Retail giant Wal-Mart (WMT) will open its first Hispanic-focused supermarkets this summer in Arizona and Texas. The stores will feature Spanish speaking staff and new layouts, products, and signage that will be "relevant to local Hispanic customers."
The stores, dubbed Supermercado de Walmart, will appear in converted Wal-Mart Neighborhood Market stores in Phoenix and Houston. Separately, the company also plans on converting a Sams Club warehouse into a Hispanic-themed Más Club.
Some of this reflects Wal-Marts U.S. stores chief Eduardo Castro-Wrights previous experience in the companys Mexican subsidiary. But it also reflects the realization that by 2042, according to the Census Bureau, ethnic and racial minorities will represent a majority of the U.S. population. So instead of apple pies and hamburger buns; get ready for Latino pastries and tortillas.
Now that the sales boost from penny-pinching consumers is peaking, its nice to see the company ramping up capital investment plans in search of new sources of growth. Prior to the recession, the company was focused on revamping existing locations with sushi bars and faux-wood floors. Besides the multi-cultural efforts, Wal-Mart is pushing forward on its Marketside convenience store concept.
It appears that the "consumer trade-down" investment theme is over, as shares have come under pressure since the beginning of the year. There are rising concerns that the Obama Administrations support of the pro-union Employee Free Choice Act will likely translate into much higher labor costs across the companys U.S. store base. Earlier this week leaders in both the House and the Senate introduced the legislation, so things are moving forward. If passed, the Act would allow employees to unionize if a simple majority wanted to join the union -- waiving the requirement for a secret ballot election that takes place up to 50 days after employees petition for representation.
Citigroup analysts downgraded the stock this week on these concerns. The obvious outcome for Wal-Mart is higher hourly wages, increased benefits, and decreased scheduling flexibility. As a result, the retailer will likely be forced to raise prices to protect margins -- undermining the companys main competitive advantage.
In anticipation of rising costs associated with a unionized workforce, Wal-Mart is looking to grow the top-line by opening its powerful supply chain to new markets. From Hispanic shoppers to inner city vegans, a wider swath of the population will soon benefit from the companys massive scale. Also worth mentioning is the push into retail health care services. But these are long-term growth stories. In the near-term, investors will continue to be pressured by the negative sentiment surrounding the card-check legislation.
Does this bother you?
I've seen a lot of people bitch about this, but I honestly don't see the big deal. To me it's just good business by Wal-Mart. But people seem to be literally outraged at Wal-Mart for doing this and I have no idea why. I mean, I keep seeing people say "Mexicans need to learn the English language, blah blah blah". But they say that like it's fucking easy to learn a second language. It's hard, and while the Mexican population continuously grows here in the States, I say it's good that they get some catering to. All of them will learn enough English to get by within a couple of years of living here, but before they can do that, whats the big deal of them having some stores of their own?
I don't know.. I just put myself in their shoes and if I was living in another country that didn't speak my language, it would be nice to have a couple of stores that dealt with people who spoke English. Thats the way I look at it.
But what do you think? Think this is unnecessary? Does this make you mad, for whatever reason? I'd love to hear why if so, because right now I don't understand the hate Wal-Mart is getting for doing this.