Diverse Opportunities for Walmart International

For Doug McMillon, Wal-Mart Stores is not a domestic company with an international division, but an international company with a global outlook.

Doug McMillon

As president and chief executive officer of Walmart International, McMillon oversees more than 6,100 stores in 26 countries outside of the United States — the main engine of growth for the Bentonville, Ark.-based retailer over recent years. In a presentation as part of Wal-Mart’s annual shareholders meeting events earlier this month, McMillon described a variety of opportunities as diverse as the markets themselves. These include mature, food-based businesses such as Asda in the United Kingdom; a cash-and-carry business in India; and a general merchandise seller in sub-Sarahan Africa.

Wal-Mart’s international divisions have also been the subject of much of the recent controversy following the company, including an ongoing investigation into corruption in Mexico, and more recently, questions as to supply chain oversight in the wake of two disasters at Bangladesh clothing factories said to have done business with a Wal-Mart supplier. (Company officials did not address either situation beyond prior statements.)

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“We’re working together in terms of global leverage and compliance and leaning toward commonality, while protecting those areas that allow us to be different,” McMillon said.

Notes from around the globe:

• In China, Wal-Mart has slowed growth while it works to make sure the locations it takes are appropriate. “We were being too accommodating,” McMillon said, citing locations in poorly managed malls where landlords and developers lacked experience and co-tenants were unreliable. “We slowed down to make sure all the projects we were approving were of high quality.”

• In India, Wal-Mart is working with joint-venture partner Bharti on Best Price, a cash-and-carry operation that is serving an unmet need as supplier to small merchants, said Ann Bordelon, senior vice president and chief financial officer of Wal-Mart’s Asia region.

• Things are difficult in Japan, which Bordelon described as a very mature retail market showing little growth and a consumer spooked by rising utility expenses following the earthquakes of 2011.

David Cheesewright

• Wal-Mart’s newest market are stores in 12 countries in Africa acquired two years ago in the deal for Johannesburg, South Africa-based retailer MassMart. David Cheesewright, chief executive officer of Walmart EMEA, its division covering sub-Saharan Africa, Canada, Europe and the Middle East, said those stores primarily serve wealthier shoppers with a general merchandise offering “but the growing middle class is something to watch, and food will be a really important part of that.”

• An emerging middle class is also a key driver for Wal-Mart’s business in several Latin American countries, McMillon said, including Argentina and Chile using versions of the “discount compact hyper” Bodega Aurrera pioneered in Mexico. “It does a fantastic job of reaching someone who is just emerging into a middle-income level,” McMillon said. “It makes thing very affordable, accessible and high-quality.”

• In Brazil, Wal-Mart is awaiting recognition for EDLP in an otherwise strongly promotional country. “We’ve been leading the change to create everyday low price that is innovative for the market, help take costs down and create a basket spread in Brazil,” McMillon said. “Right now we have price leadership in Brazil. The customers don’t know it yet but through marketing we’re trying to make that clear to them so we can drive traffic and ticket.”

• Wal-Mart is gaining share in Canada as a result of recent Zellers store conversions and an ongoing project to expand a discount store base to the Supercenter format. “Food is growing very quickly,” Cheesewright said. “We also have a very strong and very profitable general merchandise business.”