Sao Paolo, Brazil: Wal-Mart May Be Closing 30 Stores
Good news from South America this week, as Wal-Mart announces it may close 30 stores in Brazil next year. The Brazilian newspaper Valor Economico reported the giant U.S. retailer is not performing well in Brazil.
The news service Reuters picked up the story, but Wal-Mart itself would not officially confirm the report On WorldCrunch news, commenting only that it is "constantly reviewing its portfolio and making decisions based on what's best for the business and clients." But the story follows a statement by Wal-Mart’s CEO Doug “Million” McMillon, that his company was reviewing its store performance around the globe.
Wal-Mart Brazil began in 1995, and its headquarters are in Sao Paolo. Brands include: BIG, Bompreço, Hiper Bompreço, Magazine, Maxxi, Mercadorama, Nacional, Sam’s Club, Supermercado Todo Dia, TodoDia, Walmart and Walmart Posto.
The retrenchment is not a surprise. In 2012, WorldCrunch reported that according to Abras, the Brazilian Association of Supermarkets, Wal-Mart Brazil had sales of $11.5 billion in 2011. That placed them behind the French retailer Carrefour, which had $14 billion in sales the same year. The market leader was Pão de Açúcar, another French company, which had sales of $25.7 billion in 2011. Only 20% of Brazil’s retail market is controlled by local companies.
After 21 years in Brazil, Wal-Mart has stores in 18 states, but in 2012 it had 81,500 employees, and today its website lists 73,314 workers. Wal-Mart has been unable to break out of 3rd place in sales. Retail analysts say that Wal-Mart has a self-inflicted wound. It has been unable to combine the nine different brands and five different formats it operates in the country. It has three different kinds of supercenters, three supermarket chains, a cash and carry wholesaler, a chain of smaller local stores and Sam’s club buyers’ club. It has a total of 558 units today in Brazil, compared to 395 in Chile, and 108 in Argentina. But compared to Mexico’s 2,317 units, Brazil is far behind.
“Wal-Mart has not yet been able to centralize its management,” Roberto Nascimento, a professor of business at the School of Publicity and Marketing in Brasilia told WorldCrunch. “Today the network has three different realities, one in the Northeast, one in the Southeast and on in the South. The differences in leadership among the different companies can explain this situation.”
In its most recent quarter, sales at Wal-Mart same store sales (those open at least a year) in Brazil fell .6%. In a note to a recent Form 10-K to the US. Securities & Exchange Commission, Wal-Mart wrote: “cultural differences in some markets into which we expand or into which we introduce new retail concepts may result in the consumers in those markets not being as receptive to our retail concepts as we anticipate those consumers will be and may make an effective response to such issues more difficult to achieve. If we do not effectively execute our expansion plans for our Walmart International segment, our financial performance could be adversely affected.”
Since 2013, Wal-Mart de Brazil has not seen any significant increase in its number of units, or its total square footage of stores.
What you can do: In April of 2012, Reuters reported Doug McMillon, who was then the head of the International Division for Wal-Mart, as saying that Wal-Mart was getting ready to move to an everyday-low-price model in China, taking cues from Brazil, where it already switched to that model. Brazil's first-quarter results should have "some things that you'll be encouraged by," he told Reuters, without giving a forecast.
The forecast apparently has changed.
If you want to apply for a job with Wal-Mart Brazil, go to http://www.walmartbrasil.com.br/talentos/