Wal-Mart's Midlife Crisis

The Business Week article on ""Wal-Mart's Midlife Crisis" is an interesting read, pointing out the mega-retailers struggles with out of stock/out of style merchandise, sagging same store sales and an under performing stock - not to mention getting handily beat in same store growth by Target, Kroger and others.

Here is an excerpt:

If Wal-Mart seems short of answers at the moment, it might well be because there aren't any good ones. Increasingly, it appears that America's largest corporation has steered itself into a slow-growth cul de sac from which there is no escape. "There are a lot of issues here, but what they add up to is the end of the age of Wal-Mart," contends Richard Hastings, a senior analyst for the retail rating agency Bernard Sands. "The glory days are over."

Here is the always instructive last graph of the story:

The odds are that Scott, or his successor, will have to choose between continuing to disappoint Wall Street or milking the U.S. operation for profits better reinvested overseas. Only by hitting the business development equivalent of the lottery in countries like China, India, or Brazil can the world's largest retailer hope to restore the robust growth that once seemed like a birthright.


TK: As critics say Wal-Mart needs to restyle and reinvigorate existing stories, the writer points out that the expansion impulse is "deeply encoded in Wal-Mart's DNA." Wal-Mart CEO Lee Scott Jr. wants to open a new store at the pace of one a day for the next five years. In fact, he believes that Wal-Mart can add 4,000 Supercenters to the 2,000 that now exist. Currently,AC Nielsen reports Wal-Mart controls 20% of dry grocery, 29% of nonfood grocery, 17% of perishables and 45% of general merchandise sales. As Bruce Peterson said when he left Wal-Mart, there will never again be another chain that grows its food business like Wal-Mart did in the past 15 years. That truism may now apply to Wal-Mart as well. Speaking of Bruce, I spoke with him briefly today. Sounds like he may be giving a speech at CPMA.