Faced with sagging sales and little room to grow its fleet of 2,747 superstores, Wal-Mart is more and more eyeing the Big Apple and other densely populated cities.
Without naming the Big Apple by name, executives at the No. 1 retailer in the world said they are planning to turn around their stalled revenue engine by developing the smaller stores in bigger cities strategy.
And that could mean bringing the Bentonville bargains to Broadway.
“Urban America is where Wal-Mart has virtually no presence,” said Britt Beemer, president of America’s Research Group.
While Wal-Mart during the past few years has quietly scouted potential store locations throughout New York City’s five boroughs, according to real estate sources, it has failed to pull the trigger on any site — partially because it couldn’t find a large enough footprint for its massive superstores and partially because it continues to face stiff opposition from local unions and politicians.
The tide could be changing, says Beemer.
“They generate a lot of revenue and a lot of sales tax, and in many cities they are getting a much higher level of acceptance,” Beemer noted. Caught in the downdraft of the Great Recession, municipalities could be more likely to woo retailers not already within their borders.
Wal-Mart has to do something. In the first quarter, Wal-Mart’s same-store sales dropped 1 percent and rivals like Target continue to outperform the Bentonville, Ark.-based discounter.
At the retailer’s annual meeting yesterday, CEO Mike Duke explained the chain would also attempt to re-ignite its growth engine by adding more stores abroad and expanding Internet sales. But in the past Wal-Mart has stumbled on both fronts.
Sluggish growth has hit Wal-Mart hard during the past year. The company’s shares have fallen 1.3 percent while those of rival Target — which is only a fifth of Wal-Mart’s size — have risen 30.7 percent.
Duke said yesterday the retailer is determined to improve its Web site, establishing it as a destination for merchandise at rock-bottom prices, increasingly accessible to shoppers via smartphones.
While Walmart.com increasingly has waged price wars with rival Amazon, it remains only a fraction of Amazon’s size.
“Building the best Web site is just as important as getting our store format right,” Duke said.
But Wal-Mart lately has stumbled inside its stores, too. Recently, the retailer backtracked on an initiative to narrow its merchandise assortment. Wal-Mart had intended to reduce clutter, but shoppers complained when they no longer saw some products on shelves.
Wal-Mart’s apparel will get more basic after several seasons of flirting unsuccessfully with trendier looks, said Eduardo Castro-Wright, head of Wal-Mart’s US business. Apparel’s share of Wal-Mart’s overall business sank to 10 percent from 12 percent last year, even as grocery sales rose to more than half.
“Socks and underwear to jeans and T-shirts — that’s where we excel … We’re not a department store,” Castro-Wright said.