Wal-Mart (NYSE: WMT) is at something of a crossroads. Its management must decide whether to continue to pursue expansion (especially overseas) or shift attention to its current stores, which are posing lackluster sales growth and appear to be in disarray on several levels.
The company has planned to spend $17 billion on capital investments this year, mostly to build new stores and expand existing ones. But is that really what Wal-Mart should be doing? Would it be better to focus on updating and shortening the lines at the 4,000 U.S. stores?
I think it would. Wal-Mart has plenty of time to expand overseas, and will be arriving well ahead of Target (NYSE: TGT) whether they start this year or two years from now. But the problems plaguing the current U.S. stores, if not addressed, could give Wal-Mart continued problems with sales growth and lead to more opportunities for Target, which many customers already seem to prefer.
Here's my proposal for Wal-Mart. Take a one-year break from building more stores, and focus on getting the current stores back on track. One lost year of expansion is not much in the long-run and, if it can help to bolster existing stores, it's a wise investment indeed.
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Reader Comments (Page 1 of 1)
5-28-2007 @ 10:57PM
Mike said...
I believe that most Wal-Mart followers and shareholders know that the company has been renovating stores and improving the in-store experience for shoppers for a few years now.
Michael Barbaro wrote in the NY Times in October of last year:
"Wal-Mart executives have pledged to remodel nearly half of the company's U.S. stores over the next 18 months" and
"Perhaps the most ambitious part of the plan is the proposed renovation of 1,800 stores over the next 18 months. The remodeling is intended to bring the chain's oldest outlets in line with newer ones, which have faux hardwood floors in the clothing department, lower display cases that make it easier to see merchandise..."
http://www.iht.com/articles/2006/02/22/business/walmart.php
According to Bloomburg back on Oct 28, 06 the company began the last 600 of those first round of renovations in February.
They have found tremendous success in both environmental sustainability and cost-savings in the environmental initiatives they pioneered at experimental stores in McKinney Texas and Wichita Kansas.
Wal-Mart is a big ship to turn these days. I doubt it can happen overnight. But it seems to me that they've already done many of the things you suggested... while at the same time growing international sales.
Have the cake...eat it too!
5-29-2007 @ 10:02AM
Mike said...
I work for Wal-Mart ( 10 yrs. now ) and my store just remodeled. It is beautiful. I am even more thrilled to go to the store each day I work. Charlotte, NC
5-29-2007 @ 10:57AM
Fran Pipkin said...
Yes our store is going through the dreaded remodel. Some of it looks good on the outside but shelves that are refurbished from other stores that still has stickers on them and was just painted over? How long do you think that will last. Replacing the floor tile with the same color floor tile? What a waste of money. The wood look tile does look better than that crappy ugly rug. But pretty tile and pretty racks still won't make the ugly Walmart clothes line look any better. Why move the store around. Walmart customers can't find anything in the store anyways all they are doing is confusing them even further by moving everything. I think that Walmart should spend more money manning the stores so that customers needs are met. Not making the store look prettier.
5-29-2007 @ 11:05AM
Jeff said...
walmart stores aren't really any different then they were 5 or 10 years ago. It's just the media focusing on how crappy the stores look, instead of how great the prices are. This all seems to be market sentiment- you make money off the sentimental fools.