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See interactive chart links at this msnbc link http://www.msnbc.msn.com/id/10838942/from/ET/ Wal-Mart
takes over the world By
Robert Malone, Forbes, Updated:
5:32 p.m. ET Jan. 13, 2006 NEW YORK - What
operates in 44 countries, has 2,276 stores outside of the U.S., has more than
100,000 associates (their term for worker) in Mexico alone and does $56.3
billion in sales overseas? That $56.3 billion figure nearly matches the size of
the U.S. sales of the Kroger Co., and they are the seventh-largest retail
company in the world. It is, of course,
Wal-Mart. And now the accounting for 2005 is in — it increased its
international 2005 business by 18.3 percent over 2004 and grew its
international operating profits to nearly $3 billion. John Menzer, until
very recently the president of the international division and now head of U.S.
store operations, explains the reason why. "Country by country, the world
is discovering the great value of shopping at Wal-Mart. We need to be the
growth of Wal-Mart when some day the United States slows down." Menzer led the
multistore acquisition of Asda of the U.K., and of Seiyu in Japan. These
acquisitions have become the model for how Wal-Mart's roll out in new countries
will be accomplished. Go into a country, pick a sizable retailer, take a piece,
and then take the whole piece, then change the name, and voilà: a multitude of
Wal-Mart stores with discounting in place, new technology behind it and an
awesome scale of retailing and supply chain systems. Wal-Mart is growing so
fast by accelerating
electronic sales
— taking Apple Computer iPods, Hewlett-Packard printers and Toshiba laptops
around the world. They'll grow by pushing their supermarket arena products.
They'll grow as they set up in nation after nation. Above all, they'll
grow a store at a time. Already, they have retail stores operating in Mexico
(774 units), Puerto Rico (54 units), Canada (263 units), Argentina (11 units),
Brazil (295 units), China (56 units), Germany (88 units), South Korea (16 units),
United Kingdom (315 units), Costa Rica (124 units), El Salvador (57 units),
Guatemala (120 units), Honduras (32 units) and Nicaragua (30 units). During
2005, Wal-Mart started its move into India. They are not only
building stores in these countries, they are building their own distribution
centers that are the logistics hubs where they receive, sort and stock the
Wal-Mart stores in their area. These distribution centers can be ten times
larger than their stores. So the commitment within these countries is
more than providing stores. It is a full supply chain system and all the
logistics that can go into it. They can have a hundred or more docking stations in one
distribution center. China, for instance, with its 56 stores, has several
distribution centers such as the one at Shechen. These centers, like their
stores, have local associates, and in China, they number in the tens of
thousands. But to keep a balanced
view, there is a downside, too. “Germany has been terrible for Wal-Mart,"
says Jon Jacobs, retail analyst for Cantor Fitzgerald. "They are taking
losses in a soft economy. Their operations in the U.K, that are around 50 percent of their
overseas business, have shown uneven results, halted growth and [caused]
financial disappointment in a market that has taken a consumer tailspin. This
would make it understandable that they would move forward in Japan and both Latin America and
Central America
where they have recently made many gains.” Most important, Wal-Mart is exporting a
retailing and supply chain system that not only trains and influences the
"associates" but the public as well. People in these many countries
become Wal-Mart customers. They will live with the results of Wal-Mart's (and
P&G's) commitment to radio frequency identification (RFID). The technology
sneaks into the store on cat’s feet. The power of Wal-Mart
is partly derived from its partnerships and its bold use of technology. These
two things in combination give them the muscle to knock out much of the
competition, for
better or worse, regardless of state or nation. Retail Forward, Inc. has predicted that
Wal-Mart will top $500 billion by 2010. That will translate into more power and
more countries. The question is, What
is this going to change, and how will the world and its customers adapt
themselves to a Wal-Mart world? Goodbye mom-and-pop
stores, goodbye local stores in local places. Hello to stores that have a favored position in their procurement processes and their
overall supply chain practice. Hello to efficient store-owned distribution
centers. Hello to mega-stores with discount price advantages and a new sense of
providing for shoppers' full-life experiences. Hello to radio frequency
identification (RFID) and all its speed, accuracy and increased visibility of
product availability. http://www.msnbc.msn.com/id/10838942/from/ET/ |
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