Globalization Uses Existing Structures

Wal-Mart primarily has gone into existing buildings in England and Germany.

One reason is that those are two of the most land-restrictive nations in Europe. Another could be that such an invasion isn’t as noticeable if Wal-Mart doesn’t alter the landscape. If locals slowly become accustomed to Wal-Mart, they’re less likely to object when Wal-Mart decides to build a new store.

When asked about its European expansion, a Wal-Mart spokesperson said the only person who could comment about that was too busy to call the Business Journal back.

Al Norman, author of “Slam Dunking Wal-Mart: How You Can Stop Superstore Sprawl in Your Hometown,” said Wal-Mart went into Canada with a similar approach, initially occupying “dead Woolworth’s stores.” After a jittery start, Wal-Mart has since taken over the retail market north of the border.

Wal-Mart opened its first international store in Mexico in 1991. The company entered Germany in December 1997 with its purchase of the 21-store Wertkauf hypermarket chain at an estimated cost of $660 million-$1 billion. The move sent retailers scrambling for property in Germany and raised the value of the Interspar chain that Wal-Mart later purchased.

Wal-Mart is currently building its first store in Germany from the ground up. The $17.4 million store in Pattensen, near Hanover, is scheduled to open next year.

Wal-Mart is the low-price leader in the United States, but logistics has made it difficult for the company to offer lower prices in Germany than some local companies, such as Aldi.

In 1999, Wal-Mart spent $10.8 billion to purchase the 229-store Asda Group Plc., Great Britain’s third-largest supermarket chain.

Wal-Mart International sales were up 41.2 percent (from $22.7 billion to $32.1 billion) last year over the previous fiscal year. That’s out of a total of $191.3 billion in worldwide sales for the year ended Jan. 31, 2001.

In 1999, Wal-Mart saw international sales jump 85.6 percent to $22.7 billion, but much of that increase can be attributed to seven months of sales from the newly acquired Asda stores.

International sales accounted for 17 percent of Wal-Mart sales in 2000, compared with 14 percent in 1999 and 9 percent in 1998.

1999 was the first year to reflect sales from the new stores in Germany. 2000 was the first full year to reflect sales from the Asda stores in Great Britain.

Operating income for the international division increased in 2000 by 36.1 percent to $1.1 billion. Operating income for the division was up 48.8 percent in 1999 to $817 million.

In 2000, John Menzger, president and CEO of Wal-Mart International, said he hoped a third of the company’s earnings growth would come from profits in the international division by 2005. In 1998, 20-25 percent of the earnings growth came from international operations.