Wal Mart Swot

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SWOT: Wal-MartPrepared by Planet Retail

SWOT: Wal-MartPrepared by Planet Retail

Updated: 20/12/2006

SWOT: Wal-Mart


Contents

2

SWOT: Wal-Mart

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


Strengths

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SWOT: Wal-Mart

• 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.

• 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.


Weaknesses

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SWOT: Wal-Mart

• Still largely reliant on increasingly delicate US economy.

• Has missed out on a variety of international acquisition opportunities.

• 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.

• Enjoys a less than spotless reputation in PR terms. Has not been the greatest at addressing criticism, whether justified or not.


Opportunities

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SWOT: Wal-Mart

• 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.

• 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.


Threats

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SWOT: Wal-Mart

• 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.


Corporate Goals

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SWOT: Wal-Mart

Corporate missionWal-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 conceptsWal-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 developmentThere 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.


Corporate Goals

8

SWOT: Wal-Mart

Store openingsGlobally 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 strategyWal-Mart's buying power is immense and it is seeking to gain further efficiencies by increasingly shifting buying towards Asia.

Pricing strategyEDLP 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 strategyWal-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.


Corporate Goals

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SWOT: Wal-Mart

Brand and Private Label StrategyPrivate 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-commerceWal-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 managementWal-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.


Corporate Goals

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SWOT: Wal-Mart

I.T. strategyA 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 ServicesFinancial Text

Non-FoodNonFood Text


Top 30 Global Ranking, 2005

Rank CompanyRetail banner sales

2005 (USD mn)

1 Wal-Mart 339,511

2 Carrefour 116,721

3 Metro Group 82,844

4

Tesco 77,239

5 Ahold 76,149

6 Kroger 62,380

7 Sears 61,122

8 Seven & I 59,884

9 Costco 56,212

10 Rewe 55,872

11 Target 55,356

12 AEON 53,840

13

Casino 53,268

14 Auchan 51,137

15 Aldi 50,648

Rank CompanyRetail banner sales

2005 (USD mn)

16 Schwarz Group 50,462

17 Edeka 49,767

18 Walgreens 44,198

19 Albertsons 42,457

20 Safeway (USA) 41,809

21 CVS 38,930

22 Leclerc 37,540

23 ITM (Intermarché) 35,174

24 Best Buy 32,669

25 Tengelmann 32,126

26 Sainsbury 31,483

27

Woolworths (AUS) 31,178

28 Coles Group 30,150

29 Delhaize Group 24,861

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

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SWOT: Wal-Mart

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

EBT

16,105 17,358 7.8

Profit after tax

10,516 11,555 9.9

Group net profit

10,267 11,231 9.4



Retail Banner Sales by Region, 2005

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SWOT: Wal-Mart

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

South America

3,691 33.2 1.09

South East Asia

74 -7.1 0.02

Total 339,511 9.1 100



Forecast Retail Banner Sales by Region, 2010

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SWOT: Wal-Mart

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

South America

7,273 97.0 1.50

Total 484,652 42.8 100



Retail Banner Sales by Country, 2005

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SWOT: Wal-Mart

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



Forecast Retail Banner Sales by Country, 2010

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SWOT: Wal-Mart

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



Number of stores & percentage of sales, 2005

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SWOT: Wal-Mart

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



Forecast Number of stores & percentage of sales, 2010

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SWOT: Wal-Mart

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


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Wal Mart Swot

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