Wal-Mart aims for global expansion

08 June 2009

BENTONVILLE, Arkansas: Wal-Mart, the US retail giant, plans to use its strong financial position to expand its operations around the world, with Russia, China and Latin America among the core markets set to receive increased levels of investment.

As one of the few companies to have benefited from the economic downturn, Wal-Mart's brand value rose by 19% in 2008 according to Millward Brown, and the discounter has also recently announced an intention to focus on "brand relevance".

It currently manages over 3,500 stores outside of its home market in America, and is active in 15 countries overall, having recently launched its first cash and carry outlets in India.

International revenues increased by over 9% during the last financial year to $98.6 billion (€70.6bn; £61.6bn), effectively contributing almost a quarter of the corporation's total sales.

The company has set the target of diverting 53% of its international capital to rapidly-developing markets like China, Brazil and Mexico, with the remaining 47% allocated to nations like Canada and Japan, where it is more established.

Wan Ling Martello, cfo of Wal-Mart International, argues it is now "very actively looking for opportunities," and is also "well positioned for growth."

Having taken a majority share in D&S, a Chilean supermarket chain, in February, the Arkansas-based firm is considering entering the market in Argentina.

It is also in talks with "people on the ground" in Russia, which has "huge potential for the future," according to Vicente Trius, ceo of Wal-Mart's Latin American arm.

Similarly, Wal-Mart argued it was "very encouraged" by its results in Japan, where consumers have become increasingly focused on price, meaning that it is looking to keep prices at least 5% lower than those of rival retailers.

Buying existing operations has proved a successful strategy thus far, with 80% of Wal-Mart's international revenues currently being derived from its previous acquisitions.

Among the other areas set to receive an increased focus are strengthening its own-brand offering, and heightening its presence on the web.

It has already begum to make inroads in this latter area in Brazil, where its portal attracted 10.5 million visitors in its first 11 months of operation.

Speaking about the US market, Wal-Mart's chief marketing officer, Stephen Quinn, also argued that "we were fortunate that this recession came along," as it "played to our positioning really well."

He suggested the economic downturn fed into the "kinds of things we were working on anyway", and that these are "are the same things we need to do to keep these so-called 'new' customers, and, I think, continue to build loyalty with our existing base."

Data sourced from Time/Reuters; additional content by WARC staff