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.

Wal-Mart managers even agreed the online division wasn’t stellar.

“We didn’t have the tools to be able to really compete online the way that other online retailers have been doing,” Castro-Wright, Wal-Mart Stores Inc. vice chairman, said in October.

But that is changing.

In June, Wal-Mart shareholders elected Marissa Mayer, vice president of local and maps for Google Inc. of Mountain View, Calif., to sit on its board. Her nomination fits in with Wal-Mart’s plans to become more aggressive with online sales. In 2011, Wal-Mart bought the social and mobile media company Kosmix of Mountain View, Calif., for $300 million.

Wal-Mart even created a new unit in May 2011, WalmartLabs of San Bruno, Calif., to handle social media and e-commerce initiatives for the retailer. It opened an office in India in November 2011 and planned to hire 100 developers.

And its social media strategy perked up. In October, Wal-Mart launched an aggressive social media initiative by unveiling 3,500 Facebook pages, one for almost every U.S. store.

The move generated praise from social media experts. Customers who “like” the Facebook page of their local store then receive specially targeted offers. A Facebook strategy, if successful, could add 5 percent in sales to a company, said Michael Bolton, the chief technology officer for Keyora Inc., an e-commerce software company in Oakville, Ontario.

And the timing couldn’t be better for Wal-Mart because online shopping is booming. In 2010, online sales in the U.S. reached $177 billion and accounted for 6 percent of total retail sales, according to Forrester Research Inc., a research firm in Cambridge, Mass. In 2011, online sales in the U.S. hit $202 billion. By 2016, Forrester forecasts online sales will have grown to $327 billion and represent 9 percent of total retail sales.

“Basically, Wal-Mart is moving from just being a company that operates stores and a logistics company to even more of a customer-driven company that responds to how they want to shop,” Doug McMillon said in an April 12 meeting for analysts. “What the customers want, we will deliver. And we’re going to find a way to be a low-cost provider in each of those instances so we can continue to grow our business.”



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