WAL-MART SET TO BOW IN BRAZIL

Byline: Robert McGinty

ORLANDO, Fla.--With stores in 49 of the 50 states, Wal-Mart Stores is setting out to expand into South America this year and will debut with a supercenter in Sao Paulo, Brazil, on May 3.
After that, the world's largest retailer expects to add two more Brazilian units this year and four in the first quarter of 1996, according to Bob L. Martin, president and chief executive officer of Wal-Mart International.
Martin disclosed the plans last week at "Retailing Smarter," a two-day conference sponsored by the University of Florida's Center for Retailing Education and Research. Martin didn't specify whether the additional Brazilian units would be supercenters or Sam's Club warehouses, but in the past Wal-Mart has said it expects to open several Sam's units in Brazil.
Expansion will come just as quickly in Argentina, where Wal-Mart is committed to opening six stores, including two supercenters, within the next 12 months and four more Sam's Clubs after mid-1996, he said. Supercenters, which combine a discount store and supermarket under the same roof, range in size from 150,000 to 200,000 square feet.
Martin said Wal-Mart's plan is to establish a foothold in foreign markets with low initial investments and then to expand rapidly.
In Brazil, the discounter is working with joint-venture partner Lojas Americanas, a leading retail chain. However, in Argentina, the Bentonville, Ark.-based retailer is operating independently and expects to invest about $118 million to open its first six units.
"It all comes down to focus and execution," Martin told the conference. "Mistakes cost more in a foreign market so efficiencies must offset the higher fixed cost. But there's limited opportunities for growth domestically and competitive pressures here make the international market look better and better."
According to Martin, the U.S. companies who expand successfully into international markets will be those that rely on the same strategies that make their U.S. stores work.
"We're exporting attitude," he said. "We need highly motivated people, so hiring the right local work force is crucial. Finding the right products to sell comes through a learning process. New concepts are introduced, such as with the Mexico City supercenter. Live trout are a hot item with consumers there.
"The consumers are also brand-oriented, but our private labels have had great success," he added. "Sam's Choice Cola has a great portion of the soft-drink market in Puerto Rico."
Some foreign markets may be more attractive than they appear to be, Martin said. For example, he said Chinese consumers have an average yearly income is about $400, but he added, "They get all kinds of allowances. They don't pay for housing and education and they get compensation for various services, such as milk, children's hair cuts and things like that. And in some places, the median income is closer to $1,600."
Wal-Mart has three stores in Hong Kong and plans to open two Sam's units in China late this year.
A more important concern for retailers, Martin said, is the traditional buying patterns. Many Chinese live in two-room dwellings of less than 400 square feet. Without storage space, they tend to shop more frequently, sometimes every day, he said.
Separately, Wal-Mart moved closer this week to opening its first store in Vermont, the only state in the U.S. where it does not operate.
A local group in St. Albans, Vt., dropped its opposition to a proposed Wal-Mart. The group of property owners had appealed a decision by St. Albans Town approving the discounter's store. The property owners could not be reached for comment on their decision to drop the appeal. A trial had been scheduled to begin Monday.
The single hurdle remaining for Wal-Mart, according to J. Frank Montagne, chairman of the St. Albans Town selectmen, is the approval of a state environmental board. The board is scheduled to meet May 24, Montagne said.
In a non-binding referendum last year, about 80 percent of St. Albans voters approved Wal-Mart's plans, Montagne said. "The people want it," he said.
The mass merchant has applications pending for two other Vermont locations, in St. Johnsbury and in the Burlington area, Montagne said. --Fairchild News Service

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