Digital drives Wal-Mart's global growth plan

08 June 2010

BENTONVILLE, Arkansas: Wal-Mart, the retail giant, is seeking to enhance its presence on mobile and the internet in a bid to increase its global customer base to one billion shoppers.

Speaking at the company's annual meeting for shareholders, Mike Duke, Wal-Mart's ceo, said it serves 200 million people a week at present, a figure it hopes will have multiplied by five 20 years from now.

According to Duke, the "next generation Wal-Mart" will tap in to the "common aspirations" which unite consumers irrespective of their geographical location.

"Whether it's a family sitting around a kitchen table in Guangdong or Guatemala or my home state of Georgia they all want a better life," he argued.

More broadly, Duke suggested a number of developments are currently in train that will require all major corporations to react.

"The world is changing fast in big, disruptive, complex ways," he said. "There will be well over a billion more people on this plant and hundreds of millions of people will rise into the middle class."

"Energy will definitely cost more. The demand for food will double. Our global economy will be even more connected."

In response, Wal-Mart is looking to expand its reach outside the US, and plans to create some 500,000 jobs worldwide in the next five years.

As part of this process, it will combine its trademark hypermarkets with more modestly-sized outlets to ensure it meets the needs of its clientele in different countries.

"We have to serve customers as a local store … We're going to be building larger stores but we will also be building a lot of smaller stores and we will have many more points of distribution of product," said Duke.

One element of Wal-Mart's strategy during the recession has been to exploit its scale to keep costs down among suppliers, a model it will continue to utilise.

"Being a truly global company will also mean learning how to share best practices around the world and learning how to leverage our global supply chain," said Duke.

"We have a tremendous opportunity in sourcing products to save our customers billions of dollars."

Another fundamental transition taking place in the retail category is the shift towards digital media, which enables consumers to take direct control of the shopping experience.

"Technology will drive all sorts of changes, especially in our industry," said Duke. "Being a technology leader will also be absolutely essential.

"We have to develop the right channels for customers to shop when they want, how they want and where they want."

Mobile is of particular importance, not least because it is the primary means of accessing the web in many emerging markets.

"Think about giving everyone with a mobile device the platform and the information to buy the exact product they want at the absolute best price anywhere in the world," said Duke.

E-commerce similarly "goes to the heart of the customer experience," and will only increase in prominence going forward.

"Building the best websites will be just as important as getting our store formats right in the future," said Duke.

While the collected weight of all of these trends will reshape areas of the retail landscape, Duke suggested price will continue to hold an elevated status.

"Retail will soon enter into an era of price transparency. What kind of retailer will win in a time of price transparency? The price leader will win," he said.

"We need to deliver on our ‘Everyday low price' business model everywhere. Wal-Mart must widen the price gap."

Data sourced from Warc; additional content by Warc staff