Discount shopping montreal

When Wal-Mart first knocked on Canada's door in 1994, the reception was about as warm as a Winnipeg winter. While only a few miles separate most of Canada's main cities from the United States, Wal-Mart was faced with a consumer base that was world's apart from its typical U.S. demographic, especially on issues of style, shopping behavior and overall acceptance of all things American. But boy have things heated up since then.

Canadians have embraced the Wal-Mart way to such an extent they are about to make it the top-selling retailer in their country. In fact, Wal-Mart has received formal petitions from more than 15 Canadian communities requesting the company open up a local outlet--just one of the many signs of success that executives find particularly gratifying.

At some point over the past year or so, Wal-Mart surpassed long-established Sears Canada to become the second largest Canadian retailer after only seven years in the market. Analysts estimate that Wal-Mart's 174 stores at the end of 2000 generated about $4.80 billion in sales. Currently, Wal-Mart operates 176 stores in Canada.

Sears reported Canadian sales of about $4.28 billion in it's fiscal 2000 report, while the leader, Hudson's Bay Co., posted sales of about $4.96 billion. As analysts expect Wal-Mart Canada to post 2001 sales of about $5.11 billion, it is on route to becoming the biggest retailer in the country.

And Wal-Mart isn't just on its way to becoming No. 1, but No. 1 with a bullet, as executives believe they can almost double store count. Given this kind of opportunity, Wal-Mart Canada could grow to generate as much in sales as its top two competitors combined.

Wal-Mart Canada's prospects weren't always quite as sunny as they are today, said coo Mario Pilozzi, who heads up Wal-Mart's Canadian operations. Initially, he said Canadians were ambiguous about Wal-Mart Canada. Canadian retailing is different than that of the United States, and it was immediately apparent Wal-Mart meant to become a significant force quickly.

However, George Hartman of Dundee Securities in Toronto noted that Wal-Mart didn't try to force its way of doing things on Canadians. The retailer immediately made strides to adapt itself to the existing market. For one thing, Wal-Mart made adjustments to Canadian fashion expectations. "They're a little more upscale in Canada than in the United States," he said. In Canada, for example, Wal-Mart offers 725, a denim line that positions itself as an alternative to brands like Levi's and Lee.

Another difference Wal-Mart Canada had to take into consideration was the marketplace. Canada's demographics are based on the particulars of its geography. A relatively small population is strung out across an entire continent. The retail structure that developed to accommodate this reality resulted in a few national chains dominating the scene. By purchasing Woolco as a way of entering this market, Wal-Mart immediately had a presence and base for quickly gaining a stature on par with Hudson's Bay, Sears Canada and Canadian Tire.

Wal-Mart was fortunate certain barriers had already been thrown down before its arrival. Canadian consumers already were quite used to U.S. retailers operating in their country. Still, said Pilozzi, Wal-Mart was subject to the usual concerns about its impact on existing retailing.

Over time, customers warmed to Wal-Mart's everyday-low-price approach. About two years ago, Wal-Mart Canada began getting petitions from smaller Canadian communities the company did not yet serve, asking if a store might be opened in their vicinity. All told, 45 different towns have contacted the company about opening a local store, including the 15 official petitions. "Canadians say we want Wal-Mart in our community," Pilozzi asserted. "It's gratifying."

But not surprising, said Jamie Spreng, a Montreal-based analyst with Canaccord Capital Corp. Wal-Mart's EDLP pricing policy was embraced by Canadians, he said. Also, its superior distribution system is well suited for coping with Canada's vast distances. And, Wal-Mart constantly touts a buy-Canadian campaign. Wal-Mart purchases 80% of its products from Canadian suppliers as a matter of policy, although it should be noted that the vendors aren't necessarily the manufacturers. Still, the campaign has played well among Canada's consumers.

As for the petitions, Spreng said many Canadian communities not part of the most densely populated belt along the seaboards and the U.S. boarder generally have only one major retailer within a convenient traveling distance. "It's no wonder they want another retailer," Spreng said. "With Wal-Mart, Canadian consumers can get the best prices all the time."

Wal-Mart has continued to evolve as it has sought ever-new ways to meet the needs of Canadian consumers. Recently, it began opening pantries in new and remodeled stores, now operating a total of 20. The introduction of pantries has reinvigorated curiosity about supercenters, an issue that comes up regularly among observers of Wal-Mart Canada. Until now, when asked about the development of Canadian supercenters, executives have typically replied that supercenters are a "possibility," but discount store growth opportunities are the top priority.

Pilozzi, however, told DSN Retailing Today that supercenters aren't a matter of if, but of when. He said that the strong response to pantries has spurred Wal-Mart to think in more urgent terms about the advantages of introducing supercenters into the Canadian market. Warehouse clubs may also be a good fit in the Canadian market, Pilozzi said.

"Right now, we're focusing on growth in general merchandise," he said. "But I see food in our future."

Canada will play a significant roil in the development of Wal-Mart's international operations, Pilozzi said. Wal-Mart Canada has become a training ground for international managers, something demonstrated dramatically when Dave Ferguson, Pilozzi's predecessor and former boss, left to take over the ailing division in Germany.

Additionally, Wal-Mart is exploring and developing best practices in various segments of its operations that have relevance not only to European, Asian and South American operations but even those in the United States. Canada is part of a worldwide Wal-Mart effort to identify and work with promising national suppliers to help them develop into worldwide vendors for the chain. What is being learned in Canada, said Pilozzi, will contribute significantly to Wal-Mart's global expansion.

WAL-MART IN CANADA

STORE SALES: $4,800 million

TOTAL STORE COUNT: 174 [*]

TOTAL SQUARE FOOTAGE: 20,480,421

YEAR ENTERED: January 1994

COUNTRY PROFILE

POPULATION: 31.6 million

GDP: $612,049 (IN MILLIONS) VS. U.S. GDP: $8,708,870 (IN MILLIONS)

GLOBAL GDP RANKING: 9

MAIN COMPETITORS: Hudson's Bay Co., Sears Canada, Canadian Tire

(*.) Discount stores only.

Source: Company reports, DSN Retailing Today and analysts' estimates, U.S. Census Bureau and World Bank