Magazine article Marketing

Wal-Mart Eyes Up UK Shops

Magazine article Marketing

Wal-Mart Eyes Up UK Shops

Article excerpt

Following its purchase of a German superstore chain, Wal-Mart is looking at opening up in the UK. But going on the experience of previous US start-ups here, could it be a success?

Last week Marketing revealed that Wal-Mart, the giant American discount retail chain, has made its first shopping trip in Europe, by buying up a chain of German stores. It is also believed to be considering sites in the UK.

But are British consumers really interested in shopping the American way? Can a Wal-Mart-style store, with its giant aisles and vast floor space work in the UK market?

US retailers are renowned for building large superstores and Wal-Mart, the world's largest retailer, is no exception. The Wal-Mart philosophy is very much 'pile it high and sell it cheap', with huge stores on vast out-of-town retail developments.

Wal-Mart has 2805 stores in the US, including 441 'supercenters', each covering around 150,000 sq ft. Internationally, the retailer operates units in Argentina, Brazil, Canada, Germany, Mexico, and Puerto Rico, and franchise agreements in China and Indonesia.

The stores sell a broad range of merchandise including groceries, clothing and electronic goods at discounted prices, making it highly attractive to small-town US customers who can buy everything they want, in bulk, in one trip to the store.

Planning problems

Wal-Mart would find it difficult to build such a retail outlet in the UK. It would need a large number of sites on which to build its superstores, and getting planning permission for such sites is becoming tougher.

Planning guidelines implemented by the last Conservative government started the process of encouraging more high-street retail development. The flip-side to this is that getting approval for out-of-town sites is now increasingly difficult.

Retail analyst Paul Smiddy at Credit Lyonnais Laing doubts whether the UK customer would be willing to drive the extra distance to get to a Wal-Mart outlet. "People in the UK will not drive 30 minutes for a bigger store, and anyway there is no space in the UK for such stores."

But Smiddy admits that Wal-Mart's superstore idea has been very successful worldwide and should be of great concern to the UK retail market. The company has substantial funds and is renowned for rolling things out quickly.

Wal-Mart wouldn't be the first US retailer to target the UK. Recent transatlantic success stories include the fashion house Gap, and the one-stop store for children Toys 'R' Us. …

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