One challenge Wal-Mart is facing is it is difficult to build a big mall suburbs. I think new law is launched and now all big retailors profibited to build new big malls such as JASCO etc.. This is Japanese gorvenment strategy to protect medium & small size companies.
But more than that, the actual challenge is "Everyday low price" can not be attractive to everyone especially in developed countries.
People can get what we need to live our lives without any problems. Livingwares doesn't show attractive price differences anymore in many stores.
So, if wal-mart wants to be successful as retailor, wal-mart need to sell more value added and design oriented consumer goods which is relative high price and doesn't match with wal-Mart's "everyday low price".
One hidden asset wal-mart has is logistics system they developed. By releasing this sytem and providing consulting to other companies, I see wal-mart's way to survive in Japan. This is an analogy with Amazon released their API.
As IBM become a IT consulting and sold their thinkpad business and Amazon & google release their core softwares. My suggestion is Wal-Mart transform from retailor to logistics consulting company.