Can Wal-Mart Shake Up Japan's Retail Industry?

Excerpt from our One Page Annotated Wall Street Journal Summary (receive it by email every morning by signing up here):

HEARD IN ASIA: Japanese Retail May Get a Jolt

• Summary: Wal-Mart has a big opportunity to expand its presence in Japan if it purchases the nation's third largest retailer, Daiei Inc., which would give it 13% of the total floorspace of all supermarkets complementing its 54% stake in Seiyu Ltd. However, a purchase instead by Japanese rival Aeon Co., the largest retailer in Asia by sales, would result in a 22% share of floorspace. Regardless, analysts see a purchase by either as having a potentially huge impact on Japanese retail, shifting bargaining power away from difficult suppliers and wholesale distributors. Further consolidation in Japanese retail will likely mean more good news for investors, with retail stocks seen adding to their outperformance of the broader TOPIX Index. Purchasing Daiei might not have an immediate impact on either Aeon or Wal-Mart's earnings warns an analyst and it still could be tough going given a 3.2% fall in July supermarket sales in Japan, the seventh consecutive month of y-o-y sales declines.
• Comment on related stocks/ETFs: Although Wal-Mart's (WMT) operations in Japan to-date have not exactly been ideal, its stake in Seiyu (SYLTF.PK) (Tokyo: 8268) is starting to show a glimmer of turning into a success story as it continues to reorganize. Having a stronger bargaining position via a Daiei (DAIEY) (Tokyo: 8263) purchase could help Wal-Mart/Seiyu further reduce costs and improve its supply-chain. Positive impact on Wal-Mart's stock price is more likely over the longer-term. Note that a Wal-Mart spokeswoman in Tokyo declined to comment on a Daiei deal and Aeon (AONNY.PK) (Tokyo: 8267)said it isn't in talks with current Daiei owner Marubeni (MARUY.PK) (Tokyo: 8002) at this time. See a separate story from today's WSJ asking if localization is the answer for Wal-Mart. And see whether you agree that Wal-Mart's growth is going to slow as it heads down the slope of maturity. Also check out comments on Wal-Mart's exit from Germany and South Korea in its latest conference call transcript.