Retailing behemoth Wal-Mart Stores Inc. (NYSE: WMT) won't be aggressively rolling in health clinics into its retail stores in 2009, as it has scaled back its plan to 31 locations with clinics from the original estimate of about 400 stores in 2009. Wal-Mart even had as many as 77 locations with in-store clinics in 2008, so it has drastically rolled back its plans here. What happened?
The recession happened, that's what. The gap from the original 77 clinics to the present 33 occurred when venture capital-funded clinics had their funds dry up amid the credit crunch of late 2008 and they haven't returned yet. Although Wal-Mart sees health clinics as a still-untapped opportunity in its stores, they won't be coming to every possible Wal-Mart location any time soon. Indeed, former CEO Lee Scott said that it would take five to seven years to get 2,000 clinics inside Wal-Mart locations. Wonder where that estimate is now?
Hospital and health system-backed clinics didn't have the problems that privately-funded clinics had, and many of those clinics stayed open. Wal-Mart has indicated that it is in talks with "dozens" of other hospitals and health systems to open clinics in its stores, bypassing the capital funds that go in and out of favor with economic trends and going straight to the source who also can plainly see the opportunity, recession or not.
Though drug store-only health clinics already exist within the competition, Wal-Mart's stance that it's increasingly competing with standalone pharmacies -- and that it can compete head to head with them -- will probably make in-store clinics viable in the next decade for the retailer. Wal-Mart is already the "everything under one roof" retailer for tens of millions of Americans. Health care is only a natural addition that will be successful even if it takes quite a bit of time. Do your WMT shares agree?
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Reader Comments (Page 1 of 1)
6-30-2009 @ 9:44AM
roudy11z said...
Hey Brian,
I will make the first comment by saying that I totally agree with you about Wal-Mart.Cut it any way you like they are on top of their game. As a shareholder since 1981 I have never doubted their ability to recognize areas of customer need. I do not say they are perfect but overall they stand far above some of the others.+++RoudMan