We are going to continue to grow, and we are going to do it because many, many communities want Wal-Mart," Scott said. "But I can assure you, the individual approvals that occur will never garner the press that those that are declined will.
To illustrate that point, Wal-Mart disclosed its real estate committee already has approved plans for an additional 950 Supercenter locations, noting there are thousands of opportunities to add Supercenters beyond those already approved by the committee. That view was supported by another nugget of information shared with analysts concerning the growing number of high volume locations and the opportunity to put stores closer together than previously thought. Wal-Mart operates nearly 300 Supercenters with sales in excess of $100 million compared with only 10 units that topped that threshold five years earlier. Many of those high-volume locations are being cannibalized intentionally--a process Wal-Mart refers to as "market development"--in an effort to gain greater market share.
The strategy has a short-term impact on same-store sales, but after a two- or three-year period, the end result is Wal-Mart has two stores operating at highly profitable sales volumes as opposed to a single highly profitable store prone to scores of operational issues due to high customer counts and enormous sales volumes.
A perfect example is St. Petersburg, Fl. One of the company's highest-volume stores is a Supercenter in the nearby community of Pinellas Park. The unit generated estimated sales of $165 million during the recently ended fiscal year. This year, those sales are expected to decline, but only by approximately 15 percent as a new 200,000-square-foot Supercenter opened seven miles away on Jan. 26. That unit is expected to generate first-year sales in excess of $100 million.
While this example is believed to be the most extreme in Wal-Mart's real estate portfolio, a similar process is taking place throughout the nation, which explains why Wal-Mart executives are optimistic about the company's ability to add thousands more stores and continue growing.
WAL-MART 2005 EXPANSION
...........................................PROJECTED.........UNITS TO.......PROJECTED
STORE TYPE......................YEAR-END '04........BE ADDED..........YEAR-END
..................................................TOTAL ...........IN '05..............'05 TOTAL
SUPERCENTERS.............................1,713...........240-250..........1,963
DISCOUNT STORES........................1,365..............40-45..........1,240
SAM'S CLUBS.................................549.................30-40.............564
INTERNATIONAL.............................1,487...........155-165..........1,650
NEIGHBORHOOD MARKETS..............76...................25-30.............101
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