The size and scale of Wal-Mart is nothing short of astounding when you consider the figures. Worldwide, the company employs 2.2 million people – larger than the total population of several countries. 1% of America’s population is employed by Wal-Mart.

And all the more remarkable, perhaps, is the fact that Wal-Mart continues to grow at an impressive rate – all in the midst of a general decline in big box retailing. The company recently reported a 1.4% growth in its same-store sales in the US. Wal-Mart’s digital sales are up by 63%, and the total revenue of the company is $117.5 billion.

While Wal-Mart continues to post positive results, other major retailers are clearly finding the current climate far more challenging. America’s second-largest department store, Macy’s, saw its share price drop by 17% after disappointing earnings were announced for the first quarter of 2017. Now Macy’s are projecting a 4.3% decline in sales for the year. Elsewhere across the retail sector, other majors have reported disappointing and worrying financial reports.

A good example can be seen in the first quarter results of major retailer, Kroger. Same-store sales fell by just 0.2% – better than most and, on the face of it, hardly disastrous. However, Kroger has just issued a full year earnings forecast that is significantly lower than previous forecasts.

Intensified price competition and pressure on wages points to tough times ahead. Kroger’s first quarter results came in the same week that Lidl opened its first stores in the US. The rise of such discounters is causing ever-greater pressure on prices. This, of course, comes at a time when e-commerce is putting further pressure on traditional bricks and mortar stores.

In response, Kroger is doing much to address these pressures. Aggressive expansion of its order-online/pick-up in store offering has occurred, along with significant investment in pricing and CRM. This will put pressure on short-term profit figures, but Kroger is obviously taking a proactive and strategic approach.

The lines between traditional bricks and mortar and e-commerce retail are becoming increasingly less divided. In 2016, Wal-Mart’s purchase of retailer Jet.com was a significant statement of intent, marking Wal-Mart’s interest in the online side of retail. Now, Amazon has followed suit with its acquisition of Whole Foods – a move that shows Amazon still see a future in bricks and mortar retail.

However, overall, the picture across the US retail sector is a grim one, and it is very much a picture of a major industry in serious decline. It is only really the performance of Wal-Mart (and the likes of Target and Home Depot) that is propping up the overall price performance. Such a decline could have a serious impact on the economy as retailers continue to close their stores and their staff lose their jobs. Retailers such as Kroger are showing that are reacting to current conditions effectively, but it is Wal-Mart that stands clearly ahead of the rest.

There are likely to be a whole host of contributory factors that have enabled Wal-Mart to continue to grow whilst virtually all around them continue to falter. However, in short, Wal-Mart’s success can be linked to two main reasons. Firstly, the company remains true to its core purpose. Secondly, is the fact that Wal-Mart continues to execute that purpose effectively.

 


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