You are here
COLUMBUS, Ohio -- Think Wal-Mart's growth is slowing down? Think again.
In five years, Bentonville, Ark.-based Wal-Mart Stores Inc. could be twice as big as it is today if it increases its market share in major categories such as food and apparel and newer areas such as gasoline, predicts Retail Forward Inc., a marketing research and management consulting firm specializing in retail intelligence and strategies.
In a recently released report entitled The Age of Wal-Mart, Retail Forward, a global management consulting and market research firm specializing in retail intelligence and strategies, expects that Wal-Mart will continue to grow rapidly and test the outer edges of its brand reach with consumers.
"The Age of Wal-Mart," authored by Dr. Ira Kalish, chief economist for Retail Forward, explores five likely growth strategies Wal-Mart may pursue, examining rationales, prospects and likely effects on competitors and suppliers.
"In order to grow, Wal-Mart will need to sell new categories of merchandise, operate in new geographic locations including those in the United States it has not yet tapped, appeal to new consumers, obtain greater share of wallet from its existing customers, and operate in new business sectors," Kalish said.
Retail Forward expects Wal-Mart to focus on five key growth strategies:
* Food. By 2006, there will be more than 2,000 Wal-Mart Supercenters in the United States and food sales at Wal-Mart Supercenters will account for approximately one-third of the national increase in spending on food, the report said.
* Foreign. "While further foreign acquisitions are expected, Wal-Mart will not be successful as a global retailer if its only advantage is price," Kalish said. "However, it is unlikely that Wal-Mart's overseas expansion will move swiftly enough to fuel the company's growth engine. The company's most probable courses of action will be to grow its existing businesses in the United States and moving into other businesses the same velocity it moved into food and fuel."
* Fashion and Family. To reach non-core consumers, Wal-Mart will have to increase its commitment to houseware items and apparel, Kalish said.
* Format. To reach more markets and more consumers, Wal-Mart will drive growth through multi-channel delivery of its core businesses. By opening smaller food stores, developing formats for urban shoppers, and potentially leveraging its strengths by developing drug, dollar and convenience stores, Wal-Mart could overcome the limitations created by its Supercenter focus.
* Fringe. Wal-Mart will seek to expand at the fringe of its core business by developing sales in new and unusual categories. Wal-Mart's aggressive rollout of fueling stations could be followed closely by the company selling used cars, financial services, home improvement and foodservice.
Wal-Mart's growth over the next five years will revolutionize global retail markets and render the retail industry and supplier industries far more consolidated than they are today. However, its size will test the limits of its organizational scale, Kalish concludes.
ABOVE: By 2006, there will be more than 2,000 Wal-Mart Supercenters in the United States, according to a new report, and food sales at Wal-Mart Supercenters will account for approximately one-third of the national increase in spending on food.