Wal-Mart plans to spend around $750 million to build as well as renovate and relocate almost 73 stores in Canada this year.
Out of these 73, a significant portion will be supercenters that offer a large range of products from groceries to general goods. The company opened its first supercenter in Canada way back in 2006, and the store concept has been very well received by Canadian consumers who "enjoy the one-stop shopping offer," according to Rosalyn Carneiro, Wal-Mart Canada's spokeswoman. The large range of products all under one roof, coupled with "everyday low prices," is a major draw for customers.
Another possible reason for such a move is to ward off any competition it may face from Target, which plans to enter the Canadian market in a big way next year. Thus, expanding and gaining an even stronger foothold in the Canadian economy as soon as possible will put Wal-Mart in a good position.
Target, which acquired leaseholds on 189 locations, plans to put in close to $11 million to refurbish each site. Target is all set to open around 100 to 150 stores in Canada during 2013-2014. Wal-Mart definitely has the upper hand, as it already operates 333 stores in Canada. Can you say first-mover advantage?
A better picture abroad
Since the economic downturn of 2008, Wal-Mart's U.S. operations have somewhat flailed as same-store sales have generally been on the decline. However, during its most recent quarter, this trend did reverse, but profits still fell on a year-over-year basis. Adverse economic conditions in the U.S. -- a sluggish economy and high unemployment -- have played their part in the less-than-inspiring performances at Wal-Mart. The one thing that has worked in the company's favor during this time is its strong international operations, which contributed almost 32% to its total revenues in the last fiscal year.
Wal-Mart is hoping to keep its rivals at bay and become a stronger leader in the Canadian market. Its supercenters are already pretty popular and should garner further growth and help the Bentonville behemoth continue to rake in the green from abroad.
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Fool contributor Shubh Datta doesn't own any shares in the companies mentioned above. The Motley Fool owns shares of Wal-Mart Stores. Motley Fool newsletter services have recommended buying shares of Wal-Mart Stores. Motley Fool newsletter services have recommended creating a diagonal call position in Wal-Mart Stores. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.