Wal-Mart Accelerates Supercenter Growth in Canada as Sam's Shutters
In a move demonstrating that it has learned to go with what works in the international sphere, Wal-Mart announced that it would close its six Sam's Clubs in Canada while opening 26 new supercenters to bring its total to 82 or about a quarter of the stores it operates in the country.
When Wal-Mart launched Sam's in Canada six years ago, it repeated a procedure it had followed in the United States, introducing the warehouse club to a market where it had operated only discount stores previously in preparation for a supercenter introduction. The procedure gave Wal-Mart a chance to test the market and get consumers used to the idea of buying more to eat from it than chips and soft drinks as well as to gear up its distribution system to handle more kinds of food.
As part of the Canadian Sam's launch, Wal-Mart tried out an additional wrinkle. It organized much of the product it offered into small business-specific displays. Sam's wanted to become a destination for items packaged for foodservice use, for janitorial supplies and for other products require by local restaurants, cleaning services and operations that might not command enough volume to buy directly from distributors. Sam's provided consumer-oriented products, too, but aspired to differentiate itself from Costco Canada â€" and perhaps one day from its warehouse club rival as operated in U.S. -- by serving targeted small businesses. Sam's always has coveted that niche but has never quite managed to fit itself out as a distinct small business specialist.
Then, three years ago, Wal-Mart followed up on the Sam's launch in Canada by rolling out supercenters, and they proved immediately successful. In three years, while supercenters have been going from 0 to 60 and beyond, Sam's kept on running its six warehouse clubs. So Wal-Mart decided, having a fair period for evaluation, that it would do better investing its money into supercenter growth.
In terms of the decision's timing, keep in mind that Sam's leadership is in transition, and each major shift there, and they seem to occur every four years or so, also means strategic changes to accelerate sales growth at the sometimes plodding division. Ignacio Perez has just been named executive vice president of operations at Sam's after former jobholder Greg Johnston retired. Johnston followed executive vice president of merchandising Greg Spragg out of the company while the division's ceo Doug McMillon was shifted to president and CEO of Wal-Mart International.