Wal-Mart’s Growth

The Economist has an editorial and report on the world’s largest company (by revenue) and which “is defying its critics by continuing to grow vigorously:”

With $256 billion in sales in the year to January 31st, the firm is already the world’s biggest company by that measure. Its nearest retailing rival, a French supermarket chain called Carrefour, is less than half Wal-Mart’s size. In America, Wal-Mart manages nearly 3,000 giant discount stores and hypermarket supercentres. Abroad, it has ventured into Mexico, Britain, Japan, Canada, Germany and China, as well as making smaller investments elsewhere. Eight out of ten American households shop at Wal-Mart at least once a year. Worldwide, more than 100m customers visit Wal-Mart stores every week.

The mathematics of big numbers suggests that Wal-Mart’s growth must slow. Amazingly, the opposite appears to be happening. In America this year, Wal-Mart intends to open some 50 new discount stores and more than 220 new supercentres, some of which will be existing stores moving to new locations. Overseas, it plans another 140 or so new stores, including relocations. This adds up to some 50m square feet of new spaceeven more than many of its rivals operate in total.

As Wal-Mart’s boss, Lee Scott, likes to points out, Wal-Mart still represents only 8% of total retail sales in America. It is not unusual for dominant firms in mature industries to command market shares of 30% or more. So, in theory at least, Wal-Mart could still get an awfully lot bigger.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.