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Wal-Mart: Still growing and experimenting

Wal-Mart President and Chief Executive H Lee Scott, the keynote speaker at this year's NRF Annual Convention in the US, spoke at length about the company and it's future, Joan Bergmann reports from New York...

Retail Asia March 2004 WAL-MART STORES INC’S president and chief executive, H Lee Scott, who rarely speaks to large groups, spent an hour talking to a capacity crowd at
this year’s NRF (National retail Federation) convention on topics such as Wal-Mart’s evaluation of expansion abroad as well as its domestic plans, accelerating interest in RFID and some of the formats it has been experimenting with.

At the conference, held from January 11-14 in New York, USA, Scott also steadfastly defended Wal-Mart’s practice of refusing to sell magazines and CDs, which the retailer believes are pornographic or offensive. This practice has prompted some CD labels to issue
special versions that are acceptable to Wal-Mart.

And Scott drew the expected standing- room-only crowd, who applauded him lengthily, impressed by his direct manner, dry humour and hands-on knowledge of every part of his company’s business.

A large part of his talk focused on Wal-Mart’s growing presence outside the US, and its evaluation of most of these markets.

Highlighting that Wal-Mart owns about 35% of Seiyu in Japan, he took note of the option that his company has to buy a majority stake in the future.

“We are very happy about that.” Turning to other countries, he reported“success” in Argentina and Brazil, “even though we have had our share of struggles”.

Nearer home, the store is “the No.1 retailer in Mexico and Canada, where Wal-Mart’s acquisition of Woolco several years ago had propelled its growth”, noted the Wal-Mart chief. Overseas, “there are great retailers serving customers in a way we can learn from”, Scott said, citing Carrefour in France and South America, especially.

However, Germany, he acknowledged, has been Wal-Mart’s “worst” overseas
experience, explaining that the company made a lot of “bad decisions”, misreading the competition and the culture in the country and sending “the wrong people” to manage the business.

“But we are improving,” he added. Responding to a question from the audience, Scott said: “There is no grand plan to take over the world. If ever there is one, I hope it is after I retire.”
Scott described China as “very exciting” and Wal-Mart’s biggest “growth opportunity”.

Quoting his predecessor, former chairman David Glass, in a thought he clearly agreed with, he said:“China is the only place where we can replicate what we did in the US.”

Currently, Wal-Mart operates 34 stores in China, where three more are slated to open this year. Its first in Shanghai will open in 2005, with additional units in Beijing. Like other foreign retailers, Wal-Mart has encountered some problems with the Chinese government. However, the country is becoming more cooperative, observed Scott.

He also showed enthusiasm for retailing prospects in India and Russia, although Wal-Mart has said nothing about entering those countries. Citing India’s 50 million to 60 million strong
middle-class, Scott said: “You will see global retailers moving to India in the next few years.” (Others put India’s growing middle class at about 100 million.)

“We believe the worst issues are over [for Russia],” he said, observing global retailers exploring both Moscow and St Petersburg.

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