Wal-Mart's manifest destiny
Already established in the UK and Germany, Wal-Mart is looking at expanding its reach to the rest of Europe. Wal-Mart's CEO recently announced in Brussels that the company plans to start opening its British Asda supermarkets in France, and is planning to make acquisitions there and elsewhere on the continent. While avoiding much in the way of specifics, CEO Lee Scott was quoted as saying he could not think "of any country in Europe that we wouldn't want to be in over the long course of time."
A Reuters report quotes one commentator:
"When it comes to Wal-Mart's growth strategy, they are remarkably patient and diligent and persistent," said Michael Collins, a partner with consulting firm Bain & Co. "They are willing to take their lumps along the way to continue the march for global expansion."
The analysis is that although Wal-Mart is not yet at a saturation point in the US, it will reach that condition in a relatively short time. International expansion is the key to sustaining Wal-Mart's seemingly insatiable growth. Wal-Mart is finding some serious opposition recently, in California and Vermont.
French hypermarchés Carrefour and Casino have relatively low share prices and might be possible targets. There would be strong resistance, but Wal-Mart has lots of cash on hand (over $5 billion earmarked for purchases) and has shown its determination before and it can be patient, as it has been with its still money-losing German offshoot.
In a related move, a Forbes story ("Outmuscling Wal-Mart", 5/10/2004) looks at Wal-Mart's presence in Brazil and the defense being put up by Brazil's number #1 retailer, Companhia Brasileira de Distribução (CBD). That company runs supermarkets, discount stores, and other retailers. Number #2 is Carrefour, while Wal-Mart has moved up to #3 by buying a chain of 118 stores recently.
CBD has grown fast as well, paying out half a billion dollars to buy up 20 smaller chains and reaching $3.7 billion in sales at its 497 stores. CBD is also studying how Wal-Mart does business, and is adapting its practices. All retailers are now converging on the Wal-Mart model, so even if that corporation does not manage to succeed in all its overseas ventures, it is certainly remaking the markets in other countries y its own example.
