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2005-09-06
London, U.K. Wal-Mart Complains It's Just Small Potatoes.

Last year Wal-Mart had over $285 billion in sales, and cleared more than $10 billion in profits. That made the retailer the largest corporation in the world (Exxon was the most profitable) based on sales volume. But wait: now the company is whining about not being the biggest bully on the block, and is sounding like some struggling Mom and Pop operation. The CEO of Wal-Mart told newspapers in London, England that one of its rivals in the United Kingdom, Tesco, had too much power over the market. Lee Scott complained that Tesco, the largest grocery chain in England, had a 30% share of the food market. Wal-Mart, which owns the #2 market chain, Asda, only commandeered 16% of the grocery store business. Wal-Mart has been in the United Kingdom for six years now, but has not become the top dog there. Two years ago, Wal-Mart tried to buy Safeway (not the U.S. company of the same name), which would have lifted its market share to 26% -- but British regulators turned them down. (In the U.S. some reports place Wal-Mart's market share at 17% of the much-larger food industry in the United States, and as high as 50% of the food market in Mexico. AC Nielson gives Wal-Mart a 51% share of the general merchandise category.) "As you get over 30% and higher," Scott told the Times of London, " I am sure there is a point where government is compelled to intervene, particularly in the U.K., where you have the planning laws that make it difficult to compete... at some point, the government has to look at it." Such a comment would never fly in America, where Wal-Mart's dominance of the market has defied anti-trust notions for years. In the U.S., the Bush administration is not going after Wal-Mart anytime soon, and anti-trust cases could easily take a decade or longer to pursue, and millions of dollars in legal fees if brought by a private party. So Scott certainly has no reason to look over his shoulder at his home turf, while he complains about anti-trust dominance by a competitor in Britain. Three years ago Wal-Mart's dominance in Mexico was investigated, and the company's Walmex division agreed to instruct its purchasing department not to make suppliers charge higher prices to Walmex's competitors. In Puerto Rico, the U.S. Federal Trade Commission forced Wal-Mart to sell some stores in order to acquire Supermercados Amigos to ensure the giant retailer did not dominate the island's market. A Wal-Mart spokesman said the retailer was "pretty small potatoes outside the U.S.," yet it wields great power in Mexico, and in Canada, where is controls a staggering 52% of department store sales.

What you can do: Wal-Mart gets roughly 20% of its sales from its international stores, and its foreign sales hold the most promise for sales growth, as the sales per square foot in the U.S. has been dropping for years, because the company cannibalizes its own stores by placing them so closely together. For Wal-Mart to complain about anti-competitive conditions in any marketplace, is like the pot calling the kettle black. But don't hold your breath for U.S. regulators to do a study of Wal-Mart market share. The reality is that anti-trust investigation is a political decision, not a market-based decision. So Wal-Mart will continue to describe itself as small potatoes, while laying waste to the real small potatoes in the retail marketplace










 
 
"Norman has become the guru of the anti-Wal-Mart movement" ~ 60 Minutes

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