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Wal-Mart C-Store; Nutrition Front; Less Sleep
(by Mouser - February 07, 2005)
Wal-Mart Makes Inroads on C-Store Territory
Analyst predicts increased presence by 2010.
Wal-Mart is poised to become a bigger player in the convenience store business, predicted Retail Forward analyst Sandy Skrovan. The Bentonville, Ark.-based retailer, which already operates gas stations at many of its Supercenters and Sam's Clubs, “will add a refueling station to every Wal-Mart pad that can support one,” said Skrovan during an audio forum conducted by Retail Forward, an Ohio-based management consulting firm, on Jan. 26.
Freestanding convenience stores are just one of several retail formats Wal-Mart will test as it grows into a half-trillion-dollar company by the year 2010, declared Skrovan.
“Wal-Mart will be even more successful by 2010 than it is today,” she said. The retailer aims to disrupt entire businesses, not to implement incremental change, she said. “It took Wal-Mart 42 years to get as big as it is today, but it will take only five years to double its current size.”
Skrovan noted that five years ago, Wal-Mart generated about $150 billion in annual sales. This year, it would likely hit $285 billion. “By 2010, Wal-Mart will be a half-trillion-dollar company,” she predicted.
Wal-Mart will hit those goals by adding more stores, primarily Supercenters, which provide the company its best return on investment. The plan is to grow retail square footage by 8 percent per year, and Skrovan believes Wal-Mart will be operating 3,100 Supercenters by 2010, which is very feasible since two-thirds of Wal-Mart's current Supercenter fleet are located in just 15 southern states.
The new Urban 99 Supercenter prototype allows the retailer to enter metro markets where real estate is scarce and more expensive than in its traditional markets. Eventually, conventional Wal-Mart discount stores will be displaced by Supercenters, said Skrovan. By 2010, only about 700 Wal-Mart discount stores -- half the current number -- will be in operation.
Sam's Club is approaching saturation, she said, predicting Wal-Mart will only open about 100 net new wholesale clubs over the next five years. She expects that Neighborhood Market expansion will continue to take a back seat to Supercenter growth.
Wal-Mart is already the largest retailer in food, general merchandise, health and beauty care, apparel, home textiles and toys, yet Skrovan said the retailer has plenty of room to grow in the following categories:
* Baby supplies and baby care -- Target and Meijer have already remerchandised this area in their stores and Babies R Us could face stiff competition.
* Fashion apparel -- Wal-Mart is likely to use its captive “George” brand as the cornerstone to growing beyond basics. However, the retailer “has its work cut out for it,” she notes. Only 13 percent of Wal-Mart shoppers currently agree that George has improved Wal-Mart’s apparel offerings.
* Consumer electronics -- Last year, Wal-Mart added plasma and HDTV televisions and notebook computers. It could challenge Best Buy for electronics supremacy in the coming years because the trends toward commoditization and direct sourcing “play right into Wal-Mart’s hands.”
* Home, office and school supplies -- Wal-Mart has a great opportunity to be the one-stop destination for these products.
The retailer will also grow bigger on foreign soil. Currently, international sales represent about 20 percent of Wal-Mart's total revenues. The company's stated goal is to increase that percentage to 33 percent. Skrovan projects international sales will represent about 25 percent of total sales by 2010.
The analyst also foresees Wal-Mart testing and opening new retail formats by 2010. In addition to convenience stores, Wal-Mart is expected to explore tests with dollar stores, drugstores and freestanding apparel stores (Wal-Mart's Asda chain in the United Kingdom already is testing freestanding George apparel stores).
Finally, Skrovan believes Wal-Mart has the potential to “disrupt” other “big and under-rationalized” industries beyond retailing. The company is already testing financial and travel services. A healthcare diagnostic center or dental clinic would complement its current optical centers. Since it already is expanding in the fueling business, adding car washes or making a move upstream into the oil refinery business are not out of the question either.
Wal-Mart currently controls 20 percent of all single-copy magazine sales, and two large publishers, Time Inc. and American Media, have launched publications for Wal-Mart, so a move into publishing is not so far-fetched either, she notes.
Studies: Less Sleep Equal More Pounds
Two separate studies published this week – one by the University of Chicago, the other by Stanford University – suggest that when people suffer from lack of sleep it can raise hormone levels in a way that makes them hungrier.
Thus, if you’re not getting enough sleep, you’re probably getting more than enough food.
Lack of sleep, apparently, results in a reduction in leptin, a hormone that tells you that you aren’t hungry anymore, and an increase in ghrelin, which tells you that you are. One study put the magic number at four hours a night minimum, while the other said five hours per night minimum.
Thus, since in the US there tend to be a lot of people who live time-constrained, high-pressure lives that don’t lend themselves to a lot of sleep, this could be yet another reason for increasing obesity rates.
Nutrition Front
* In Canada, Loblaws’ President’s Choice division is launching a new line of healthier products. The line, dubbed “Blue Menu,” will consist of 80 SKUs and will be in shelves by the end of this month.
The goal is to give consumers an easier way to identify products that are either low in calories, high in fiber, or low-fat.
* A new study by the Agricultural Research Service suggests that adolescents who read food labels don’t necessarily make better food choices than kids who don’t.
As a result, experts say that a better job of educating kids about what food labels mean – and the long-term consequences of ignoring them – must be done.
* In the New York State Legislature, a bill has been introduced that would require school report cards to include how much kids weigh, as well as where they rank on the weight scale compared to other kids their age.
* McDonald’s has announced that it has found its own version of Jack La Lanne – Ronald McDonald, who will be sent by the company into the nation’s elementary schools to talk about diet and fitness. In this role, Ronald has been named the company’s new Chief Happiness Officer.
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