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WALMART INSIGHT DECK

WALMART INSIGHT DECK. Growth markets and strategic initiatives. December 2013. STEPHEN SPRINGHAM. Senior Retail Analyst. Planet Retail View Overview Major Strategic Initiatives Key Markets Further Reading. Contents. All data correct at time of publishing. 2. Overview.

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WALMART INSIGHT DECK

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  1. WALMART INSIGHT DECK Growth markets and strategic initiatives December 2013 STEPHEN SPRINGHAM Senior Retail Analyst

  2. Planet Retail View Overview Major Strategic Initiatives Key Markets Further Reading Contents All data correct at time of publishing.

  3. 2. Overview The International division is structured around three geographies (EMEA, LATAM, Asia). Corporate Structure - Walmart International A new head of International will be appointed to take office from 1 February 2014, when McMillon steps up to become President & CEO of Walmart. Walmart International Doug McMillon President & CEO Asia Latin America EMEA Scott Price President & CEO, Walmart Asia EnriquéOstalé President & CEO, Walmart Latin America David Cheesewright President & CEO, Walmart EMEA Canada Mexico China Scot Rank President & CEO, Walmart de México & Central America Shelly Broader President & CEO, Canada Greg Foran President & CEO, China Brazil Sub-Saharan Africa Japan Marcos Samaha President & CEO, Brazil Grant Pattison President & CEO, South Africa (Massmart) Steve Dacus President & CEO, Japan (Seiyu) Argentina UK India Andy Clarke President & CEO, UK (Asda) HoracioBarbeito President & CEO, Argentina RamnikNarsey President & CEO, India (interim) Chile Middle East Franchised George stores. Gian Carlo Nucci President & CEO, Chile (D&S)

  4. The long tail: the US is nearly nine times larger than Walmart’s second biggest market, the UK. Some 15 markets have sales of less than USD1 billion. • 4. Key Markets “[Internationally] The majority of revenue and profit comes from our operations in the UK, Mexico and Canada.” CHARLES HOLLEY Walmart EVP, Chief Financial Officer (March 2013) • There is a distinct ‘Top Tier’ among the International businesses of the UK, Mexico and Canada... • …Brazil, Japan and China form a notional ‘Second Tier’ (sales >USD10 billion)…. • …South Africa, Chile and Argentina form a notional ‘Third Tier’ (sales >USD3 billion). Only a further three markets (Costa Rica, Puerto Rico, Guatemala) achieve sales of USD1 billion or more. Chart features the Top 10 Walmart countries by size and excludes markets with sales less than USD3 billion. Source: Planet Retail

  5. STRENGTHS OPPORTUNITIES • Canada is one of Walmart’s longest-established international markets. • Supercentres have had a significant impact on the Canadian grocery market. Already the second-largest retailer overall, Walmart will challenge Loblaw for market leadership. • Geographic proximity to US has enabled almost seamless deployment of EDLP and supply chain practices. • Global scale and lean cost structure enables Walmart to better absorb inflationary pressures compared to its domestic rivals. • Further conversions/upgrades of discount stores to Supercenters (around 170 discount stores remained trading at the 2013 fiscal year-end). • Further organic expansion of Supercenters in under-represented region (e.g. the Maritime Provinces in the east). • Introduction of smaller-box formats - Neighborhood Market or Express - to mirror its strategy in the US. • Possible acquisitions of smaller rivals. • Walmart: Canada SWOT • 4. Key Markets WEAKNESSES THREATS • Walmart took longer than expected to become a success. • Failure of Sam's Club in Canada has left something of a bitter taste. • Grocery merchandising, although improving, still lags behind Sobeys and Loblaw. • Heavily exposed to GM, many sub-sectors of which are suffering weak consumer demand. • Absence of a smaller format gives competitors such as Sobeys an advantage in targeting the convenience/urban segment. • Poor reputation in union/labour relations. • Target entered the market early in 2013 and is expanding aggressively. • Although Target has struggled to achieve its performance targets since entering Canada, it is nevertheless intensifying competition in the non-food sector. • The grocery market is subject to ongoingconsolidation (e.g. Sobeys’ takeover of Safeway’s Canadian stores) and competitors are therefore becoming larger. • Walmart could over-expand in its efforts to head off Target’s incursion into Canada. • Unionisation.

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