What was is what will be

Discount Store News, Oct, 1999

As this commemorative issue recognizing Wal-Mart as "Retailer of the Century" comes to a close, the questions and challenges for what will soon become the largest company in the world are just beginning to unfold.

In many ways, they are the same questions and challenges that were posed at earlier stages in the retailer's history.

Consider the following events:

When Sam Walton uncharacteristically predicted in June 1990 that that Wal-Mart would hit $100 billion in sales by the end of the decade, the company was questioned about its capacity to grow that large that rapidly.

When Hypermart USA opened in 1988, marking Wal-Mart's official entry in to the traditional grocery business, the company was challenged about its ability to execute the format and succeed in food retailing.

When the stock price remained flat during the mid-1990s, questions were raised regarding the return on investment for shareholders and associates, which had been such a key component in maintaining long-term loyalty.

Last year, questions were raised about the viability of the Neighborhood Market test concept and whether Wal-Mart could operate this hybrid combo store efficiently.

Most recently, following its acquisition of Asda and entry into the United Kingdom, similar questions were raised again about the competitiveness of international markets, Wal-Mart's ability to export its culture, the difficulty of recruiting talented associates and the acceptance of the format among the habitual shoppers of High Street.

And opinions are being tossed around about whether Wal-Mart, despite its knowledge of merchandising and technology, truly has the web-savvy culture needed to maximize its e-commerce effort and become one of the masters of the dot-com universe.

If history can repeat itself, then what Wal-Mart accomplished during the 1990s it can at the very least replicate in the first decade of the 21st century.

During the 1990s, Wal-Mart added almost $140 billion in revenue. It could post similar gains over the next 10 years.

Moreover, it is projected that Wal-Mart will add in about four years what it previously took 10 years to generate. In fact, the company is projected to add an unfathomable $511 billion during the first 10 years of the new millennium and should reach a remarkable $676 billion by 2010.

Beyond that, Wal-Mart could become the first trillion-dollar company in the world at some point during the second decade of the new millennium.

If the stock splits according to its pattern during the 1990s, when it recorded three 2-for-1 splits, then 100 shares purchased on Jan. 1, 1990, valued at about $4,500 could be worth $300,000 by 2010. If the stock splits six times, considering the phenomenal growth that is projected, then the investment could be worth around $2.4 million over a 20-year span.

If Wal-Mart continues to expand globally over the next 10 years as it did during the 1990s, when it entered nine countries, then it could operate in 18 countries or more by 2010. And if Wal-Mart negotiated four acquisitions around the globe over the past several years, it could easily duplicate its prior initiative with four more over the next 10 years.

If Neighborhood Market follows the growth pattern established by supercenters, then there could conceivably be 1,000 such units by 2010.

Undoubtedly, there are a lot of "ifs" regarding the future of Wal-Mart. There is arguably some skepticism about Wal-Mart's ability to sustain its current growth record, let alone achieve the numbers analysts are projecting. And there is some concern about running a $200 billion enterprise, let alone a $676 billion one, if only because so far no conglomerate on the planet ever has.

What Wal-Mart must do to achieve these projections is to stick to the basics, stay focused on the customer, reward its associates, and continue to change. Wal-Mart will reach $200 billion and beyond by adhering to the simple principles of Sam Walton as it has done for almost four decades.

For now, as the new millennium approaches, it's business as usual for the "Retailer of the Century." Regardless of its size or stature, it's business the WalMart way. And that way is pretty much the same as it was when it all started on July 2, 1962.