Wal-Mart’s Limited Growth in Urban Retail Markets: The Cost of Low Labor Investment
- Author(s): Roberts, Anthony;
- et al.
Expanding Walmart’s share of urban markets is becoming increasingly important to the company because of declining sales growth and the over-saturation of suburban and rural retail markets. The company has sought urban expansion, especially outside its home base in the South, for over 15 years, but in recent years their quest has taken on added urgency. During 2009’s 16th Annual Meeting for the Investment Community of Walmart, former Vice Chairman Eduardo Castro Wright stated achieving average market share in the most urban areas of the United States would increase annual sales by $80 to $100 billion. Over the next six years, Walmart developed an ambitious growth strategy aimed at expanding the company’s share of the urban retail market by using smaller store models designed to boosts grocery and e-commerce sales in these areas. Neil Currie, an analyst at UBS Securities LLC, estimated in 2010 that the company’s strategy for expanding into urban markets could potentially increase its annual revenue by over 20 percent. Despite such bold predictions, Walmart’s urban growth has been disappointing. This report explores Walmart’s shortfall in city-based growth, and how community and consumer opposition to the company's low labor standards and negative impact on local business has contributed to that shortfall.