RETAIL MANAGEMENT

Group : Ankita Prasad | Karthick Sharma | Ramanathan K |

Saytanya Sonowal | Sonia Joseph | Varsha Poddar
WALMART The Company
Walmart is the largest retailer and largest company in terms of revenue.
The company was founded by Sam Walton
First store opened in Rogers, Arkansas in July,2962
Company is publicly traded at the New York Stock Exchange under the symbol WMT and has its
headquarters in Bentonville, Arkansas
Walmart operates over 11,000 retail units under 71 banners in 27 countries and e-commerce
websites in 10 countries
The company employs 2.2 million associates around the world 1.3 million in the U.S. alone
Every Day Low Price (EDLP) is the cornerstone of the companys strategy
Wal-Mart topped Fortune magazines list of top 500 companies in the world, successively for
three years in 2004.
Walmart U.S.
Walmart
International
Sams Club
Walmart Global
eCommerce
Different types of stores Walmart Supercenter, Walmart Discount Store,
Walmart Neighborhood Market, Walmart Express
Walmart became an international company in 1991, and we operate in 26
countries outside the United States with more than 6,100 stores
Sam Walton opened the first Sam's Club in 1983 to meet a growing need among
customers who wanted to buy merchandise in bulk
Mobile transforms the retail experience by bringing together online and stores
putting power directly in the customers' hands
History & Global Expansion
1962 Retail Revolution began when Sam Walton opened first Walmart store; 1969 Company
officially incorporated as Wal-Mart Stores, Inc.
Walmart went National; 1970 Became publicly traded company; 1971 First Distribution
center and Home Office opened; 1972 Listed on NYSE (WMT); 1979 Walmart
Foundation established
1980 Reached $1 billion in annual sales; 1983 First Sams Club opened; 1987 -
installed the largest private satellite communication system in the U.S., linking the
company's operations through voice, data and video communication
1991 Walmart went international opening Sams Club in Mexico City; 1994 Expanded
into Canada; 1996 Opened first stores in China; 1997 First $100 billion sales year;
1998 Neighborhood market format introduced; 1999 Entered U.K.
2000 Walmart.com was founded; 2002 Company topped Fortune 500 ranking of America's
largest companies; 2009 - Walmart exceeded $400 billion in annual sales; 2010 - Bharti Walmart,
a joint venture, opened its first store in India; 2011 - First Walmart Express stores were introduced
1960s
1970s
1980s
1990s
2000s
Evolution
1962 - 1964 1964 - 1981 1968 - 1981
1981 - 1992 1992 - 2008 2008 - present
Impact on the Economy
Dying Real
Estate
As the retail jobs are lost, the owners of retail stores are left with no option but
to close down the stores due to which the prices of the real estate drops by a
significant amount.
Government
Subsidies
Government has been providing subsidies to Walmart for opening stores in
different regions. As a result, huge amount of tax payers money is being
utilized to set up stores by Walmart. Also, a huge amount of tax payers money
is used for providing Medicaid for Walmarts employees. Thus, Walmart enjoys
the privilege of shelling out very low wages for its employees
Unemployment
Everyday Low Prices methodology followed by Walmart is responsible for
destroying the retail jobs. Small Mom and Pop stores are not able to compete
with Walmart in terms of pricing due to which, eventually, they lose out on
customers. This is one of the reasons why FDI in retail was opposed in India
by retail shop owners.
Unethical
Practices
Walmart has been accused of following unethical practices when it comes to
paying salaries for its associates. The associates are paid in terms of number
of hours worked. The managers are encouraged to reduce the number of
hours an associate has actually worked due to which many associates have
sued the company.
Environmental
Footprint
Walmart has also been sued in courts for its environmental unfriendly practices.
E
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Acquisitions
Exporting
Franchising
Wholly owned
subsidiary
Licensing
Greenfield
ventures
Strategic alliances
Turnkey projects
Joint ventures
India- JV with Bharti Airtel- Failed
Brazil- Acquired Ahold Store
Argentina-entered in 1995 by setting up
100%-owned greenfield stores
Entry strategy adopted by Walmart in major markets
Costa Rica, Guatemala, Honduras,
Nicaragua-acquisition of Central
American Retail Holdings Company in
2007
Korea-1999 entered by acquiring four
units from Macro
Mexico-50:50 joint venture with the
leading retailer
Hong Kong- JV with Thai partner
China
Reason for
failure
Failed to localize,
made an offer to
Emart for acquisition.
Made an exit selling its
stores to Emart
Selection of wrong
partners
Thai partner instead of
company from Taiwan
or Hong Kong
Selection of wrong
partners
Bharti Itself had
intentions to become a
retail giant
Acquisitions and
Greenfield
investments have
yielded better
results for
Walmart
Walmart in JAPAN
$451 billion retail industry
Entered in March 2002, through an alliance with Seiyu Limited
Introduced best practices in retailing like Every Day Low Prices (EDLP) and the supply chain
management software
ISSUES in JAPAN
Wal-Marts retail model was not the right fit as Japanese consumers were not very price
conscious and preferred conveniently located stores
Faced trouble with procurements as the Japanese retail sector was a multi-layered network
of suppliers
Entered China in 1996
Adopted a slow growth approach
The company sold goods worth $940 million
and purchased goods valued at $18 billion
from Chinese manufacturers in 2004
Implemented global practice of Every Day
Low Prices (EDPL)
Localized its offerings to Chinese consumers
with significant innovations
ISSUES in CHINA
Domestic retailers had the advantage of an
established supply chain network and
knowledge of local taste and preferences, in
addition to support from the government in
China
Carrefour gained a lot of ground due to rapid
expansion
Walmart in CHINA
Walmart-Strategies for success
Reduce Cost
Minimize bargaining
power of powerful
suppliers
Remove costly steps
in value chain
Raise prices
Minimizing bargaining
power of powerful
buyers
Increased ability to
differentiate
Minimize strategic
risks
Reduce the threat of
supplier buyer cutoff
Minimize technology
spillovers
Increased
responsiveness
Bring the
organization closer to
customers
Localization
Relies on Vertical Integration
Vulnerabilities in International Strategy
Late entry on foreign markets thus losing first movers advantage
Flawed entry strategy in mature European markets
Rashly made acquisitions without judgment (Acquisition of 85
stores with less than 3% market share in Germany
Poor understanding of foreign customer psyche
Anti-union stance leading to union battles and workers lawsuits
Imposition of previously prevelant ways in US on new customers
Wal-Marts success had been the result of its ability to leverage size, market clout, and efficiency
Walmart- Customization in different Geographies
Suppliers
Supplier relationship is
critical
Different quality
standards
Culture Collisions
Product requirements
Buying patterns
Human Resources
Labour laws
Motivating local
employees
Technology
Online shopping
Technology breaks
through geographical
limitation
Competition
Different levels of
competition and entry
barriers
Key focus:
Stores were located In
small towns and rural
areas with population <
25,000
Well known brands at
low prices
Strategic advantages
built on capabilities
Strong supplier, and
distribution network and use
of Information Technology
employees also keep
expenses to a bare minimum
"Different Stores for Different Folks"
CUTOMIZATION IS CRITICAL
Walmart acquired and re-
launched the whole chain of
retail stores under the Central
American Retail Holding Co.
with wider product assortments
and a lower pricing strategy
multi-format strategy - different
groups of consumers could be
served through meeting their
various needs
e.g. Bodega Aurrera (small
outlets serving urban areas) vs
Mi Bodega Aurrera (designed to
serve rural towns)
Wal-Mart acquired and
quickly reconfigured
Woolco along the lines of
its successful United
States model
Due to stark similarities
between US and Canada,
little customization
Achieved success through
a large grocery insert in its
Canadian discount stores
called "Grocery Shelf" that
provided a big return on
capital at low risk
USA MEXICO CANADA
Walmart- Customization in different Geographies
Contd.
Shenzhen Supercenter, a
hybrid store combining a
supercenter and a warehouse
club where memberships were
sold but non-members could
also shop at "everyday low
prices" plus a 5 percent
premium
Wal-Mart began to carry a
wider range of products,
particularly perishable goods
that appealed to the Chinese
palate
Purchased 85% of its
merchandise through a
combination of local and global
suppliers
over the years, has cultivated
influential relationships and
donated RMB77 million to local
charities to gain acceptance
Entered European market
through Germany by
acquiring 21 Wertkauf
hypermarkets with a
similar operations
Didnt understand German
market
Stores were situated in
poor locations and
geographically dispersed
Cultural differences with
errors like hiring American
managers who
implemented the same
strategies as they would at
home
Competitors like Aldi and
Lidl - with lower prices.
Walmart lost profits of
about 200 million euros
and moved out in 2006
Wal-Mart was arrogant in its
approach to Latin America
It was slow to adapt to local
tastes, and many irrelevant
items in the merchandise
Ignored major differences
between low-income and
high-income areas and
maintained the same type of
assortments and pricing
without distinctions
Walmarts formula of
decision making in company
headquarters in Bentonville,
Arkansas left little room for
adaptation
Carrefour was present in
Latin America long before
Walmart was able to adapt
to the conditions and its
prices were said to be lower
GERMANY LATIN AMERICA CHINA
Indian Retail Market
India had the highest per capita outlets in the world: 5.5 outlets per 1000 population
The liberalization of the Indian economy in 1991 had opened up the market for consumer
goods
By 2005, the Indian retail sector fourth largest in the world: stimated at about US $180 billion
Major players: Piramals, Tatas, Rahejas, ITC, S.Kumars, RPG Enterprises, and mega
retailers- Crosswords, Shoppers Stop, and Pantaloons
Rising incomes coupled with improvements in infrastructure were drivers for market growth
The internet revolution was making the Indian consumer aware of global products for local
markets
Challenges in Retailing
Approval for foreign investment in retail
Regulations on real estate purchases
Cumbersome local laws
Taxation favouring small retail businesses
Absence of developed supply chain and
integrated IT management
Lack of trained work force
Low skill level for retail management
Intrinsic complexity of retailing
Rapid price changes
Constant threat of product obsolescence
Low margins
Opportunities it would Bring
Employment Generator
The retail sector in India employed 6-7%
of the total employment
Provide boost to agriculture & food
processing, handicrafts, and SME by
creating new jobs indirectly
Boost performance of the economy
Walmarts Dilemma
India's complex FDI regulations
Indian Political Conditions
Cultural Difference in Shopping
ENTRY STRATEGY FOR INDIA
Whether to wait for the governments
policy to open the retail sector
Whether to enter right away through
wholesale route
Whether to find a suitable partner for
the joint venture route
INDIAN Retail Scenario
RECOMMENDATIONS
Walmarts entry into India?
NO
YES
Not utilising this big market
Growth opportunity
Acquisition of local players
Organisational and cultural
issue Not Recommended
Organic Growth
Regulation issue Not
Recommended
Greenfield Investment
Too Risky Not
Recommended
Joint Venture
Considering the various Regulatory, Risk vs return aspects, it is recommended that
Walmart should enter with strategic Joint venture.
CURRENT SCENARIO
Plans to open another 50 cash-and-carry, or wholesale, stores in India over the next four-
five years

Initiate its Indian e-commerce business this summer - B2B (business-to-business) e-
commerce

Walmart is keen on an inventory-based e-commerce model, an area in which India has
not permitted FDI so far Negotiations going on

Despite so many ups and downs, the company has never thought of exiting the Indian
market

Walmart is still optimistic about India and. will focus on cash-and-carry till policies
governing multi-brand retail are eased
THANK YOU