Wal-Mart Poised to Reach Half-Trillion Mark by 2010: Retail Forward Analyst

NEW YORK -- If you think Wal-Mart's big now, just wait until 2010, when the retailing giant is expected to reach the half-trillion mark. Those were the cautionary words spoken here yesterday by Al Meyers, s.v.p., business development for Retail Forward, Inc., during the consultancy's conference, "Retailing 2010: Five Years Survived, Five Left to Thrive."

"Wal-Mart is stronger and better poised than ever to grow in the next five years. This is primarily because they're a learning organization," noted Meyers, adding that the company constantly keeps an eye on its competition and looks for ways to improve its business.

Supercenters will continue to drive Wal-Mart's U.S. business. By 2010 its supercenters will total about 3,131 if all goes according to Wal-Mart's plans, said Meyers. That's compared with the 1,931 stores projected by the end of 2005. In comparison, the number of conventional Wal-Mart units will continue to decline to about 668 by 2010.

"Wal-Mart will leave massive paths of destruction in its wake," Meyers warned. As an example, he cited the grocery business in his hometown market, Dallas. Five years ago Wal-Mart accounted for 5 percent of food sales. Today it owns 25 percent of the market, thanks to an aggressive rollout of supercenters.

The tremors created by Wal-Mart's growth will also be felt among the supplier community, noted Meyers. By 2010 the typical consumer products manufacturer could find 35 percent to 40 percent of its sales going through Wal-Mart.

In addition to its growth from new stores, Wal-Mart will likely consider alternative areas of growth, including new formats, more foreign expansion, and more nonretailing activities, such as financial, telecommunications, and travel services.

New formats that could work for Wal-Mart include a standalone dollar store, a convenience store, standalone drug store, a health care superstore, or a small-footprint general merchandise store similar to its 35,000-square-foot ASDA stores in the United Kingdom.

Post-2010, Wal-Mart's Neighborhood Market format could "really take off," said Meyers. He admitted that he had projected the supermarket format to have grown more by now.

For supermarkets to survive against Wal-Mart, they must be what Wal-Mart isn't, noted Meyers. "The hi/lo pricing game won't cut it anymore. Those who do hi/lo will help Wal-Mart grow faster," he said, referring to the company's policy of matching competitors' prices.

Other tips for competing against Wal-Mart, according to Meyers, include:

--Distinct positioning is critical

--There are still underpenetrated consumer segments to tap

--Sell solutions, not just products

--Invest in exclusivity

--Create a shopping experience

--Leverage customer-facing technology

More information on the Wal-Mart presentation will soon be available on VNU's Smart Supplier site at www.vnusmartsupplier.com.

--Jenny McTaggart
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