestals, and the market snatched by shelf e-commerce and interest e-commerce is unlikely to return offline. In the end, the clustering of membership stores brings only increased price sensitivity and higher demands for service quality.

In front of increasingly rational consumers, the membership store ecosystem will eventually face a brutal stock competition stage. Whether the membership model will collapse toward comprehensive discounting, as Hema founder Hou Yi predicted, remains to be seen.

It is foreseeable that Zhu Xiaojing, who has stabilized with Sam's Club, will eventually squeeze the last bit of surplus value from the supply chain to face the entrants besieging Bright Summit. The biggest challenge before her is how to climb to new heights.

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