Wal-Mart Stores is an irresistible (or at least unavoidable) retail force that has yet to meet any immovable objects. Bigger than Europe's Carrefour, Metro AG, and Tesco combined, it's the world's #1 retailer with more than 2.1 million employees. In the US Wal-Mart operates about 700 discount stores, 2,900 Supercenters that sell groceries and general merchandise, 610 Sam's Club warehouses, and a growing number of smaller format stores. The company's faster growing international division (26% of sales) numbers more than 4,500 locations; Wal-Mart is the #1 retailer in Canada and Mexico and has operations in Asia (where it owns a 95% stake in Japanese retailer SEIYU), Africa, Europe, and South America.
While Wal-Mart's US retail operation enjoyed a boon during the deep recession as many shoppers traded down to its lower-priced stores, more recently it has struggled, logging eight consecutive quarters of negative same-store sales. The slump followed corporate missteps, including a decision to narrow its product assortment and de-clutter its stores, which alienated its core customers. In fiscal 2011 (ends January) overall sales increased by more than 3% vs. the previous year, with net income up by about 14% over the same period. However, all the sales growth came from the company's international and Sam's Club divisions, which grew by 12% and 3.5%, respectively. Wal-Mart US eked out a 0.1% change in sales in fiscal 2011 vs. fiscal 2010.
Among the many measures the retailer has taken to get its groove back at home (including a sunny new logo), was a restructuring of its US organization (including top executive changes), the formation of a new division to oversee global e-commerce (called Walmart Global eCommerce), and a new global sourcing partnership with Hong Kong-based Li & Fung. Under the terms of the deal, Li & Fung -- a provider of supply chain services -- will form a new company to manage the Wal-Mart account and will act as the company's buying agent. The reorganization in the US entails the formation of three geographic business units: Walmart West, Walmart South, and Walmart North, in an attempt to more efficiently manage its domestic stores. While the retail operation was carved into three geographic slices, the logistics, real estate, and store operations functions were consolidated under one leadership team.
With US suburbs saturated with Wal-Mart stores, the retailer has tried -- mostly unsuccessfully -- to gain access to urban markets. In 2011 Wal-Mart scored a significant breakthrough in its plan to build stores in US cities when it teamed up with Michelle Obama to launch its five-year plan to provide its customers with healthier, more affordable foods. Wal-Mart will reformulate its Great Value private label line of foods to reduce sodium, fats, and added sugars (and encourage its major suppliers to follow suit). Concurrently, with the first lady's support, it announced a commitment to building stores in underserved communities (aka "food deserts").
Looking abroad for growth, Wal-Mart in mid-2011 bought a 51% stake in South African retailer Massmart Holdings in a deal valued at about $2.4 billion. The purchase bought Wal-Mart entry into the fast-growing African market where Johannesburg-based Massmart runs 290 stores in about a dozen countries (with most locations in South Africa). The South African Competition Tribunal approved the takeover on the condition that Wal-Mart and Massmart not lay off any workers for two years and other stipulations protecting workers. The two companies have also pledged to spend about $14 million over the next three years to help farmers and other local suppliers do business with Wal-Mart. Prior to its purchase of the Massmart stake, Wal-Mart's ASDA unit acquired the Netto Foodstores chain of discount supermarkets in the UK from owner Dansk Supermarked Gruppen. In late 2010 the deal was approved by competition authorities, who ordered ASDA to dispose of 47 of Netto's 194 locations. Still, the addition of Netto's stores will help ASDA narrow the gap with Tesco, the UK's leading retailer. Also, Wal-Mart recently consolidated its two Latin American businesses: Wal-Mart de México (aka Walmex) and Wal-Mart Centroamérica. Wal-Mart holds a majority stake in Walmex, which with the addition of more than 500 supermarkets in Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua now operates about 2,000 locations throughout the region. In Chile, Wal-Mart acquired that nation's largest grocery chain Distribución y Servicio in 2009. Looking to expand in Brazil, where it already operates some 485 stores, Wal-Mart is reported to be seeking to acquire the Brazilian arm of its French rival Carrefour. One of the world's fast-growing emerging markets, Brazil is key to Wal-Mart's expansion in the region. Buying Carrefour's Brazilian unit would add more than 500 stores, including hypermarkets, supermarkets, and convenience stores.
Through joint ventures in China the company operates about 335 stores. To support its growth there, Wal-Mart is building its Asian headquarters in the coastal city of Shenzhen, the site of its first supercenter and Sam's Club in China. And in a move that demonstrates how important the vast Chinese market is to the world's largest retailer, staunchly anti-union Wal-Mart has announced that it will work with officials there to establish labor unions in all Wal-Mart stores in China. Wal-Mart is poised to enter India's huge but fragmented market via a joint venture with the Bharti Enterprises Ltd. (Regulations in India prohibit retailers like Wal-Mart from selling directly to consumers, but allow them to engage in wholesale cash-and-carry and back-end supply chain management operations in the country.) Wal-Mart's first wholesale outlet in India -- a BestPrice Modern Wholesale store --opened in May 2009 and the company has added about five more since. Another 10 to 15 locations are expected to open by 2017.
Wal-Mart's Japanese subsidiary, THE SEIYU, operates more than 400 supermarkets and supercenters. In early 2009, Wal-Mart formed a new holding company in Japan, of which SEIYU is now a subsidiary, to acquire local retailers. Also, Wal-Mart has lured an executive away from German discount retailer REWE, to help it explore possible expansion into Russia and other emerging markets. To that end, the company is seeking acquisitions in Russia, and elsewhere around the globe.
The retailer's online incarnation, Walmart.com (launched in 2000), offers more than 1,000,000 products, as well as music and video downloads and digital photo services. The e-tailer is expanding by offering merchandise from other retailers at its new virtual mall called Walmart Marketplace. Launched in August 2009, Walmart Marketplace offers apparel, baby, home, and sporting goods items from other sellers in return for a share of the revenue. In Demonstrating its commitment to e-commerce and social media, Wal-Mart acquired Kosmix, a social media technology provider, in 2011. Kosmix developed a platform that enables users to filter and organize content into social networks. As part of the transaction, Kosmix became @WalmartLabs, and founders Venky Harinarayan and Anand Rajaraman stayed on to lead the business. Also, in 2012 Walmart Global eCommerce agreed to increase its investment in Yihaodian, one of China's leading business-to-consumer e-commerce companies, to 51%.
Following the death of Helen Robson Walton in 2007, the Walton family announced that much of the Wal-Mart stock held by Mrs. Walton through a family partnership will be donated to charity over several years. As a result, the Walton family's grip on the world's largest retailer will slip from about 48% (as of march 2011) to about 33%, following the disposition of Mrs. Walton's stake.