Retail giant Wal-Mart Stores, Inc. (NYSE:WMT) is looking to continue its growth story, which started 50 years ago. In the US, its small-format stores such as “Express” stores and “Neighborhood” stores are the future growth drivers. It is also going global to increase its presence, expanding its sites in Canada and focusing on emerging economies. The company’s e-commerce platform is another growth driver, and it has taken several initiatives to become a strong player with some acquisitions and tie-ups.Let’s take a look at these initiatives in detail to give us a better sense of the company from an investment perspective.
Moving toward smaller-format stores in the US market
Wal-Mart Stores, Inc. (NYSE:WMT) is looking for growth options in urban centers with small-format stores. These stores are called “Express” stores and are 10% smaller in size when compared to the standard supercenter store. They offer day-to-day items and groceries with around 15,000 items in each store. The first Express store opened in 2011, and with 76 new stores added in fiscal year 2012 and 100 more to come in fiscal year 2013 (including “Neighborhood” stores) the company is looking for aggressive growth in this format. These stores will lead to capital efficiency as these are expected to occupy 8% less space and cost 16% less. The company also stated that these stores are generating double-digit comp sales growth and will be crucial in attracting customers with busy schedules.
International expansion will drive sales growth
International expansion is another growth option for Wal-Mart Stores, Inc. (NYSE:WMT). Wal-Mart Canada continued to be a growth opportunity with its supercenters in the market. The expansion is going aggressively, opening 40 new supercenter sites and converting discount stores into supercenters. The company is looking for growth opportunities with “Everyday Low Prices” in emerging economies like Brazil, China and South Africa. Its acquisition of Massmart in Africa is also expected to drive sales growth in the long term.
E-commerce platform is a key to success in future
E-commerce has become a very important channel, even for big players like Wal-Mart Stores, Inc. (NYSE:WMT). After success in the US and UK markets, it is looking ahead to use social media and other technologies for creating a global platform. @Walmart labs, a digital unit designed to use social media and mobile commerce, has acquired Grabble for mobile technology. It acquired Kosmix for digital advertisement and with an investment in Yiahodian, a Chinese online store, it is moving ahead strongly in the e-commerce industry. Customers across the globe are moving towards online shopping, and the online market will continue to grow in the future.
Target Corporation (NYSE:TGT) and Costco Wholesale Corporation (NASDAQ:COST) are two other major discount stores in the US. Wal-Mart Stores, Inc. (NYSE:WMT) has been present in Canada for the last 19 years, but with the entry of Target into the country last year the company’s competition has increased. Target Corporation (NYSE:TGT) entered into partnership with Beaver Canoe, a member of the Roots Canada family, and this will be helpful for it to establish itself in this new market. Its price-matching policy with its Red card has been a good introduction as cardholders are shopping 2.5 times more often than non-cardholders. It is also strengthening its online and mobile channels with service initiatives of “Geeksquad” and “Beauty” consultants.