Walmart 2000 Annual Report Download - page 11

eight percent of the operating profit,
but Menzer envisions both will con-
tinue to grow throughout the decade.
ASDA will be an important part of that
growth. In 1998, the British retailer
had $14 billion in sales, and since the
Wal-Mart merger, ASDA’s monthly
comparable-store sales have risen
11 percent.
Two-Way Learning
There are plenty of oppor-
tunities for the two compa-
nies to learn from each
other. ASDA, for example, can teach
Wal-Mart about its line of high-quality,
private-label fashion apparel — a prod-
uct line rarely seen in grocery stores.
George, ASDA’s private-label apparel
brand, is Europe’s fastest growing line
of apparel, with annual sales of more
than $830 million. At large ASDA
stores, the company devotes around
15 percent of the floor space to the
clothing line.
ASDA also receives high marks for the
quality of its in-store home-meal
replacement departments. The com-
pany is now the U.K.’s biggest retailer
of Indian food and the world’s largest
Indian “takeaway” retailer. And ASDA
is lending its expertise in the areas of
smaller store formats and the fresh-
food supply chain.
On the other side of the coin, Wal-Mart
stores offer ASDA a wealth of needed
experience in general-merchandise
retailing, along with the best store-
information systems in the
industry. Wal-Mart systems
are being rolled out through-
out ASDA between now and
October this year, and will bring
real improvements in service
and in-stock for customers.
Changing
European Retail
ASDA is the third-largest
supermarket chain in the
U.K, but that could change with
the Wal-Mart merger. In a bold
move to build market share, ASDA
pledged last year to continue reducing
prices, some by five to 10 percent,
through its ongoing rollback program.
The merger with Wal-Mart also has
accelerated ASDA’s price-rollback plan,
with the Company promising to cut
10,000 prices in calendar-year 2000.
“The changing retail landscape in
Europe has caused all retailers to think
about the future,” Leighton says. “The
net effect is that prices have dropped,
certainly in the U.K., and I think that
will happen in Germany, too, as our
rollback programs really begin to ‘buy
a home.’ There are a group of competi-
tors who take the attitude that ‘this too
will pass,’ and will probably not sur-
vive. But there are also some very
good competitors who will take this
opportunity to reinvent themselves and
will come out of it much stronger.”
The Company plans to spend in excess
of $100 million over the next five years
to open 50 stores in the new 25,000-
square-foot ASDA “fresh” format,
which stresses fresh foods and
prepared meals. Two new ASDA
Supercenters — ala Wal-Mart — also
are in the works.
Around the Planet
Wal-Mart’s German opera-
tions got a big boost from
the purchase of 74 Interspar
hypermarket stores in fiscal 1999. By
September, Wal-Mart had rebranded all
95 of its German stores and begun
stocking them with a new and
revamped selection of merchandise.
Store renovations also began last year
and half of all the German stores
should be renovated by late 2000.
Although German shoppers are hur-
ried by local laws that force early store
closings and forbid Sunday sales,
German Wal-Mart stores are setting
the bar for the rest of the Company in
sales volume. The store in Karlsruhe,
for example, is one of the highest
volume Wal-Mart stores in the world,
though it is open less than 12 hours a day.
Wal-Mart has already made a major
change in the shopping culture of
Germany simply by opening stores two
hours earlier than the 9 a.m. standard.
German laws allow shopping to begin
at 7 a.m., but most shops in the coun-
try wait at least two more hours to open.
Germans seem to enjoy browsing the
stores when crowds are smaller.
Though they were initially
Puerto Rican Associates show
Wal-Mart’s international energy.
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