The latest “landmark announcement by big box retail chain, Walmart, shows the company making the decision to shift focus a little ways outside the borders of the country. The retailer is set to make big investments towards the opening of several stores in Canada. This news comes not too long after the company had opted to close down several existing branches across the United States due to underperformance in sales.
Walmart’s “Landmark” announcement
Last week, the budget friendly retailer made a self-proclaimed “Landmark” announcement that it will be making a huge investment into expanding operations into Canada. The company will be putting $6.5 billion** towards expanding its investment in Canada, including “dozens of new stores across the country,” plus five new “Walmart Supercentres” stores in the Canadian provinces of Alberta and Ontario.
Gui Loureiro, the regional CEO for Walmart in Canada, Chile, Mexico, and Central America, has shared regarding the new investment that “Walmart Canada is on an ambitious growth journey to serve even more Canadians – better and differently than ever before. This $6.5 billion investment is the largest we’ve made in Canada towards expanding our footprint since we first arrived here 30 years ago.”
Why make such a big move now?
The retailer seems determined to bounce back from recent underperforming sales, as well as diversity, equity, and inclusion policy controversies. Not to mention the other external pressures such as the recent announcement from President Trump who will be fulfilling his promise to enact a 25 percent tariff on Canadian goods entering the U.S.
Granted, the increased tariffs most likely won’t be a direct hinderance to the idea of a Canadian subsidiary expanding — however, there is no denying that, even if you go back decades, this is possibly the most fraught time for relations between the United States and Canada.
Warren Buffet once shared, “Our goal is more modest: we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.” And it appears that Walmart is adopting this approach as they layout the company’s plans and investments for the near future. In a sense, the company is taking advantage of everyone’s fear (regarding the higher tariffs and precarious U.S – Canada relations) and turning it into an opportunity to grow the business on an extremely large scale.
A timeline of growth
The company first crossed borders over into Canadian territory in 1994 when it bought a Canadian retailer called Woolco and converted 122 of its stores into the first Canadian Walmart stores. The company was also gracious enough to retain all of Woolco’s employees and gave them each a 5% raise.
At present, Walmart Canada has over 400 stores which is actually quite the feat for an American retailer. Despite the vast amount of similarities between Canada and the States, it is rather rare for a retailer to cross the border and do it successfully the way Walmart has.
Target, known competitor of Walmart, attempted to expand into the Great White North in 2011 but soon had to close its doors in 2015. Conversely, a Canadian brand, Canadian Tire made two attempts to grow business in the States but sadly, both attempts ended in failure.
It does not seem likely that Walmart will face such a sad fate in Canada, however. Whilst investing $6.5 billion is, of course, a risk, if things do go according to plan, it will bring an even greater reward. Since the company is already relatively well established in the region, it could be a safe assumption to make that things will pan out in a positive way once the new stores are up and running.
**$6.5 billion in Canadian dollars, which works out to just under $4.5 billion in U.S. dollars.