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Wal-Mart Reveals 2004 Expansion Plans

Developers, start your engines. The leading market-share-gaining retailer is gearing up for even more growth in 2004. Wal-Mart Stores Inc. will add 50 million net new square feet next year, an 8 percent growth of its total store portfolio. The new space planned will include 50-55 discount stores, 220-230 supercenters (including 140 conversions of existing discount stores to the supercenter format), 25-30 neighborhood market grocery stores, 35-40 Sam's Clubs and 130-140 international units (including 30 relocations and expansions.) California is the latest stomping ground for the company's runaway supercenter concept, as several of the concepts will open there in 2004. Sam's Club is also opening its four Canadian stores in Toronto this month.

Wal-Mart's annual analyst meeting kicked off yesterday and continues today, with top officers from the Bentonville, Ark.-based behemoth presenting goals for 2004 and results from 2003. Among the announcements, Wal-Mart revealed cannibalization has increased 132 basis points from just 16 basis points in 1999. But that's not stopping the company from operating and opening new supercenters within three to four miles of one another in dense, high-growth markets. According to Bear Stearns analyst Dana Telsey, "management believes that cannibalization improves the customer experience."

The Sam's Club division is benefiting from a renewed focus on small business customers that began last fall, including the re-instatement of early morning hours designated specifically for small business customers, according to executives. One example of Sam's attempts to woo small business customers is its inclusion of bowling-alley products in its Las Vegas stores, since Vegas has a proliferation of bowling alleys, Telsey reports. Sam's August comp-store sales are up 8.2 percent versus only 1.1 percent in 2002, and September sales are trending toward the high single-digit range as opposed to 1.6 percent last year. The top small business segments are convenience stores and offices, while restaurant and food service customers are the fastest growing segments.

As far as 2003 holiday sales go, Wal-Mart is cautiously optimistic. Executives said sales should be better than last year, but not a lot better and they don't see any evidence for a consumer spending boom ahead.

TAGS: News Retail
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