Now let's look at Wal-Mart and how it keeps making the competitive landscape more difficult for its competition while delivering solid operating results and improved performance for its own customers and owners.
While Wal-Mart has no magic formula for success, they do have a simple one. They do the basics better than anyone else, and they're constantly striving to improve everything they do. All the time and each day through continuing and rapid productivity enhancements throughout the company.
In simple words, Wal-Mart is able to provide its ever expanding customer base with everyday low prices by maintaining low costs and keeping a relentless focus on continuing to innovate and improve. It's part of their culture. So what's the outlook?
Wal-Mart Says New Stores Will Bolster Sales provides an optimistic outlook concerning Wal-Mart's plans to keep its sales and profit juggernaut rolling along through 2013 and beyond:
"Wal-Mart Stores Inc expects sales to grow throughout this year and next, as the world's largest retailer keeps enticing shoppers, especially those on limited budgets, with smaller new stores, ecommerce and lower prices.
Wal-Mart . . . plans to add roughly the same
amount of store space in fiscal 2014 as it has planned for fiscal 2013,
and will still open more supercenters than smaller stores in the United
States, its largest market.
The retailer also touted strong sales at U.S. grocery stores and a big
start to holiday layaway sales....
Walmart plans to more than double the number of its Neighborhood Market
grocery stores in the United States by fiscal 2016, putting more
pressure on grocers such as Kroger Co, Safeway Inc and Supervalu Inc.
Smaller than supercenters and focused on groceries, the stores have become more profitable as Walmart has added more. Sales at existing Neighborhood Market stores have grown in excess of 5 percent, or double the overall Walmart U.S. rate, as shoppers find them more convenient.
"They kind of have the keys to the castle now," Susquehanna Financial
Group analyst Bob Summers, who has a "buy" rating on Wal-Mart, said of
the Neighborhood Market format.
Walmart should have more than 240 Neighborhood Market stores by the end
of fiscal 2013 and more than 500 by fiscal 2016, ultimately adding more
than $10 billion in sales, U.S. Chief Executive Bill Simon said.
While Wal-Mart is not planning for a deep decline in GDP or consumer
spending, if the economy were to get worse, Wal-Mart believes it is in a
good position as it continues to lower costs, improve productivity and
cut prices.
"Even if we go into a more difficult economy, all that does is position us even stronger," CEO Mike Duke said. . . .
PLACING BIG ORDERS FOR HOLIDAY SEASON
Walmart U.S. is preparing for a strong holiday season, ordering twice as
many Apple Inc iPads and other tablet computers as last year. It
started offering layaway in mid-September, a month earlier than in 2011.
Layaway allows shoppers to put certain items on hold and pay for them
over time.
Walmart has lined up $400 million in U.S. layaway sales in less than a month, half of the amount shoppers put on hold for all of the 2011 holiday season.
"They could conceivably do 50 percent more layaway this year than they
did last year," which has the potential to add half a percentage point
to same-store sales growth, said Summers.
Walmart U.S. has posted four consecutive quarters of same-store sales
growth after nine straight quarterly declines, though the pace of growth
slowed to 2.2 percent in the second quarter from 2.6 percent in the
first quarter. The pace of quarterly same-store sales growth still
trails competitors such as Target Corp and Dollar General Corp.
Plans for Walmart U.S. this holiday season include offering sale prices
on certain toys on Tuesdays based on weekend feedback from social media.
At the Sam's Club warehouse chain, holiday season plans include selling
Children's Place merchandise and the company is testing higher-priced
membership fees in Texas along with cash rewards.
Ecommerce is growing with efforts such as letting shoppers buy online
and pay in stores with cash, yet is still a small part of the giant
company. Wal-Mart's ecommerce sales should total $9 billion next year,
excluding acquisitions, while Wal-Mart rang up nearly $444 billion in
total sales in fiscal 2012.
Walmart International plans to add 21 million to 23 million square feet
of store space in fiscal 2013, down from an original target of 30
million to 33 million. It plans to add another 20 million to 22 million
square feet of store space in fiscal 2014.
Walmart U.S. plans to add roughly 205 stores this year, and about 220 to
240 in fiscal 2014. Sam's Club plans to open 9 stores this year and 10
to 15 next year.
Overall, Wal-Mart plans to add 36 million to 40 million retail square
feet in fiscal 2014 on top of 36 million to 39 million square feet this
year. As it cuts costs, capital expenditures should total $12 billion to
$13 billion in fiscal 2014, down from $12.6 billion to $13.5 billion
this year."
Summing Up
The Wal-Mart story is really a very simple one. They are the most cost competitive, customer focused, information driven retailer in the world.
And they're never satisfied --- they're always striving to improve their offerings and performance. Groceries and ecommerce are good examples, as is their emphasis on growing their international sales base. And now they're experimenting with home delivery. Watch out, Amazon.
There is no mystery to Wal-Mart's ongoing success. Just low prices driven by low costs, innovation, brand extension, higher sales, committed employees and excellent management.
They're one-of-a-kind --- a best-in-class retailer sitting in the low cost catbird seat and totally focused on getting more customers, keeping the ones they already have, and figuring out how to sell more products and services to both.
Thanks. Bob.
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