WAL-MART STORES:

EVERYDAY LOW PRICES IN CHINA

GROUP 8 | ANUPAMA | ANURADHA | APARNA | MONISHA | SARIKA
BACKGROUND
Established as a self service discounting store in 1962, by Sam Walton

Formats of operation:-
Wal-Mart
Warehouse Supercenter Hypermarket Close-out Store
Phenomenal Success

Jan 2005 Net Sales $285 bn, 9 country presence with 5289 stores & 1.6 mn employees

Largest company in the world, US Most admired company (Fortune Magazine)
THE SUCCESS RECIPE
Everyday low prices
Commitment to
customer service
Maintaining
technological
superiority
Building loyalty
amongst associates &
suppliers
WALMARTS
SUCCESS
BUSINESS STRATEGY THE 4 Ps
PRODUCT
PROMOTION PLACE
PRICE
Food
Groceries
Stationary
Household Consumables & Chemicals
Health & Beauty
Paint & Hardware
Sports

Small Towns Rural Areas
Pattern of expansion pushing from
the inside out
Always Low Prices Always
EDLP strategy
Continuous competitor monitoring to
ensure lowest prices
Roll Back philosophy
Very few promotions
Low Advertising costs

WHY WALMART SUCCEEDED
Changing Customer Demand
Flexible shelf space allocation
Private label lines
Changing prices EDLP
Technological change- heavy
investment in IT
HIGH RESPONSIVENESS
& FLEXIBILITY

Discount stores, supercentres
Very new concepts in retail
EDLP strategy
INNOVATIVE STRATEGY
WALMARTS SOURCE OF COMPETITIVE ADVANTAGE
LOW PRICE
CUSTOMER ORIENTED
VALUE EMPLOYEES
MOST
EFFICIENT COMMUNICATION
NETWORK
SUCCESSFUL VENDOR
RELATIONSHIP
EFFICIENT OPERATION
MANAGEMENT
DECIPHERING THE SOURCES
Discount stores with sizeable spread in one horse
towns
Saturated region by spreading out stores
This strategy helped avoid competition from
stronger players
Locating stores in rural backwaters reduced costs
due to lower land & real estate prices
Principle of frugality was at companys
heart
Executives flew economy class, shared
budget hotels, emptied own trash
Only costs that got customers to buy
products were justified

Small- Town Locations

Relentless Cost Control

Partnerships with Suppliers

Distribution & Logistics Management

One of the shrewdest negotiators in
the world
Love-Hate relationship with supplier
Demanded high quality, efficient
book keeping & punctual delivery

Created distribution centers & centralized purchasing
Used highly automated handling systems & carefully
coordinated cross docking
Used technology to get real time insight into
merchandise, forecasting, planning, producing &
shipping
Culture that
reduced Agency
Costs
Profit sharing plans for rank & file workers
Sharing of crucial financial numbers conveyed trust
Promoted an open door policy
SUCCESSFUL VENDOR RELATIONSHIP
No-nonsense negotiator
Efficient Purchasing
Partnership with suppliers
eg P&G-
-Sharing information
electronically
Efficient
communication
Vendor-managed inventory systems
eg Wrangler & GE
Minimize
inventory cost
Lower
Cost
SUSTAINABLE ADVANTAGE
EFFICIENT COMMUNICATIONS NETWORK
There are no superstars
at Wal-Mart
Combined informal
Entertainment with business
Sharing the numbers
Better
Communication
Lower
Cost
Higher
Productivity
SUSTAINABLE ADVANTAGE
VALUE EMPLOYEES MOST
Yes We Can Sam suggestion program
Store within a store
Shrinkage incentive plan
Management Training Program
Profit Sharing Scheme
Lower
Cost
Motivation
High
Productivity
SUSTAINABLE ADVANTAGE
EFFICIENT OPERATIONS MANAGEMENT
Distribution Network
-Hub-and-spoke distribution network
-Owned warehouses
-Cross-docking
Operating system
-Uniform Product Codes (UPC)
-Satellite system
Higher
Productivity
Lower
Cost
SUSTAINABLE ADVANTAGE
CUSTOMER FOCUS
SUSTAINABLE ADVANTAGE
No. 1 Boss the customer
People Greeter
Satisfaction Guaranteed policy
Loyalty
Business strategy Work /
not In HK

Work /not
In China
low price





successful vendor relationship





efficient communication
network





value employees most





efficient operation
management





customer oriented





CUSTOMER FOCUS
RECCOMENDATIONS
1
Maintain & Reinforce core competitive advantages
Growth Strategy Technology- join forces with well known
interactive service provider to bridge physical & virtual world (for
global promotion & cost saving)
2
Serving customers better by setting up a search engine, personal
online services, better opinion gathering
3
Culture- adapt locally- some core values need to change locally (as in
HK)
Formats- increase supercenters