According to a report by market research firm Kantar Worldpanel, strong growth is now coming from shoppers in lower-tier cities. Meanwhile, shoppers in higher-tier are buying more fast moving consumer goods.

The renovation of existing outlets is another facet of the retailer's plans. It will freshen up locations that have been operating in China since 1996.

That plan covers the remodeling of about 45 stores this year, 55 next year and 65 the year after.

More distribution centers will be developed to ensure that all stores have access to ambient distribution networks, which handle food at room temperature, and chilled distribution networks. Both types of distribution are crucial to food quality and fresh food supply.

Walmart is being conservative about opening new physical stores. The company has acquired majority control of its Chinese online store Yihaodian, and it's expecting more growth from e-commerce in China, as well as real estate.

Doug McMillon, the president and chief executive officer of Walmart International, said that as to possible mergers and acquisitions in China, the company is looking for other retailers with stores - and also for those adding new capabilities, such e-commerce activity.

He cited opportunities for growth in good-quality real estate.

In the competitive retail sector in China, Walmart ranked fifth in the third quarter, after Sun Art Retail Group Ltd, RT-MART International Ltd, Groupe Auchan SA and China Resources Vanguard Co Ltd in terms of market share, according to Kantar Worldpanel.

Wumart Stores Inc announced it has agreed to buy most of Thailand-based CP Lotus Corp's supermarkets on the mainland for HK$2.35 billion ($302 million).

United Kingdom-based Tesco Plc announced it will form a joint venture with China Resources Enterprise. which operates the Vanguard stores.

Jason Yu, an analyst at Kantar Worldpanel China, said Walmart needs a long-term strategy to play up its strengths and eliminate underperforming stores amid fierce competition with local rivals.