Wal-Mart plans to expand overseas
Wal-Mart Stores, known for its giant stores and global omnipresence, is shifting gears to think small: focusing on small and medium-size stores that it plans to open in small towns and urban markets as it seeks to jump-start sluggish U.S. sales.
The world's largest retailer is bringing back "Action Alley" — wide aisles filled with palettes of discounted merchandise — and offering same-day pickup for online purchases in some areas in an effort to jump start sluggish U.S. sales.
CEO Mike Duke predicted a rise in fourth-quarter revenue in its U.S. stores open at least one year at an investor meeting in Rogers, Arkansas, on Wednesday. That figure has fallen for five straight quarters.
Company executives also outlined plans to expand internationally and draw more customers to Sam's Club warehouse stores.
Wal-Mart Stores, despite $405 billion in annual sales, is struggling to hold on to market share as stubbornly high unemployment and tight credit continue to squeeze its main U.S. customers — Americans with annual household income under $70,000.
To refocus on those middle- and lower-income consumers, who make up 68 percent of its shoppers, U.S. CEO Bill Simon said Wednesday the chain will more aggressively display discounts on some items featured in its main aisles rather than discounting as much throughout the store.
It also is restocking some items it dropped and resuming displaying canned vegetables by type rather than brand. And it is focusing on classic clothing styles, offering more plus sizes and more basics like socks and underwear.
"In this environment we should be thriving and we're gearing up to do that," Simon said.
Wal-Mart is also shifting money it had been spending on remodeling existing stores toward opening smaller new stores. It plans to open 185 to 205 new stores in the next fiscal year, compared with 153 stores in the current year, but with the same increase in square footage, 11 million, and similar capital expenditure, $7.5 billion to $8 billion.
As the crucial holiday season approaches, Wal-Mart is also experimenting with some novel options for shoppers picking up things they buy online.
Within months in 20 markets, or about 750 stores, orders will be available for pickup the same day. And a program providing free shipping to FedEx Office stores in Los Angeles and Boston will expand to New York, Washington and Chicago.
At Sam's Club, Wal-Mart is expanding electronics and jewelry offerings, including selling Apple Inc.'s iPhone and iPad in some clubs by the holiday.
Also in the works: a pilot online grocery program and a beta test on letting customers check out via mobile phones.
Internationally, the company plans to expand with "strategic acquisitions in large, high growth markets," said international chief Doug McMillon.
He said the company needs to grow in Japan and would like to grow in Argentina, Chile and Brazil.