Retail Forward, a Columbus, Ohio based industry consulting group that likes to release dramatic crystal ball prognostications, put out a new report on January 11th that said by the year 2010 Wal-Mart will top $500 billion in net sales, and will own 12% of all non-auto/non-gasoline retail sales in the United States. That compares to 8% today. Retail Forward says that one out of three U.S. primary household shoppers visit a Wal-Mart weekly. That means that Wal-Mart shoppers are still in the minority, and that 66% of shoppers do not visit a Wal-Mart weekly. The report also indicated that five years from now the typical consumer products manufacturer could have more than 35% of its sales going through Wal-Mart. Retail Forward projects that by 2010, 25% of Wal-Mart’s sales will come from international operations. This is not really going out on a limb, since November, 2004 sales data shows that today 20% of Wal-Mart sales came from its international division. The Retail Forward number for international sales is probably very conservative, since Wal-Mart’s opportunities to expand are far greater in other countries than in America, where at least one in three stores Wal-Mart will propose this week will run into major community opposition. Retail Forward says that in five years “the runway for Wal-Mart’s existing formats domestically will be running out.” But as the company places its superstores as close as three miles apart, that Retail Forward prediction is grossly miscalculated. Wal-Mart can go on cannibalizing its own stores for decades, packing them closer and closer together to gain more market share.
Why would Retail Forward suggest that once Wal-Mart reaches 12% of market share for non-auto/non-gas retail sales, that it will have no room to add to its store count? This is absurd. Wal-Mart has been rapidly shutting down discount stores for the past decade, so the total number of stores has not increased dramatically. For example, between 1994 and 2004, the number of Wal-Mart U.S. stores (leaving aside Sam’s Clubs) grew by only 46%, because during that period, the number of Wal-Mart discount stores fell by almost -25% from 1,953 to 1,478. There are 475 fewer discount stores today than a decade ago. At the same time, Wal-Mart added 1,403 supercenters. By contrast, net sales at Wal-Mart grew in the last decade from $67.34 billion to $256.3 billion, or 280%. These figures suggest that supercenters roughly bring in 2.6 times more sales revenues than discount stores. Any way you cut it, the Retail Forward numbers only reinforce the notion that Wal-Mart is monopolizing the retail industry, and taking out competition in the marketplace.