ed to achieving success.The arrival of a recession in 1998, escalating interest rates and the resulting slowdown in consumer spending halted store expansion at 10 supercenters and three Sam's Clubs. Wal-Mart added no new supercenters in 1999, and it stepped cautiously back into the market with one store opening last year.It was never able to get the Sam's Club format to work, even after remodeling clubs and altering its strategy. So last year it sold the units to Home Depot.Despite a lack of financial success, Wal-Mart has received other benefits from the experience of entering Argentina. Valuable lessons were gained regarding the importance of cultural sensitivity, as well as how to approach store management and vendor relations when entering a new market from scratch. Argentina has also been a source of best practices, especially as it relates to food merchandising, fresh departments and operating in an inflationary environment.For the time being, the outlook for Argentina is bleak largely because of the nation's economy, not to mention Wal-Mart's lack of scale. As a result of its commitment to organic growth strategy in Argentina, Wal-Mart lacks the size of more entrenched operators and others that expanded via acquisition.Another French player, Casino, entered the market in 1998 with the acquisition of Libertad and its eight hypermarkets. Royal Ahold also has a large operation; the Dutch retailer is joint owner of 235 Disco supermarkets.Any improvement for Wal-Mart in Argentina rests on its ability to increase its size substantially and on the economy improving; the outlook for the latter is still suspect. The economy performed worse than expected last year and the outlook for this year, according to the International Monetary Fund, is for 2.5% gross domestic product growth. Interest rates have fluctuated wildly, but the prime lending rate was still in the upper teens at press time.The government has attempted to institute reforms t...
