Published on: October 29, 2008The Wall Street Journal this morning reports that while Walmart said earlier this week that it plans to cut back on US store openings as a response to the current economic crisis, it will continue its international expansion plans.
According to the story, “Over the next five years, Wal-Mart said it will devote 53% of its international spending to emerging markets such as Brazil and India, up from 33% in the previous five years, with the remainder going to mature markets such as Canada and the U.K. Wal-Mart also said it remains committed to succeeding in Japan, a plan that was criticized by analysts a year ago. The retailer said it is on pace to post its first operating profit in Japan this fiscal year.”
MSNBC reports that “Wal-Mart has found itself in the right spot as it pushes the right mix of merchandise and marketing to complement its renewed focus on price just as the economic slowdown worsened. The company has also focused on inventory management and has improved capital efficiencies.”
And, according to the MSNBC story, “Wal-Mart officials noted that their company — considered a barometer of the pulse of the American consumer — continues to see firsthand how the mounting financial crisis, including tightening credit, is putting more strain on its shoppers. Castro-Wright noted that credit card payments as a percentage of total payments is down 7.4 percent so far in fiscal 2009. That means that customers are maxing out on their credit cards, says Castro-Wright. That’s a big reversal from the robust double-digit growth rates in credit cards over the past three year.
“Wal-Mart noted that it’s focusing on expanding its store-label food business as shoppers look to save more money on their food bill amid soaring inflation. As part of the strategy, the company is reformulating 1,200 food items, including cold cereal, cookies and yogurt, from the 5,000 food items it tested to improve the taste.”
CEO Lee Scott told an analysts conference in Bentonville, Arkansas, that "this company will emerge from this time a tougher competitor … It is clear in this environment that the customer is more cautious and more thoughtful about what they buy and they’re more thoughtful about when they buy it … We see this as an opportunity to widen our moat. ... This is Wal-Mart time.”
- KC's View:
- There are few companies out there better positioned to navigate the perfect economic storm that we’re all coping with right now. It has both established value and values…and, as reported just a few days ago, has the fifth most powerful brand in the country.
Doesn’t mean that there won’t be continued challenges, especially in places like Japan. (I’m a little less confident about its future there than the folks in Bentonville are.) Doesn’t mean that it does everything right. (While I admire steadfastness and consistency, I’m not sure that there aren’t better ways to deal with labor issues than just shutting down stores where unionization becomes an issue…though I concede that I have no idea what those better ways are.)
As has been noted here before, just watch Walmart’s new TV ads. See the simplicity and consistency of message. And then watch how the company delivers on its promises. Daily.