Wal-Mart operates 8,900 stores across three business segments of retail stores worldwide that offer a wide array of general merchandise including groceries, apparel, electronics, and small appliances. In addition, the company is the world's largest retailer and grocery chain by sales. Over 54% of the company's stores are located in the United States, with the majority of international stores located in Central and South America and China. The company focuses on offering the lowest prices across its business segments, which together earned $401.2 billion in revenue in 2009, a 7.2% increase from 2008. Wal-Mart's largest business segment is its namesake Wal-Mart stores, which accounted for 63.7% of the company's revenue in 2009. The company also earns revenue through its Sam's Club and international business segments which accounted for 11.7% and 24.6% of the company's 2009 net revenue each, respectively.
Business Segments
Wal-Mart Stores (63.7% of Revenue, 79.6% of Operating Income)
Wal-Mart's 4,258 domestic namesake stores accounted for $255.7 billion of the company's revenue during fiscal year 2009 which was a 6.8% increase from sales from 2008. This moderate growth coincides with Wal-Mart Stores' 3.2% increase in comparable store sales in 2009, which is slightly higher compared to 1.0% growth in 2008 and 1.9% growth in 2007. Wal-Mart blames the slow growth in comparable store sales to declines in consumer spending, particularly in apparel categories as well as cannibalization caused by new store expansions. For example, if Wal-Mart builds a store relatively close to an already existing store, the new store might take away customers from the old store (a reason could be convenience) thus hampering comparable store sales -- this is cannibalization. Wal-Mart stores earned 49% of their revenue from grocery sales in 2009, with sales of entertainment, electronics, and toys a distant second at 13% of Wal-Mart stores' revenue. In 2010, the company plans to add 150 to 165 Wal-Mart Stores, 125 to 140 of which will be Wal-Mart Supercenters.
Wal-Mart stores come in one of three traditional formats:
* Supercenters average about 187,000 square feet in size and carry general merchandise and include a supermarket. Wal-Mart operated 2,612 Supercenters at the end of 2009, an additional 165 locations from 2008 which were primarily from conversions of Wal-Mart Discount Stores.
* Discount Stores average approximately 108,000 square feet in size and carry a wide assortment of general merchandise, but a limited assortment of food products. Wal-Mart operated 891 Discount Stores at the end of 2009, 80 fewer than a year before as the company converted 78 Discount locations into Supercenters.
* Neighborhood Stores are usually about 42,000 square feet in size and carry a limited assortment of general merchandise, but have a full supermarket. Wal-Mart operated 153 Neighborhood format stores at the close of 2009, an increase of 21 locations from 2008.
Sam’s Club (11.7% of Revenue, 7.4% of Operating Income)
Sam’s Club is Wal-Mart’s membership-only warehouse club, the second largest in America after Costco by sales. Under the membership-only system, customers pay $40 and business owners pay $35 annually for memberships to shop at Sam's Club stores. Like its parent company, Sam's Club main strategy is price leadership. The core customer base of Sam’s Club is comprised of small businesses, including convenience stores, restaurants, offices, daycares and schools, and motels. Sam’s Club management remains focused on growing this foundation and improving its relationships with small business owners. To this end, the company expanded its offerings of office furniture and restaurant supplies in 2006. The company also introduced services geared towards small business, such as prescription drug plans and worker’s compensation claims billing.
The company operated 602 Sam’s Club locations nationwide, which generated $46.8 billion in total sales during fiscal year 2009. This represents a 5.6% increase in sales from 2008 which is mainly due to a 4.8% increase in comparable store sales and 11 newly opened Sam's Club locations during 2009. Sam's Club stores earn revenue through the sale of bulk brand name merchandise including grocery items, electronics, and furniture, but also sells private-label merchandise under the Member's Mark, Bakers & Chefs, and Sam's club brands. In 2010, Wal-Mart plans to open 15-20 new Sam's Club locations nationwide.
Wal-Mart International (24.6% of Revenue, 21.7% of Operating Income)
Wal-Mart operates international locations of its Wal-Mart and Sam's Club stores as well as other retail and supermarkets in Central and South America, Mexico, Canada, Japan, China, and the United Kingdom. Wal-Mart operated 3,121 international locations altogether, which generated $98.6 billion in revenue in 2009, a 9.1% increase from 2008 sales. As Wal-Mart begins to slow its square footage growth in the US, it is expected to turn to its international locations to continue real estate growth. As a result, the company plans to add 550 to 600 new international stores in 2010.
Wal-Mart has a large international base which extends from Japan to the UK to South America. Mexico and Canada, neighbors of the United States, account for a quarter of the company's international revenue.
Retail
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