Wal-Mart Supercenter growth scaled back; focus is on improving same store sales and returns on invested capital
In an announcement on June 1 of this year, they dramatically changed this number.
The new projection is for about 195 new Supercenters this year.
To put this in perspective...
This year it will only grow by about 4.5%.
The previous strategy for Wal-Mart was all about “the growth”, baby.
But recently Wal-Mart has had an efficiency awakening.
Tom Schoewe at Wal-Mart has built something called the “Capital Efficiency Model” and the model is telling them to slow down the hell bent pace of store growth in order to more efficiently manage resources and capital.
In order to better understand what this is about, I have typed out verbatim what Wal-Mart’s Chief Administrative Officer, John Menzer, said on this subject at the briefing for analysts on June 1st.
“On the U.S. Wal-Mart Supercenter program, we kind of came out with an answer that we call the ‘sweet spot.’ We’re trying to balance returns here. We are looking at 1) improving our comp store sales, 2) looking still at total sales, and 3) improving our ROI. And that’s the bundled package we came up with. We spent a lot of time on it and came to where we really thought we want to be as a company. Improving comp store sales is about helping the operations, the marketing, the merchandising team, slow down that growth so they can focus on existing stores. Give them some time to get some of these programs into place.”
The idea here is no longer to fill in the country at a massive speed. The focus is apparently now on efficiently filling in the country in order to maximize the returns on existing stores and cut back on the effect of cannibalization.
I must say that sounds great. ..More to come.