Wal-Mart: Twice as big by 2007?
Sep 1, 2002 12:00 PM, Ben Johnson, Editor-in-Chief
According to a recent report from consulting firm Retail Forward Inc., by 2007 Wal-Mart could be twice as big as it is today. How will it accomplish the feat? By increasing its market share in categories such as food and apparel and foraging into new areas such as gasoline, says the report, “The Age of Wal-Mart.”
Author Ira Kalish, chief economist at Retail Forward, notes that Wal-Mart likely will employ a five-pronged strategy to grow so vigorously:
Food — Much of Wal-Mart's recent growth has been tied to the food sector, where it is now the market leader in food sales. The report predicts there will be 2,000 supercenters in the United States, and food sales will account for about one-third of the national increase in food spending.
Foreign — Kalish doesn't expect this area to be a real growth driver, but the company will continue to make its presence felt overseas. Instead of relying on price as a growth driver, the company must focus on service.
Fashion & family — Wal-Mart must ramp up these merchandising segments to get more out of existing stores and attract more affluent consumers. “Wal-Mart will need to focus on expanding its range of merchandise, improving the quality of its non-food assortment and developing strong private and exclusive labels,” says Kalish.
Format — Consumers can expect to see different types of Wal-Marts in the future, including smaller food stores, urban formats and even drug, dollar and convenience stores carrying the famous brand's name. Call it multi-channel delivery of its core businesses.
Fringe — “Wal-Mart will seek to test the outer boundaries of what consumers are willing to allow Wal-Mart to be,” says Kalish. New gas stations may be followed by selling used cars, financing services, home improvement and food service.
“The challenge for Wal-Mart will be to sustain growth without straying from its core strengths, and without spreading its wings too thinly,” says Kalish.
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