2. Industry Sector & the NAICS 2
Digit Code
Industry Sector: Retail Trade
NAICS 2 Digit Code: 44-45
The Sector as a Whole:
The Retail Trade sector comprises establishments engaged in retailing merchandise, generally
without transformation, and rendering services incidental to the sale of merchandise. The retailing
process is the final step in the distribution of merchandise; retailers are, therefore, organized to sell
merchandise to the general public.
Store retailers operate fixed point-of-sale locations, located and designed to attract a high volume of
walk-in customers. In general, retail stores have extensive displays of merchandise and use mass-
media advertising to attract customers. They typically sell merchandise to the general public for
personal or household consumption, but some also serve business and institutional clients.
Source: http://www.naics.com/
3. Industry Sub-Sector & the
NAICS Code
Industry Sub-Sector: Warehouse Clubs
& Supercenters
NAICS Code: 452910
This industry comprises establishments known as warehouse clubs,
superstores or supercenters primarily engaged in retailing a general line of
groceries in combination with general lines of new merchandise, such as
apparel, furniture, and appliances.
Source: http://www.naics.com/
5. Discount Industry & the NAICS
Code
Industry Sub-Sector: Discount
Department Stores
NAICS Code: 452112
This U.S. industry comprises establishments known as department stores
that have central customer checkout areas, generally in the front of the
store, and that may have additional cash registers located in one or more
individual departments. Department stores in this industry sell a wide range
of general merchandise (except fresh, perishable foods).
Source: http://www.naics.com/
7. Warehouse Clubs & Supercenters (452910) +
Discount Department Stores (452112)
Combined
1997 2002 Growth
# of Stores 7,908 8,562 8%
Sales ($1,000) 208,041,586 325,138,570 56%
Since Wal-Mart belongs to both Sub-Sectors, Wal-Mart data will be compared to the total of
both NAICS codes 452910 & 452112
Source: http://www.naics.com/
9. Wal-Mart’s performance relative to
Warehouse Clubs & Discount Stores
In 1997 Wal-Mart contributed 50% of the Sub Sector’s overall Sales.
(Warehouse Clubs - 452910 & Discount Stores - 452112)
By 2002 Wal-Mart sales grew to 66% of the Sub Sector’s overall Sales.
Source: http://www.naics.com and www.walmart.com /
10. Market Share & HHI
ENTERPRISE MARKET SHARE
Let's begin at the beginning. A two year time frame (2006-07) was used because their fiscal years
have different closing dates. The fiscal years of Mal-Mart (WMT) and Sears (SHLD) closed in early
2007 while those of Costco (COST) and Target (TGT) closed in late 2006. The companies
generated $456.6 billion in combined sales revenues. Wal-Mart's share was 62.2 percent of group
revenues. The market shares of its three competitors were 13.2, 13.0 and 11.6 percent.
Source: http://www.customersandcapital.com/book/walmart/
12. HHI
The higher the index, the more concentration and (within
limits) the less open market competition. A monopoly, for
example, would have an HHI index of 10,000, the maximum
score.
If the 4 company’s had an equal share of 25% the HHI index would be
2500, with no particular company having a higher concentration over
the others. Based on these parameters an HHI index of 4235.28, the
Discount Department and Warehouse Clubs industry would be
considered low to mid concentrated with Wal-Mart having the majority
of share.
Source: http://www.oligopoly watch.com/2003/08/15.html
13. Wal-Mart’s Performance Relative to
Competitors within the same Sub-Sectors
2008 Wal-Mart Stores Inc. BJ's Wholesale Club Inc. Costco Wholesale Corp. Target Corp. Family Dollar Stores Inc
Industry Discount, Variety Stores Discount, Variety Stores Discount, Variety Stores Discount, Variety Stores
Discount, Variety Store
Current Share Price 47.12 28.68 45.03 31.2 27.77
Market Value $184,831 mil $1,687 mil $19,509 mil $23,487 mil $3,885 mil
Revenues $404,040 mil $9,944 mil $73,068 mil $65,259 mil $7,054 mil
Net Earnings $13,705 mil $132 mil $1,284 mil $2,633 mil $240 mil
5-yr Sales Growth 9.14% 7.62% 10.15% 7.25% 7.34%
5-yr Earnings Growth 9.84% 4.37% 11.04% 8.59% 2.73%
Net Profit Margin 3.40% 1.30% 1.80% 4.00% 3.40%
Short Interest 2.1 5.9 3.9 4.8 2.3
Proj. Long-Term EPS Growth (%) 10.30% 11.30% 12.10% 12.30% 9.80%
Forward P/E 13.9 12.9 15.5 10.7 15.9
PEG 1.35 1.14 1.27 0.87 1.63
Price/Sales 0.5 0.2 0.3 0.4 0.6
Price/Cash Flow 10.7 8.7 11.4 6.8 10
Price/Book 2.8 1.7 2.2 1.7 3
ROE 20.80% 13.60% 14.20% 18.60% 19.50%
ROA 8.10% 6.50% 6.10% 5.90% 9.20%
Dividends $0.95 $0.00 $0.64 $0.64 $0.54
Dividend Yield 2.02% 0.00% 1.42% 2.05% 1.94%
Payout Ratio 27.30% 0.00% 26.50% 17.70% 29.80%
Total Return (12-mos) -5.30% -11.50% -32.80% -42.60% 34.40%
Total Return (3-yr) 7.60% -10.80% -6.30% -40.20% 21.70%
Beta 0.2 0.5 0.8 1.1 0.1
% Off 52-wk High 26.20% 35.24% 40.14% 47.61% 14.55%
% Above 52-wk Low 0.43% 1.13% 46.68% 21.87% 54.28%
On-Balance Volume Index 53 85 69 86 161
Source: http://www.smartmoney.com/stock-quote/?referrer=/marketmap/index.c fm&story=competition&symbol=WMT
14. Travel Agencies
NAICS code: 561510
This industry comprises establishments primarily engaged in acting as
agents in selling travel, tour, and accommodation services to the general
public and commercial clients.
1997 2002 Growth
# of Establishments 29,332 21,705 -26%
Sales ($1,000) 9,977,110 9,387,397 -6%
The travel agency industry has been seeing a decline in both sales (-6%)
and # of establishments (-26%). The decline is sales from ‘97 to ’02 can
be attributed to the slight 2001-02 recession in the US economy after the
dot com bubble burst and 9/11 terrorist attacks. The number of
establishments has decreased due to the popularity and convenience of
e-ticketing options.
Source: http://www.naics.com/
15. Book Publishing
NAICS code: 511130
This industry comprises establishments known as book publishers.
Establishments in this industry carry out design, editing, and marketing
activities necessary for producing and distributing books. These
establishments may publish books in print, electronic, or audio form.
1997 2002 Growth
# of Establishments 2,684 3,570 33%
Sales ($1,000) 22,648,251 27,162,866 20%
There has been an increase in both sales and # of establishments
from ‘97 to ‘02. The outrageous cost of college books must be
contributing to the increase in sales.
16. Book Publisher’s & Travel Agency’s
Sales & No. of Establishments
Compared.
17. Industry Life Cycle
Based on the competitive and comparative analysis (Sales, # of establishments, growth rates) I would place
Discount Stores in the low to mid section of The Maturity stage in the Industry Life Cycle,
Book Publishers in the mid to high Maturity stage and Travel Agency's in the mid Decline stage.
