The past 18 months have not been the best for the world’s largest retailer. Walmart has generated record sales and profit. The company has added square footage according to their goals. Walmart has again been named the largest employer in the world. So what are the problems?
Over the same timeframe, Executives have either left the company or been reassigned. Bill Simon has been promoted, Eduardo Castro-Wright was reassigned, and John Fleming and Dottie Mattison have left the company. On top of senior management moves, the company has faced five consecutive quarters of declining sales for the United States division.
Scrambling to find answers, Simon has expressed concern over Americans lackluster spending habits. The main culprit is the down economy. Simon also lays claim to merchandise reduction being the cause for customers who traded down during the “Great Recession”, not returning to Walmart.
On top of everything else, Walmart’s urban expansion plans might be hindered by the knowledge of Chicago’s Mayor Daley deciding not to run for reelection.
To combat the ill effects of the previous year and a half, Simon has aggressive plans for Walmart. He has refocused the company and implemented a new/old strategy of “Everyday Low Price”. He has instructed stores to add feature merchandise to the action alleys and partnered with suppliers to fill in the gaps of merchandise.
The other strategy falls on the shoulders of the Real Estate Division. Walmart has realized the supercenter concept is becoming oversaturated and growth opportunities are in the urban markets. Having successfully entered in the Chicago market, Walmart is eyeing San Francisco and New York.
The goal is to introduce those urban hubs to a smaller concept store. The average Walmart is a 195,000 square foot giant. The company is aiming at concepts around the 20,000 square foot range. As of now, the only store small in nature is its Neighborhood Market’s (39,000 square feet) and Marketside (15,000 square feet). With only four Marketside’s in the testing phase, Walmart has to be ahead of the curve in understanding if this concept is viable in major metropolitan cities.
The final hurdle, Walmart now has to face the fact that their rival Target has entered New York with plans to expand into urban cities as well. In the coming months, Walmart has meeting with analysts to cover the new format and the planned expansions. The times are changing, will Walmart meet the demands?