In less than 11 months, Wal-Mart will turn fifty.
No longer a company in its adolescent growth spurt, the giant retailer is showing its advancing age. In fiscal year 2011, Wal-Mart's U.S. store count grew by only 49 units, or 1.3%. In 2010 by only 52 stores, or 1.4%. For some companies that would seem like an enormous expansion -- but for Wal-Mart, it's definitely a powering down mode. Ten years ago, Wal-Mart 's U.S. stores division opened 220 new stores -- 4.5 times as many units as today.
In his August 16th earnings report, Wal-Mart U.S. President Bill Simon admitted that his company was feeling the recession. "We remain concerned about the economic pressure on our customers and the uncertain impact it can have on their shopping behavior." Some analysts have claimed that the recession was forcing shoppers into the waiting arms of Wal-Mart -- but the disappointing comp store sales from the past nine quarters tell a very different story.
If you go back to May of 2009, Wal-Mart's Chief Financial Officer proclaimed that his company was "in a great financial position." But even then Wal-Mart was forecasting flat same store sales.
But things got worse. By the following quarter, Wal-Mart admitted the sales environment was "more difficult than we expected." The third quarter "continued to be difficult," and by the end of fiscal 2010, the company told investors "U.S. sales will be more challenging" in the coming year. By February of 2011, Wal-Mart was resigned to the reality that "it will take some time to see positive comparable store sales."
Some of Wal-Mart's woes have been self-inflicted. For many years Wal-Mart has been over-building superstores, packing them in as close as three miles apart. The Ozark-based retailer was cannibalizing its own sales. 'Old' stores -- sometimes built as recently as the mid-1990s -- were being abandoned to build a bigger store down the street. This pattern is still happening today. In Seekonk, Massachusetts, for example, Wal-Mart is proposing a 156,000 s.f. superstore just half a mile from an existing Wal-Mart discount store of almost the same size. This "parking lot hopscotch" is wasteful, and an embarrassment for a company that prides itself on "sustainability."
No surprise then that Wal-Mart Realty currently has 145 empty buildings on its hands -- what they call "excess property," totaling a staggering 12.6 million square feet of dead stores. That's the equivalent of 217 empty football fields. Based on new store openings in 2011, if Wal-Mart retrofitted the 145 stores it has for sale or lease, it would have enough room to grow in the United States for the next three years -- without having to do any new building or engage in ugly site fights with angry neighbors.
The other remarkable fact about Wal-Mart as it nears fifty, is that its U.S. division is rapidly shrinking in importance to the overall economic vitality of the company. In 1999, Wal-Mart's International segment accounted for only 1.6% of the company's total net sales. Today, net sales from International stores represents 26% of the company's total sales.
In the past ten years, net sales at Wal-Mart U.S. have doubled -- adding $138 billion. But International sales have more than tripled, adding $77 billion. Stores outside of the U.S. have become the beacon for the future of Wal-Mart. While Wal-Mart U.S. sales grew only by .1% in 2011, International sales grew by 12.1%. During the same stores sales slump of the past two years in America, Wal-Mart International has been described by CEO Mike Duke as "an impressive growth engine."
If this International growth is trended forward another ten years, the dominant economic focus for Wal-Mart will have shifted from America to the giant emerging markets of Africa, China and India. The power center will incrementally shift from Bentonville to Beijing. Right before our eyes, Wal-Mart, the erstwhile "Made in America" icon, is year-by-year morphing into China-Mart.
As Wal-Mart's U.S. operation loses momentum, and lack-luster same store sales performance from its overbuilt domestic inventory continues to disappoint, shareholders will suffer from Wal-Mart fatigue, and look for more nimble, faster-growing competitors. At that point in the not too distant future, there will be plenty of people ready to dance on Wal-Mart's grave.
Al Norman is the author of 'The Case Against Wal-Mart.' He has been helping communities fight big box stores since 1993. His website is http://www.sprawl-busters.com>.
We are creating a future that is unsustainable in a quest to buy the most junk we don't need for the least amount of money we don't have.
QUESTION: Why are sales declining in the U.S.?
ANSWER: Because American jobs that paid a living wage were destroyed by people who can not see the connection between shopping at WalMart and where those jobs went.
When we spend money in local businesses that money stays in circulation. When the people who own them spend the money locally and source what they sell locally and pay their employees a living wage all that money stays in your community. It passes from hand to hand and benefits all it touches.
When those businesses are successful they can hire more people, pay them better, pay more local taxes and the entire community has more financial abundance. You are either creating a better standard of living for all or your standard of living is declining - and which you create is based on the choices you make.
Money spent at Walmart leaves the U.S. and part of it pays slave wages and ridiculously low prices to suppliers and the rest is hoarded by the wealthy few where it benefits no one.
A store that wants to be everything to everybody is nothing to nobody.
Competing with this, and doing so very effectively, are operations like Dollar General, which operates very small(!) stores in very targeted locations, and stocks each one with a sensible cross-section of goods. No optical shops, no hairdressers, no bank, no tires, no groceries.
When these companies thought that "economy of scale" was going to be King of the Hill, they looked only at the supply side. They never seriously thought about demand. They never thought that their business model, which was designed to knock every competitor out of business, would in so doing affect demand. They never thought it would affect supply, either. It did both.
If you can't be prosperous in America, you're doing something terribly wrong. And your competition isn't.
Semper fi
It looks like I can't share the link with you, so you'll have to find the page for /Kaufman-Texas on growmap.com to see them. There IS research that shows the effects on both the places where Walmart opens and also adjacent towns - all you have to do is look.
Semper fi
Its a natural for the US as is so car oriented anyway.
Less so w/ cities w/ mass transit. better to pay more on way home from station than pay fuel on a trip to the exburbs mall unless a big buy.
Semper fi
That seems to me to be prudent stewardship.
Semper fi
Semper fi
Use to be a kid out of high school or young adult worked in their store, learned the various positions and received promotions for good performance and dedication. I’ve seen people go from cashier to department manager, to assistant manager, to co-director, to store director and yes eventually district & regional managers. Heck there are VP’s that started out on the floor as an hourly. (And yes I know my order may not be exact).
Now, they look down their noses at anyone without a degree for the same dang positions that high school educated people performed for years and with great success. These people excelled because they saw a future and a company that offered hope and a career path.
This too is part of our employment problem today….positions that could and should be filled by smart, competent people at all levels are being selectively left out because they don’t fit in the mold the New Corporate WMT wants.
Funny how the “Skill Sets” of today don’t match the jobs…..that have never really changed!!
This is precisely why corporate America is un-phased by the plummet of consumer spending in the U.S. Having sucked most of the blood out of our economy, they are moving on to new victims. The outsourcing of attracting consumers is following the outsourcing of jobs. When the media was catching on to the collapse of the economy in 2008, I heard an interview with the CEO of Citibank who, when asked if he was planning to expand "retail operations" (banks) in the U.S. replied, "oh, no. We plan to focus on countries where people actually save their money." Sure sounds an awful like a man who forces sex on a woman, then abandones her because she is now damaged goods.
No worries though - manufacturing will eventually grow in this country when cheap labor is needed to make plastic gee-gaws for the burgeoning Chinese middle class.