Wal-Mart’s strong international growth a sign of things to come
Posted by: in Companies Competitive StrategyFiled under: Products and services, Competitive strategy, Wal-Mart (WMT)
When Wal-Mart Stores, Inc. (NYSE: WMT) reported it had reached its first $100 billion quarter in the company’s history Tuesday, it was probably a time to celebrate at its Bentonville headquarters. But even a $100 billion quarter doesn’t make for good feelings sometimes, as much of that growth came from the company’s international division. Yes, that’s the one I’ve lamented over frequently in the past. This time, it was shining brightly.
Wal-Mart’s Q4 sales came in showing a 19% international growth rate that pushed those sales to $27 billion for the just finished quarter. At the same time, the retailer’s U.S. sales rose only 5%. Is international becoming the company’s growth engine care about it has frequently wanted to happen? This quarter proved it — yes, it has. Wal-Mart’s Asda grocery chain in the UK even showed same-store sales growth in the “mid-single digits” for all of 2007. Wal-Mart indicated that its Asda operation was the fastest growing food retailer in Europe, ahead of competitors Tesco and Sainsbury.
Is “Everyday Low Prices” winning over customer groups outside the U.S. now? That was the reason given behind Asda’s growth, as customers seeking out the lowest prices more frequently shopped at Asda. Is this the beginning of the “Wal-Martization” of all its global markets? Commodity and energy prices aren’t doing anything to help, but it’s too early to make that call. Give four quarters of outstanding international growth, and finally, Wal-Mart investors might have something to cheer about.
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