1planetretail.net

WALMART INSIGHT DECKGrowth markets and strategic initiatives

December 2013 STEPHEN SPRINGHAMSenior Retail Analyst

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1. Planet Retail View

2. Overview

3. Major Strategic Initiatives

4. Key Markets

5. Further Reading

ContentsContents

All data correct at time of publishing.

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Corporate Structure - Walmart International

The International division is structured around three geographies (EMEA, LATAM, Asia).

2. Overview2. Overview

David CheesewrightPresident & CEO,Walmart EMEA

EMEA

Doug McMillonPresident & CEO

Walmart International

Enriqué OstaléPresident & CEO,

Walmart Latin America

Latin AmericaScott PricePresident & CEO,

Walmart Asia

Asia

Shelly BroaderPresident & CEO,

Canada

Canada

Grant PattisonPresident & CEO,

South Africa (Massmart)

Sub-Saharan Africa

Andy ClarkePresident & CEO,

UK (Asda)

UK

Franchised George stores.Middle East

Scot RankPresident & CEO,

Walmart de México & Central America

Mexico

Marcos SamahaPresident & CEO,

Brazil

Brazil

Horacio BarbeitoPresident & CEO,

Argentina

Argentina

ChileGian Carlo Nucci

President & CEO,Chile (D&S)

Greg ForanPresident & CEO,

China

China

Steve DacusPresident & CEO,

Japan (Seiyu)

Japan

Ramnik NarseyPresident & CEO,

India (interim)

India

A new head of International will be appointed to take office from 1 February 2014, when McMillon steps up to become President & CEO of Walmart.

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US UK Mexico Canada Brazil Japan China South Africa Chile Argentina0

50

100

150

200

250

300

350

400

346.48

39.2829.38 26.19

13.29 12.81 11.25 7.90 7.06 3.15

Walmart: Total Banner Sales by Market, 2012 (USD bn)

Bann

er S

ales

(USD

bn)

The long tail: the US is nearly nine times larger than Walmart’s second biggest market, the UK. Some 15 markets have sales of less than USD1 billion.

4. Key Markets4. Key Markets

Chart features the Top 10 Walmart countries by size and excludes markets with sales less than USD3 billion. Source: Planet Retail

“[Internationally] The majority of revenue and profit comes from our operations in the UK, Mexico and Canada.”

CHARLES HOLLEYWalmart EVP, Chief Financial Officer

(March 2013)

There is a distinct ‘Top Tier’ among the International businesses of the UK, Mexico and Canada...

…Brazil, Japan and China form a notional ‘Second Tier’ (sales >USD10 billion)….

…South Africa, Chile and Argentina form a notional ‘Third Tier’ (sales >USD3 billion). Only a further three markets (Costa Rica, Puerto Rico, Guatemala) achieve sales of USD1 billion or more.

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Walmart: Canada SWOT

4. Key Markets4. Key Markets

STRENGTHS

Canada is one of Walmart’s longest-established international markets.

Supercentres have had a significant impact on the Canadian grocery market. Already the second-largest retailer overall, Walmart will challenge Loblaw for market leadership.

Geographic proximity to US has enabled almost seamless deployment of EDLP and supply chain practices.

Global scale and lean cost structure enables Walmart to better absorb inflationary pressures compared to its domestic rivals.

OPPORTUNITIES

Further conversions/upgrades of discount stores to Supercenters (around 170 discount stores remained trading at the 2013 fiscal year-end).

Further organic expansion of Supercenters in under-represented region (e.g. the Maritime Provinces in the east).

Introduction of smaller-box formats - Neighborhood Market or Express - to mirror its strategy in the US.

Possible acquisitions of smaller rivals.

WEAKNESSES

Walmart took longer than expected to become a success.

Failure of Sam's Club in Canada has left something of a bitter taste.

Grocery merchandising, although improving, still lags behind Sobeys and Loblaw.

Heavily exposed to GM, many sub-sectors of which are suffering weak consumer demand.

Absence of a smaller format gives competitors such as Sobeys an advantage in targeting the convenience/urban segment.

Poor reputation in union/labour relations.

THREATS

Target entered the market early in 2013 and is expanding aggressively.

Although Target has struggled to achieve its performance targets since entering Canada, it is nevertheless intensifying competition in the non-food sector.

The grocery market is subject to ongoing consolidation (e.g. Sobeys’ takeover of Safeway’s Canadian stores) and competitors are therefore becoming larger.

Walmart could over-expand in its efforts to head off Target’s incursion into Canada.

Unionisation.