Wal-Mart's Future: World's Largest Retailer Marches Toward $500 Billion in Annual Sales

by Mark Friedman  on Monday, Jul. 2, 2012 12:00 am  

While domestic sales have flatted out, China is a growth market for Wal-Mart, which already employs more than 100,000 in 370 Chinese stores.

One of the markets for growth will be China. Between 2010 and 2020, China is projected to add 189 million middle-income households.

Between January 2010 and January 2012, Wal-Mart opened more than 90 stores in China, giving it 370 at the end of April. It planned to hire 160,000 Chinese workers in the next couple of years.

“The growth is explosive, and what’s happening in China is that, much like in the United States many, many years ago, Mr. Sam brought products to rural America that customers in those markets did not have access to and brought them at prices they could afford,” Eduardo Castro-Wright, Wal-Mart Store’s vice chairman, said in the October meeting.

In addition to its low-price strategy, Wal-Mart plans to grow through acquisitions and opening stores.

Wal-Mart said in an October news release that it plans to spend between $4.5 billion and $5 billion this fiscal year, an increase of 11.8 percent over the previous year, to acquire companies for its international division.

Not including the acquisitions, Wal-Mart plans to add between 26 million SF and 28 million SF to its international division.

At the end of April, Wal-Mart had 1.04 billion SF; of that, 330.8 million SF were in its international division.

Wal-Mart also plans to grow through online sales in other countries. “We have a great opportunity to take [online sales] … and build business faster than those markets would’ve been able to build on their own,” McMillon said in October.

Wal-Mart also will attempt to improve its online sales in the United States.

Online Sales

For more than a decade, Wal-Mart online sales have sputtered. Although Wal-Mart doesn’t reveal its online sales in U.S. Securities & Exchange Commission filings, Internet Retailer, an online retail industry website, estimated Walmart.com sales at $4.9 million in 2011, up 20 percent from a year earlier.

Amazon.com Inc. is the leader in online sales with $48.1 billion in 2011. And Amazon’s profit margin is vastly greater: Amazon earned two-thirds as much as Wal-Mart in their most recent fiscal years on barely one-tenth of the total revenue.

 

 

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