Wal-Mart to develop new formats in the US

Slowing sales growth at existing Wal-Mart formats in the US, combined with new competition from British retailer Tesco, leads to speculation on Wal-Mart considering new US store formats and acquisitions in its domestic market. Wal-Mart admits that it is considering new formats, but it denied any M&A activity in the near future.

The reason for the speculation comes from the Career Opportunities pages on Wal-Mart’s website, which feature an ad for a senior director of ‘multi format strategies’ whose responsibilities would include assessing “(…) the strategic implications of any possible M&A (mergers and acquisitions) on our overall portfolios.”

Wal-Mart acknowledged to the media that it is hiring managers for a team to consider new formats for the U.S. market. “Two months ago we posted a number of middle-management level positions to evaluate our existing formats with the aim of achieving better customer relevance”, Wal-Mart’s spokesperson John Simley said to Associated Press. “But it would be wrong to speculate about how that might translate into future M&A activity.”

Wal-Mart has a much better track record when it comes to organic growth in the US. Also, the head of its US stores – Eduardo Castro-Wright – comes from Wal-Mart in Mexico, where the retailer has experience in running a variety of formats. Robert Buchanan, retail analyst at A.G. Edward & Sons, points this out to Associated Press and says that the timing is right for looking at new- smaller – formats because of the imminent opening of Tesco's first US stores in southern California, Arizona and Nevada. Tesco plans to open 30 “Fresh & Easy Neighborhood Markets” in the US, which are smaller than typical supermarkets.