Wal-Mart plans to increase retail space by 9% in the coming fiscal year. Another year, another 46 million square feet of retail space. Wal-Mart’s ambitious new expansion plans are well timed, as the weakening economy drives consumers towards cheaper grocery outlets. The company must secure and expand its US revenue stream to ensure pockets deep enough for additional long-term overseas investments.
Wal-Mart’s upcoming expansion will be the biggest single year increase in retail space in the US discount retailer’s history. The company plans to open 50 new discount stores and 180-185 new hypermarket-format supercenters in the US. While 110-115 of the Supercenters will be expansions or relocations of existing stores, the remaining 70-75will be entirely new stores.
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It seems that Wal-Mart can do no wrong at the moment. The smaller Neighborhood Market format has also proved successful and the company will be creating another 15-20 over the coming year. Wholesale warehouse Sam’s Club, too, is in for another round of investment, gaining around 25 new stores topped by another 25 extensions or relocations of current outlets.
The timing is good. Despite waning consumer confidence and diminishing sales of luxury and other nonessential goods, Americans still need to eat. Consumers are buying the same amount of food and basic household products, but edging towards the most affordable products and retailers available. Wal-Mart is in a choice position to benefit from the slowing economy and this shift in consumer sentiment.
The direction is good, too. Wal-Mart will benefit greatly from securing its hold on the US market. One of the company’s major advantages in the global market is a strong revenue stream from its domestic base. Despite remaining intent on international expansion, Wal-Mart has yet to achieve the same success and impact abroad as it has enjoyed here in the US.
While there is no reason why Wal-Mart can’t become the international powerhouse that it aspires to be, “Rome wasn’t built in a day” and it will take time and above all money. While pursuing global domination, the company must ensure sure that its domestic revenues are strong enough to provide it with sufficient cashflow for continuing expansion ventures abroad.
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By GlobalData
