The Behemoth Retailer That Could

Today, the Financial Times reported that Wal-Mart is expanding its overseas expansion. Well color me surprised! Currently, international sales constitute 26% of the company’s net sales and this is while Wal-Mart is lowering its capital expenditures. In layman’s terms, this means that they’re slowing growth- or rather, they are being forced to by the market. So in order to sustain the company, Wal-Mart is looking to conquer new markets abroad. Thankfully, Asia and Eastern Europe are still up for grabs! 

Wal-Mart readies for overseas expansion

Wal-Mart, the world’s largest retailer, is embarking on a further round of international expansion on the back of a systematic overhaul of the way it runs its business, which is expected to deliver more than $100bn in sales this year.

The retailer is actively exploring a first move into Russia and neighbouring countries, while preparing to open its first wholesale warehouse stores in India next year in a joint venture with Bharti Enterprises.

Wal-Mart already has operations in 13 countries, which accounted for 26 per cent of its net sales last year.

Wal-Mart’s international square footage growth rate is now above that in the US, where it has now slowed the expansion of its profitable Supercenter format in the face of market saturation.

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Posted by Vasudha Desikan on Wednesday, June 18 | 7 comments | Permalink

Move Over Wal-Mart

Competition in China’s global marketplace is heating up even more.  With South Korean Lotte entering the Chinese market through the acquisition of CTA Makro, Wal-Mart and Carrefour will face even greater pressure to distinguish themselves and appeal to Chinese customers.

Unfortunately for Wal-Mart, which has faced an unusual amount of brutally honest attention in Chinese media, and Carrefour, which has gained an infamy for being French, Lotte could be poised for success.  In addition to Lotte’s proposed growth of 300 stores over the next ten years (Wal-Mart and Carrefour both managed about 100 stores in their initial ten years), Lotte has previous experience in China selling food products.

More from Reuters:

Lotte to open 300 stores in China in 10 years

SHANGHAI, June 11 (Reuters) - Lotte Shopping Co (023530.KS: Quote, Profile, Research), South Korea’s biggest department store operator, said on Wednesday it plans to open 300 hypermarkets in China in the next decade, as it competes for market share with Wal-Mart (WMT.N: Quote, Profile, Research) and Carrefour (CARR.PA: Quote, Profile, Research) in the world’s fastest-growing major economy.

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Posted by Michael Mignano on Wednesday, June 11 | 0 comments | Permalink

Wal-Mart’s 2008 Shareholder Resolutions: Human Rights Committee

This is the third in a series of posts on Wal-Mart’s 2008 shareholder resolutions. The full list of resolutions - and Wal-Mart’s statements regarding them - can be found in the company’s 2008 proxy here (PDF).

Resolution #7 on this year’s proxy proposes the establishment of a human rights committee at Wal-Mart. Below, the details of the proposition, why Wal-Mart’s shareholders would benefit and how the company has reacted to the proposal.

Wal-Mart’s Public Image Problem
Reports of human rights violations have dogged Wal-Mart for years - particularly in the company’s supplier factories, most of which are overseas. These violations have thoroughly damaged Wal-Mart’s reputation, with everyone from U.S Senators to Wal-Mart employees to factory workers themselves speaking out about the inhumane conditions in Wal-Mart’s supplier factories. Bama Athreya, director of the International Labor Rights Forum, testified before Congress on the issue of toy safety, explaining that “Wal-Mart bears a lion share of responsibility for pushing the toy industry to a place where worker health and safety are basically nonexistent.”

Wal-Mart also holds the ignominious title of being the only company investigated by Human Rights Watch for its domestic labor practices. The group’s 2007 report labeled Wal-Mart’s union-busting policies a violation of basic human rights, saying:

It pursues its anti-union agenda relentlessly, often from the day a new worker is hired, devoting considerable time and resources at all levels of the company to the anti-union drumbeat.

The constant stream of allegations have damaged Wal-Mart’s reputation and in turn, its profits. In 2007, a Bank of America analyst’ report found that Wal-Mart’s profits had suffered as a result of organized labor’s opposition to the company and its unethical labor practices.  The report noted that the union’s campaign “has cost WMT [Wal-Mart] real estate sites in key locations, adversely impacted comp store sales to some degree, and has distracted m management from focusing on its retail strategy. Additionally, Lee Scott now spends a large amount of time improving WMT’s image domestically and abroad, and WMT has been forced to focus advertising dollars on defending their brand.”

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Posted by Research Team on Tuesday, May 13 | 3 comments | Permalink

Wal-Mart Continues to Focus on Expansion Abroad

In this article from the Arkansas Democrat-Gazette, author Steve Painter makes the important correlation between Wal-Mart’s increasing international expansion and the company’s difficulty expanding in the U.S. Just last week the company lost a 2-year-long site fight on the south side of Chicago, a crucial city in the company’s urban expansion plans. Wal-Mart has met opposition to its international plans as well, including protests in India which have stymied the company’s plans there. Were all international markets aware of Wal-Mart’s business practices, we’re pretty sure the company’s expansion efforts abroad wouldn’t be going so well.

Foreign markets fertile for Wal-Mart [Arkansas Democrat-Gazette]

In Brazil, Wal-Mart Stores Inc. is counting on its small format Todo Dia neighborhood grocery stores to drive sales among low-income customers.

In Canada, Wal-Mart continues to add supercenters to its traditional base of discount stores, gaining market share.

In India, Wal-Mart partner Bharti Enterprises recently opened the first of its new Easy Day stores in a nation teeming with potential customers.

Deploying formats ranging from convenience store-sized markets to U.S.-sized supercenters, the world’s largest retailer is expanding its international operations at several times the rate of its stores in the United States, where it scaled back growth last year.

As Wal-Mart increasingly encounters opposition to its stores in U.S. cities it has yet to penetrate, it has mostly found open doors overseas, especially in developing economies where incomes are rising. In the past year, Wal-Mart’s international selling space grew 18 percent while U.S. space was up 4.6 percent.

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Posted by Alex Goldschmidt on Monday, May 12 | 53 comments | Permalink

Wal-Mart Reports Big Losses in Japan

Wal-Mart reported big losses in its Japan unit Seiyu for the sixth straight year. As we discussed yesterday in regard to Wal-Mart’s attempts to expand in the U.K., the retailer is notoriously bad at adapting to changing market conditions. Building in the U.K. as well as Japan has meant stricter development regulations and a harder time building the company’s notorious supercenters.

Douglas McIntyre on 24/7 Wall St. points out that the company can’t afford another failure:

After pulling out of Germany and Korea it would be hard for Wal-Mart to raise the white flag in Japan. The market is simply too big for the US company to walk away. That would leave it out of three of the largest developed counties in the world.

Wal-Mart’s Japan Unit Forecasts Deeper Loss [Wall Street Journal]

Wal-Mart Stores Inc.’s Japan unit said it expects its net loss for 2007 to be twice its earlier forecast, raising fresh doubts about the U.S. retailing giant’s plans to turn around its business in the world’s second-largest economy.

In revising its net-loss forecast for the year ended Dec. 31 to 20.9 billion yen ($195.5 million) from an earlier 10.4 billion yen, Wal-Mart’s subsidiary, Seiyu Ltd., cited weak sales of clothing and seasonal household products, as well as a special asset write-down related to its stores. Seiyu also cut its forecasts for operating profit, to 400 million yen from 4.6 billion yen, and for sales, to 952.3 billion yen from 963 billion yen. Full year results are to be released Thursday.

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Posted by Alex Goldschmidt on Tuesday, February 12 | 5 comments | Permalink

What Happened To Wal-Mart Korea?

Wal-Mart Venture Disappointing In Korea[The Collegian]

SDSU professors, students and Brookings community members gathered on Dec. 3 to hear Korean exchange professor Dr. Kye-Chung Song speak on the Asian perspective of the globalization of American firms.

Song specifically discussed the failure of Wal-Mart in Korea and contrasted it to the success and economic growth experienced by the Korean division of GM.

At the opening of his presentation, Song spoke about the roles of economic globalization and glocalization. He defined globalization as “the trend of companies expanding across the world” and glocalization as “the process of adapting a product specifically to each locality that it is marketing.” An example of globalization is the presence of McDonald’s restaurants worldwide; the addition of fried rice to the menu is an example of McDonald’s glocalization process.

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Posted by Vasudha Desikan on Wednesday, December 05 | 0 comments | Permalink

Wal-Mart Sends Tennessee Jobs To South Korea

From today’s Arkansas Democrat-Gazette:

Winning a contract means a small vendor like [TV Guardian CEO Mike] Seals may see his product on Wal-Mart shelves across the globe. But it can be a painful victory since making a product that meets Wal-Mart’s price requirements can mean losing U.S. jobs to workers overseas. Small vendors can make useful industry contacts selling to the giant retailer, but they must remain nimble enough to give customers, and Wal-Mart, a winning product…

“At the end of the meeting, the Wal-Mart buyer said he wanted to start selling TV Guardians in 500 stores,” Seals recalled. “He wanted to sell it for $49. We had to figure out how to manufacture huge quantities inexpensively.”

TV Guardian’s factory was at that time in Tennessee. Seals had to move manufacturing to South Korea to meet Wal-Mart’s low retail price…

[Seals] was consoled by the fact that South Korea, unlike China, is a democracy with factories that pay workers a living wage.

Click here to read the full story in the Democrat-Gazette.

Click here (PDF) for more on how Wal-Mart pressures manufacturers to ship American jobs overseas.

Posted by Nu Wexler on Sunday, January 15 | 42 comments | Permalink

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