brazil report 2007

26 20062007 from so paulo to shanghai new consumer

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Unformatted text preview: nuary 31, 2006. The company employs 1.8 million associates worldwide. More than 176 million customers visit Wal-Mart stores worldwide per week. Wal-Mart has more than 6,200 facilities around the world, including 3,800 stores in the United States, along with 2,400 international units in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom. Wal-Mart opened its first store, in Brazil, on May 3, 1995; a Sam’s Club in São Caetano, in the metropolitan area of São Paulo. Organic growth Growth by acquisition? Estimated market share for 2005 Revenue evolution 20 16% Millions of R$ 15 12% Wal-Mart Carrefour 10 CDB/ Casino 61% CBD/Casino Carrefour Wal-Mart Others 11% 5 0 2002 2003 2004 2005* *Estimated figures considering low increase in sales and purchase of Sonae by Wal-Mart During the first years in Brazil, Wal-Mart grew slowly by adding new locations without any external acquisition. In 1998 Wal-Mart had its first experience of doing business outside the state of São Paulo. A significant breakthrough on Wal-Mart’s operations was the opening of the new distribution centre at the end of 2001. Only then was Wal-Mart able to achieve a significant reduction in the operating cost by reaching a critical mass in the number of stores. 27 61% of the market is still made up of a significant number of minority players who do not make even 2% of market share. Any attempt to raise market share by any of the main players will require a major acquisition effort of small, regional, niche competitors. Today Wal-Mart operates 294 stores. In 2004, Wal-Mart Brazil added 118 stores from the Bompreço operation and by the end of 2005, 140 new stores were added from the Sonae operation, being present in 17 out of the 27 Brazilian states. 2006/2007 FROM SÃO PAULO TO SHANGHAI – New consumer dynamics: the impact on modern retailing* Local development through sourcing Wal-Mart procures over 95% of local products. It has developed around 8,000 local vendors in Brazil. It provides training and other assistance to Brazilian suppliers to meet Wal-Mart’s quality specifications and eventually makes them compliant with export specifications for the U.S. market, through Wal-Mart’s procurement procedure. • Complex system to determine applicable tax credits, as this depends on multiple factors such as product type, sourcing, type of buyer, and location of buyer/seller. Brazilian Corporate Taxes – Quantity of taxes Number of taxes Description 52 Federal 5 on revenue, 2 on income, 3 on assets, 6 on imports/exports, 2 on financial operations, 3 on services & goods, 21 on payroll and 10 fees. 13 State 2 on assets, 1 (with 27 different regulations) in services & goods and 10 fees. 30 Municipal Geographical distribution of stores in Brazil 2 on assets, 1 (with over 5,000 different regulations) in services & goods and 27 fees. There are a total of 95 different taxes of which at least 60 taxes are applicable to current Wal-Mart Brazil...
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