Has Wal-Mart, the American retail giant which by itself brings in annual sales of 345 billion dollars which surpasses that of its four closest rivals combined (which includes Costco and Target), reached the peak of its profitability? Can this Goliath continue on the path it is currently on without serious repercussions? Recent evidence would say no. It currently seems as if Wal-Mart’s discount strategy is fighting for territory in a saturated market. Its recent sales have been increasing at the very low rate of .9% and its stock price has rested close to its 1999 price. And this isn’t the end of Wal-Mart’s troubles. The huge retailer’s low priced, everyday strategy does not seem to work globally as well as it does in the US. After ten years in Germany Wal-Mart has called it quits. It has seen similar lack-luster results in several other countries as well such as South Korea and Brazil. From such information, Wal-Mart does not and should not attract attention from investors; however, we should be aware of the adage that past performance does not accurately reflect future revenues.
Though it might seem as if the culture of Wal-Mart does not jam with the culture of many countries, it is hard to think that Wal-Mart will not learn from its mistakes in Germany and other countries and improve on them. Just like any company expanding into foreign territory, Wal-Mart first experienced turbulence trying to figure out local customs. Its notorious faux pas include demanding employees in Germany to greet customers with a smile (an act that came across as flirtatious to many Germans) and shelves that were too high to reach for the average South Korean. Wal-Mart is learning from its mistakes and taking steps to improve its expansion strategy overseas. There are few reasons why Wal-Mart cannot adapt and begin to see the same success in China or other countries that it sees in England where its subsidiary ASDA records sales of $26.8 billion dollars and accounts for 43% of Wal-Mart’s international revenue. Similar changes are being made on the home front, as stores are being remodeled, its employee relations image is improving, and its product offering is being upgraded. As soon as the dust is settled a stronger than ever Wal-Mart could very well emerge.
sources:
le figaro. "Wal-mart cherche un nouveau souffle" 30 Mars 2007.
MSN Money. "In praise of Wal-Mart."
MSN Money. "Is shopping at Wal-Mart immoral?"
Aucun commentaire:
Enregistrer un commentaire