Will You Marry Wal-Mart?

The writing is on the wall at Wal-Mart (NYSE:WMT), or at least on its corporate job listings website. The Financial Times unearthed new openings at the world's leading retailer that hint the company may be looking to make some acquisitions to get back on the growth track.

Calls for executives to help lead the New Format Development team were posted on the Wal-Mart site five weeks ago. The job descriptions suggest that the "multi-format strategy team" will develop concepts in-house -- but there's a tantalizing entry in the requirements for the position of Senior Director, Multi-Format Strategy.

"Assess strategic implications of any possible M&A on our overall portfolio," is the sixth responsibility listed for the opening (it's job post number 16984, if you're curious or want to apply).

Hmmm. Inserting "possible" merger and acquisitions activity is intriguing. The article's angle is that Wal-Mart is concerned over the stateside expansion of Tesco, England's popular chain of grocery stores, although there's more to it than that.

Tesco is an impressive operator with nearly 2,000 stores in the United Kingdom, but it has expanded into 11 more countries and has no more than 370 units in any single country (and that would be Thailand, where Tesco has been for nine years).

So it's not Tesco that is forcing Wal-Mart's hand here. It is the company's recent weakness relative to its domestic competitors -- and apathetic customers -- that must be at the root of this "possible" push to snap up smaller chains.

Where the best buys are
One would argue that Wal-Mart is a couple of years too late. It could have cleaned house on West Coast grocers and rival discounter Kmart when they were trading at a pittance earlier in the millennium.

Thankfully, there is still plenty of blood in the aisles. But instead of going for the obvious department stores and supermarket chains, Wal-Mart is about to find that the biggest bargains to be had are in small, specialty retail concepts.

They may not seem like much of a match with Wal-Mart, but consider the sad fates of some of these distressed chains:

This eclectic lot of chains is trading at significant discounts to recent highs. Now before you say there's no way Wal-Mart would ever want to tail the Hot Topic emo and goth kids around its stores, ask yourself what each of these brands would do in reinvigorating the vanilla bean brand that is Wal-Mart.

Wal-Mart made a commitment to consumer electronics last year, but that basically involved slashing prices. Imagine if it could refashion its consumer electronics departments after the proven Circuit City format, taking advantage of the rising popularity of Firedog to get into the home theater installations and tech repairs markets.

Pier 1 and Restoration Hardware would help bring a new clientele to the company's home decor department. Chico's FAS is a play on appealing to middle-aged fashion-savvy women, and Hot Topic is an outreach program for kids who feel that Wal-Mart is cool only as an object of derision once you get on the intercom system.

All these concepts would be enhanced in their current stand-alone state with Wal-Mart's inventory control mastery, while also providing attractive "store within a store" enhancements to the charisma-free Wal-Mart.

Yes, blood in the aisles
It doesn't have to look too hard to find compelling third-party concepts. Some are practically being given away. Tired retailers are out to unload underperforming chains. Forth & Towne was shut down two months ago. Yesterday we learned that Paiva's days are numbered.

When you get down to it, even something as out of the ordinary as Build-A-Bear Workshop (NYSE:BBW) -- which is on the block, by the way -- would do wonders to breathe new life into Wal-Mart's toy department.

Wal-Mart may sell more toys than anyone else in the country, but good luck finding a pulse of personality there. It's the same story throughout most of the superstore's departments. It needs an inoculation to cure it from the mundane, and the bloodied brand injections are pretty darn cheap.

If Wal-Mart takes its "low prices" mantra to heart, there is no reason why its "possible" concept nibbling shouldn't break out into an all-out feast.

Wal-Mart is an Inside Value recommendation. Now there's a newsletter that lives the "low prices" mantra. Find out how with a free with a 30-day trial subscription.

Longtime Fool contributor Rick Munarriz wonders why Walmart.com isn't as popular as Target.com according to Alexa, but it isn't keeping him up at night. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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