Thursday, June 07, 2007

Wal-Mart Supercenter growth scaled back; focus is on improving same store sales and returns on invested capital

In 2006, Wal-Mart originally indicated they planned to open about 270 Supercenters in calendar 2007.

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...
U.S. square footage for Wal-Mart grew by 8.4% last year.
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.

15 Comments:

Blogger Drew said...

I agree with what you're talking about. ROI is going to be hard for Wal-Mart corp to maintain. In fact, it seems inevitable that its returns will erode with the increasing importance of international growth, where ROI is chronically lower than in the US.

Walmart has to drive maximum ROI out it US stores to balance the international expansion.

June 11, 2007 6:15 AM  
Blogger Dhruv said...

Hi Bobby,

I was wondering if there is anyway in which one could break down the sales and square footage data of Walmart by type of store, i.e, discount vs. supercenter. Or, for that matter, by category, for eg: entertainment vs market. Thanks,

Dhruv Chadha

dhruvchadha14@gmail.com

August 10, 2007 11:51 AM  
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January 15, 2008 8:14 AM  
Anonymous Kody said...

Do yo understand what walmart is doing? this is very bad, they are running small buinesses out of buinesses and are treating their employee's like objects; for walmart's profits. walmart has cost america about 8 billion dollars on tax payers money. this money is coming out of your pockets and your childrens education funds. walmart refuses to get good health insurance benefits for their employee's so they have to go on the medic-aid. walmart is anything but good. 70% of their murchandice is from china!Walmart is EVIL

i am a 14 year old and i am very strongly against walmart, they are destroying walmart

November 26, 2008 6:55 PM  
Anonymous Anonymous said...

I work at Wal-Mart. It's very physical labor for poor pay. Things aren't right with that company. The store i'm at has driven out all the african american employees and continue to stab them in the back. The store manager seems awesome. I don't think the next step down is telling him how they are getting employees so upset. Of course not. Low supplies for workers, broken pallet jacks. Push Push Push. In my other jobs I was considered a model employee. Not at Wal-Mart. I went to higher management with some of my issues and it's been a struggle for my job ever since. They owed me back pay for under paying me on one position. Never got it. I desperately need a job but am hoping too find something where the managers don't retaliate if you go above them. Hopefully, this won't be necessary elsewhere. I really like my job but the treatment from the managers is degrading.

September 15, 2009 12:53 AM  
Blogger MAN ABOUT TOWN said...

walmart sucks dude.
sales associates are stupid.
wouldn't help me apply for charge card in store, went online, now cant use until card gets here and need product now.
fucked up management fucked up attitude and i hate it when someone tells me they understand.
fuck you and your understanding cause you don't. will not shop at wal mart and will convince others not to as well.

donny herrin
3095310280
bloomington il
mickwd1@gmail.com

November 09, 2009 10:21 AM  
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November 14, 2009 5:01 AM  
Blogger VendorWhoNeedsHelp said...

I am a vendor that would like to know how to best to 1. Reach Market Managers to show them my products and 2. Sell a large number of products to Wal Mart? Can someone please help me?

August 29, 2011 11:53 AM  
Blogger Sylbia Garza said...

Well, I don't work at wallmart & seldom shop there but today I was glad to have been there. They gave my daughter the price posted on the shelf and not the one the computer showed. Apparently the system has not yet adjusted to new pricing. The cashier alerted the manager and they took care of it right away...gotta take the bad with the good.

January 02, 2012 12:44 PM  
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