Wal-Mart: A retail titan

Wal-Mart's fortunes abroad have been mixed

By Danielle Rossingh BBC News Online business reporter

US discount grocer Wal-Mart has officially joined the tussle for British supermarket chain Safeway.

BBC News Online traces how a family store founded in 1962 in the US Deep South transformed itself into the world's biggest - and some say best - retailer.

In the old days, Sam Walton used to fly a propeller-driven plane to keep tabs on all his stores.

Now, the company he founded with his brother Bud uses a fleet of 20 jets just so management can keep in touch.

1972: Wal-Mart listed on the New York Stock Exchange.

Mid-1970s: Wal-Mart expands to 125 stores in the US, with sales of £340m

1976: inspired by a visit to Korea, Sam Walton introduces the famous "Wal-Mart cheer" to staff

1990: Wal-Mart becomes America's number one retailer

1992:Sam Walton dies, his son S. Robson Walton becomes company boss

1993: First billion-dollar sales week in December

1993: Wal-Mart international division formed

1997: First $100bn sales year

2000: H. Lee Scott named as president and CEO

With $240bn (£150bn) in sales, 3,400 American stores, 1,200 international stores in nine countries and more than 1.3 million employees worldwide, Wal-Mart is hot favourite to snap up the British number four supermarket, Safeway.

The £3bn fight for Safeway seems like peanuts for a company that recently racked up sales of more than $1.4bn (£869m) in just one day's trading.

But at Wal-Mart headquarters in Bentonville, Arkansas all that matters is keeping the costs as low as possible.

"It's said that Wal-Mart has the deepest pockets, but you get deep pockets by not being too foolish with your money," said Tim Rees, a director of Insight Investments.

Expansion

Although each store enjoys a relatively high level of independence, all Wal-Mart stores have clean and large aisles and bright lights.

Employees, or rather "associates", in red polo shirts walk around the stores, serving customers attracted to the stores by claims of low prices, on a range of up to 100,000 items, from groceries to jewellery.

Although sales in Wal-Mart stores open for at least 12 months were up a mere 3% last year, other retailers suffered much worse.

Indeed, rival Kmart filed for bankruptcy last year.

But if Wal-Mart wants to achieve its target of doubling sales to $480bn in just five years, it needs to step into new markets, overseas as well as in the US.

Mixed fortunes

Last year, Wal-Mart's international stores generated $40bn, or 16% of the firm's total sales.

But, strangely enough, the US retail giant has not been as successful conquering the world as it has been on home turf.

One of the reasons Wal-Mart can keep its prices so low is its management of supply chains and inventories.

But in Europe and Asia, where transport systems are not as refined as those in the US, that has proved to be less achievable.

Furthermore, it has struggled with some cultural differences, notably in Germany.

Operations there are still in the red five years after Wal-Mart stepped in.

Local resistance

From the beginning, Wal-Mart faced stiff competition from well-established German chains, and German shoppers were put off by Wal-Mart's friendly - or sickening, depending on your perspective - door greeters.

After a difficult start-up period, Wal-Mart turned things round in Canada, while its £6.7bn acquisition of Britain's Asda in 1999 has been branded success.

Wal-Mart's roll-out into China and Korea seems to be proceeding well, although Argentina and Brazil have remained difficult markets.

But Wal-Mart has fared well in Mexico, where it is now the largest retailer.