Brazil, China Build Wal-Mart Bottom Line

Retailing: With Boom Years in U.S. a Memory, Giant Eyes International Expansion as Source of Future Gains

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COLUMBUS, Ohio ( -- China is "the one place in the world where you could re-create Wal-Mart all over again."
In fiscal 2008, Wal-Mart will open more stores internationally than domestically.
In fiscal 2008, Wal-Mart will open more stores internationally than domestically.

That assertion wasn't made in 2007, as marketers worldwide slaver over the potential in the world's most populous country, but during a 2005 interview on PBS. It was a prescient statement by Joe Hatfield, then president-CEO of Wal-Mart Asia.

Developing countries such as Brazil, Russia, India and China are of increasing interest to all major marketers, but they're especially crucial to Wal-Mart Stores, whose 40 years of explosive growth in the U.S. appears to be slowing. The key to marketing the retailer in these countries, as the ranks of their own middle-class consumers grow, may be to dust off what worked best back home in the States during Wal-Mart's boom years.

Picking up the slack
Wal-Mart, at its annual meeting earlier this month, said that instead of opening the usual 265-270 U.S. stores this fiscal year, it will open 190-200. In the years to follow, that number will drop to 170 new Supercenters annually. Those stark projections for U.S. growth help bolster the importance of international markets, where Wal-Mart is likely to make its most noteworthy gains in the future.

"We operate stores in 13 countries outside the U.S., three-fourths of which are under brands other than Wal-Mart," a company spokesman said via e-mail. "What this means is that we work to tailor our stores and formats to the needs of our customers wherever they may be."

Brazil and China are among Wal-Mart's top international markets; Mr. Hatfield opened Wal-Mart's first Supercenter in China in 1996.

Regarding Russia, "Wal-Mart has been looking at the retail industry [there] for some time," the spokesman says. "As of now, we do not have any specific plans to enter the market."

More international ribbon-cutting
Wal-Mart will open more stores internationally than domestically in fiscal 2008. Wal-Mart declined to make executives available to discuss international strategy.

Still, Wal-Mart's marketing strategy for BRIC or other developing countries would seem to entail what made the discounter a behemoth on its home turf -- offering value, variety and low prices to middle-class consumers. In the U.S., Wal-Mart's future success doesn't involve "trying to emulate Target," JPMorgan analyst Charles Grom said in a report this month. "Wal-Mart will begin to drive a more cohesive marketing and merchandising message to its 'bread and butter' customer -- the low end." That advice could also apply to BRIC development.
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