Walmart Takes Charge In Expansion

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    Just when we thought Wal-Mart already had a big presence in Canada, last week the company announced it is significantly adding to its current store network.  The company announced it would be investing Cdn $500 million in 2014 to drive growth in Canada, mainly through fresh food offerings.

    Wal-Mart Canada stated that over fiscal 2014, it would invest Cdn $91 million on distribution projects to grow fresh food, Cdn $31 million on e-commerce and Cdn $376 million on opening and upgrading the store network.

    CEO Shelley Broader stated that she wants to have fresh food in every store.  “I’m not stopping until I get food in every box in Canada,” she said.

    Grocery stores are ranked on key indicator same store sales, which have been slipping in Wal-Mart Canada over the last three quarters as the company’s 20th anniversary of operations in Canada is approaching next month.

    The company will be opening 35 supercentres with full supermarkets and the total store count will increase from 389 to 395 stores.  By fiscal year end there will be 282 supercentres and 113 discount outlets.

    Wal-Mart announced this expansion amidst the heated grocery sector in Canada.  The sector has been under pressure as consolidations and new deals have been popping up over the last year.

    Perry Caicco, retail analyst at CIBC World Markets says that grocers are consolidating, looking for more savings and looking to suppliers to lower or freeze prices.

    For its part, Wal-Mart cut the number of vendors, brokers and middlemen it uses, instead preferring to deal directly with suppliers.

    Last year, Target opened up 124 stores and faced scrutiny for unstock store shelves.  The company did not do as well as first expected, however, it soon upped the ante and started to increase advertising of low food prices in weekly flyers.  This year it will be opening up an additional 9 stores.

    Loblaw bought Shoppers in an attempt to bolster its presence in the sought-after urban areas.  Wal-Mart faced opposition from neighborhood groups in Toronto and Vancouver when it tried to enter downtown neighborhoods.

    E-commerce giant Amazon Canada boosted its online presence in Canada last year.  Wal-Mart will also be pushing efforts in its online presence and plans to have more than 10,000 food items online by the end of March.  Currently, the company sells 150,000 merchandise items on the web and includes free shipping throughout most of Canada.

    The Wall Street Journal reported that Wal-Mart’s head of e-commerce says that within 2 years, his company will match the service offerings of Amazon.

    Wal-Mart launched its website in 2013 and sales have been steadily climbing.  In the third quarter, e-commerce traffic increased 42% and sales were up 96% over the prior year.

    This time next year, we will see the financial results of Wal-Mart’s expansion plans and results of its increased online exposure.  In the meantime, Target is on track to increase its success in Canada while the rest of the grocery sector continues to monitor and consider other consolidation and buying opportunities.

     

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