NEW YORK — Wal-Mart Stores expects to boost its U.S. growth in 15 “opportunity markets,” Eduardo Castro-Wright, president and chief executive officer of the company's Wal-Mart U.S. division, said here last week.
Speaking at the Morgan Stanley Global Consumer & Retail Conference, he said those markets “are not necessarily the most urban and not necessarily the largest markets — we call them opportunity markets, because they are markets where we have a 3.9% share as opposed to our average of 8.9%.”
“Those 15 markets represent 34% of total U.S. retail sales, and they are nearly the size of the entire retail market in China and larger than Russia and India [markets] combined,” he said. “Since we have a very low penetration in those markets, logic will tell you the growth potential for Wal-Mart's U.S. business is real. It's there, and it's waiting to happen.”
Some of Wal-Mart's ability to grow in those 15 markets will come from the smaller-size formats that the Bentonville, Ark.-based chain is developing, Castro-Wright said.
“These smaller stores would allow us to penetrate markets where we don't have a presence today, with what we call high-efficiency retail formats that would deliver much higher sales per square foot and return on invested capital,” he explained.
Castro-Wright also said Wal-Mart's U.S. stores are growing comparable-store grocery sales faster on a quarterly basis than the four largest grocery chains in the United States. Without identifying those chains, he said the difference in comp-store growth between them and Wal-Mart is 230, 223, 491 and 439 basis points in the grocery business, which he defined as food, other consumables and pharmacy.
(The four largest traditional supermarket operators are Kroger Co., Supervalu, Safeway and Publix Super Markets, respectively, although it was not clear that those were the same companies Castro-Wright was referring to.)
He also said Wal-Mart's own spread in comps has been growing during the year between non-discretionary merchandise, encompassing food and consumables, and discretionary merchandise, with a spread of 600 basis points in the second quarter, 800 basis points in the third quarter and almost 900 basis points in October.