SWOT: Wal-Mart

SWOT:
SWOT: Wal-Mart
Wal-Mart
Prepared
Prepared by
by Planet
Planet Retail
Retail

Updated: 20/12/2006 | e-intelligence on global retailing - www.planetretail.net

SWOT: Wal-Mart
Contents
SWOT
Corporate Goals
Top 30 Global Ranking, 2005
Global Map
Key Financial Results, 2004-2005
Retail Banner Sales by Region, 2005
Forecast Retail Banner Sales by Region, 2010
Retail Banner Sales by Country, 2004-2005
Forecast Retail Banner Sales by Country, 2005-2010
Number of stores and percentage of sales, 2005
Forecast Number of stores and percentage of sales, 2010

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SWOT: Wal-Mart
Strengths
• Wal-Mart can use its cash-rich US
operations to bank-roll international
development.
• The company has assembled a credible
international portfolio of operations.
• Wal-Mart has a virtually unassailable lead
in global retailing, giving it strong benefits
in terms of buying and economies of scale.
• Despite challenges from the likes of Tesco
and Carrefour, Wal-Mart`s growth and
performance has yet to be threatened.
• Sales and profitability growth have been
impressive in the bulk of Wal-Mart`s
international operations.
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• Wal-Mart`s multi-format strategy gives it
a degree of flexibility in store
development.
• The company has proven adaptable and
willing to consider new store formats in
both organic expansion and acquisitions.
• Behind the scenes, Wal-Mart`s buying
power, logistical networks and IT systems
are the envy of the retailing world. These
infrastructures have been rapidly exported
to new international markets, usually
boosting performance.
• Own brand development is becoming
increasingly important to the group. An
example is Asda's George clothing brand
which is being rolled out to outlets across
the world. This development has helped to
reinforce Wal-Mart`s strong EDLP
reputation.
• Barring any unforeseen disasters, Wal-
Mart's global leadership and ongoing
international domination appear assured.
SWOT: Wal-Mart
Weaknesses
• Still largely reliant on increasingly delicate • Enjoys a less than spotless reputation in
US economy. PR terms. Has not been the greatest at
• Has missed out on a variety of addressing criticism, whether justified or
international acquisition opportunities. not.
• Some international moves have been
extremely lacklustre, such as the ongoing
debacle in Germany and the failed attempt
to crack the South Korean market.
• Sticks too rigidly to established formulas,
although is showing a bit more flexibility
(eg Neighborhood Markets).
• Own brand development has lagged that
of rivals in key markets.

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SWOT: Wal-Mart
Opportunities
• Still massive scope for organic expansion
in the fragmented US market.
• Acquisition targets across the world can
be absorbed into the Wal-Mart empire.
• A mega-merger or takeover of rival global
retail group such as Carrefour.
• Further acquisitions in Japan would
bolster its scale there.
• Move into non-food retailing in the UK.
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• Entry into new retail segments, such as
drugstores, department stores, speciality
units.
• Cross fertilisation of best practise across
all markets. Greater exploitation of buying
synergies.
• Internationalisation of private label
ranges.
• Development of wholesaling and in-house
manufacturing.
SWOT: Wal-Mart
Threats
• The global growth of competitive discount
retailers.
• Growing use of planning laws by
authorities and pressure groups to block
big-box developments.
• Wal-Mart is a big and easy target for anti-
capitalist, anti-globalisation,
environmental and labour pressure
groups.
• Price-driven approach does not enjoy
universal appeal and some shoppers may
start demanding better merchandise,
stores and service.

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SWOT: Wal-Mart
Corporate Goals

 Corporate mission
Wal-Mart is seeking to consolidate its world-leading position through organic development
and acquisitions both at home and overseas. Both food and non-food retailing opportunities
will be explored.

 International concepts
Wal-Mart is essentially a three-format retailer, trading through discount superstores,
supercenters/hypermarkets and warehouse clubs around the world. In other markets, it also
operates traditional supermarkets and clothing stores and future growth is likely to adhere
to the multi-format strategy.

 Geographic development
There is still great scope for further growth/acquisitions in the USA, although the focus of
development will gradually shift towards international opportunities. Further market entries
in Europe, Asia and Latin America are a distinct possibility.

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SWOT: Wal-Mart
Corporate Goals

 Store openings
Globally in 2007, the company expects to add around 5.5 million square metres of gross
retail space, which is a 7.5% increase. The company will open over 660 new units during the
year.

 Buying strategy
Wal-Mart's buying power is immense and it is seeking to gain further efficiencies by
increasingly shifting buying towards Asia.

 Pricing strategy
EDLP is Wal-Mart's key retailing ethos around the world and it seeks to offer shoppers the
keenest possible pricing without compromising quality. Own labels have been a core
component of the EDLP strategy.

 Marketing strategy
Wal-Mart actively uses TV, press and radio ads to market itself, its low prices and new
stores. Its US division is also home to the biggest instore TV network in the world.
Increasingly, in the face of more vocal criticism, Wal-Mart is using its marketing initiatives to
defend its reputation.

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SWOT: Wal-Mart
Corporate Goals

 Brand and Private Label Strategy

Private label development has been a cornerstone of Wal-Mart's success, and the company is
developing similar ranges in all of its markets. An example is the international roll-out of the
George clothing line.

 E-commerce
Wal-Mart has embraced e-commerce in a number of its core operating markets, although it is
by no means a universal strategy throughout its international operations.

 Supply chain management

Wal-Mart's supply chain infrastructure and systems are the envy of the retail world. The
company takes a very hands-on role in its supply chain operations and is keen to collaborate
with suppliers to drive out cost savings to benefit retailer, vendor and shopper alike.

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SWOT: Wal-Mart
Corporate Goals

 I.T. strategy
A cornerstone of Wal-Mart's growth has been its Retail Link system. This EDI system enables
suppliers and Wal-Mart to interact more effectively. Wal-Mart is also a keen proponent of
RFID implementation within the supply chain.

 Financial Services
Financial Text

 Non-Food
NonFood Text

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SWOT: Wal-Mart
Top 30 Global Ranking, 2005

Retail banner sales Retail banner sales

Rank Company 2005 (USD mn) Rank Company 2005 (USD mn)

1 Wal-Mart 339,511 16 Schwarz Group 50,462

2 Carrefour
Tesco 116,721 17 Edeka 49,767
3 Metro Group 82,844 18 Walgreens 44,198
4 77,239 19 Albertsons 42,457
5 Ahold 76,149 20 Safeway (USA) 41,809
6 Kroger 62,380 21 CVS 38,930

7 Sears 61,122 22 Leclerc 37,540

8 Seven & I 59,884 23 ITM (Intermarché) 35,174

9 Costco 56,212 24 Best Buy 32,669

10 Rewe 55,872 25 Tengelmann 32,126

Woolworths (AUS)
11 Target 55,356 26 Sainsbury 31,483
Casino
12 AEON 53,840 27 31,178
13 53,268 28 Coles Group 30,150
14 Auchan 51,137 29 Delhaize Group 24,861
15 Aldi 50,648 30 Loblaw 24,264

Source: Planet Retail

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SWOT: Wal-Mart
Global Map

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SWOT: Wal-Mart
Key Financial Results, 2004 -2005

2005 results (USD mn) - % change versus 2004

2004 2005 % chg

Retail Banner Sales 311,123 339,510 9.1
Net sales 285,222 312,427 9.5

Gross profit on sales 65,429 72,036 10.1

EBITDA 21,496 23,247 8.1

EBIT / Operating profit 17,091 18,530 8.4

Net financial income -986 -1,172 18.9

Source: Planet Retail

EBT 16,105 17,358 7.8

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SWOT: Wal-Mart
Retail Banner Sales by Region, 2005

Region 2005 (USD mn) % chg vs 2004 % of Total

North America 274,194 9.3 80.76

Western Europe 32,598 5.2 9.60

Central America 16,781 16.9 4.94

East Asia 12,173 1.5 3.59

Source: Planet Retail

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SWOT: Wal-Mart
Forecast Retail Banner Sales by Region,
2010
Region 2010 (USD mn) % chg vs 2005 % of Total
North America 392,609 43.2 81.01

Western Europe 42,039 29.0 8.67

Central America 29,124 73.6 6.01

East Asia 13,607 11.8 2.81

Source: Planet Retail

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SWOT: Wal-Mart
Retail Banner Sales by Country, 2005

Country 2005 (USD mn) % chg vs 2004 % of Total

USA 262,692 9.1 77.37
United Kingdom 29,783 5.6 8.77
Mexico 14,988 13.5 4.41
Canada 11,502 14.2 3.39
Japan 9,997 -0.9 2.94
Brazil 3,026 41.7 0.89
Germany 2,815 0.9 0.83
China 1,211 31.5 0.36
Puerto Rico 1,154 -0.1 0.34
Korea, South 949 4.7 0.28
Argentina 665 4.7 0.20
Guatemala 200 N/A 0.06
Others 529 232.6 0.16
Total 339,511 9.1 100

Source: Planet Retail

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SWOT: Wal-Mart
Forecast Retail Banner Sales by Country,
2010
Country 2010 (USD mn) % chg vs 2005 % of Total
USA 375,160 42.8 77.41
United Kingdom 42,039 41.2 8.67
Mexico 25,054 67.2 5.17
Canada 17,449 51.7 3.60
Japan 10,739 7.4 2.22
Brazil 6,289 107.8 1.30
China 2,868 136.8 0.59
Puerto Rico 1,668 44.5 0.34
Argentina 984 47.9 0.20
Costa Rica 797 315.1 0.16
Guatemala 710 255.0 0.15
El Salvador 574 252.1 0.12
Others 321 282.1 0.07
Total 484,652 44.4 100

Source: Planet Retail

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SWOT: Wal-Mart
Number of stores & percentage of sales, 2005

Format Number of Stores % Sales

Hypermarkets & Superstores 4,714 84.17
Supermarkets & Neighbourhood stores 504 1.09
Discount stores 253 0.06
Other Grocery formats 9 0.34
Department & Variety stores 3 0.02
Other Non-food formats 63 0.47
Cash & Carries & Wholesale clubs 681 13.54
Foodservice 349 0.27
EEO 3 0.00
Total 6,579 100.00

Source: Planet Retail

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SWOT: Wal-Mart
Forecast Number of stores & percentage of
sales, 2010
Format Number of Stores % Sales
Hypermarkets & Superstores 5,636 84.29
Supermarkets & Neighbourhood stores 622 1.29
Discount stores 345 0.18
Other Grocery formats 9 0.25
Other Non-food formats 113 0.49
Cash & Carries & Wholesale clubs 863 13.24
Foodservice 390 0.22
EEO 3 0.00
Total 7,981 100.00

Source: Planet Retail

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