Once again, the company's sales growth came in light during the third quarter. Total revenue of $115.7 billion was just 1.7% higher than a year ago. In "constant currency," the number was $116.2 billion, and that was below the expected $116.8 billion figure.
Theories for why Wal-Mart has stopped growing abound.
Some blame the wages the company pays, which impact what other retailers pay and limit what Wal-Mart shoppers can spend. Others say it's a sign of the times, that the rich are getting richer and heading off to Macy's (M). Some say the company is just politically incorrect, and the left side of our political aisle is staying away.
In fact, the answer is simpler. Wal-Mart has exhausted its original target market.
Sam Walton's idea was to bring big-city pricing to the countryside, then to America's outer suburbs. His successors expanded the company by expanding the niche, adding groceries and gasoline, making the stores enormous.
That low-hanging fruit has been picked. In recent years the company has begun moving directly into cities, where real estate costs are high. They have worked with developers to limit land costs by adding parking garages instead of lots. Along the way they have had to fight neighborhood activists who have a variety of causes, and that costs money.
Wal-Mart has also tried to fight the trend by expanding overseas, but that can also be self-limiting. Some markets, like India, just don't want Wal-Marts. The same real estate problems bedeviling the company in the U.S. count double in Europe. The problems of Mexico, where Wal-Mart paid $157 million over a probe into bribery, illustrate another risk.