Value Chain Management of Walmart

1. Introduction

Walmart was found in 1962 by Sam Walton, is an American public corporation that operates a chain of large discount stores and warehouse stores in various formats around the world. Listed on the New York stock exchange in 1972 (NYSE Euronest, Listing Directory, 2012). Walmart is the leading grocery chain in international which focus on sales in everyday low pricing

format (Jones, 2004)

Nowadays Walmart is the world ‘s largest corporation (Fortune Magazine, Fortune Global 500 companies 2013), It operates over 8000 stores worldwide, offer a vary selection of products at a reasonable price. Walmart China opened its first Supercenter in Shenzhen in 1996. As of February 28, 2013, Walmart operated more than 390 units in over 150 cities in 21 provinces, autonomous regions and 4 municipalities in China (Our story, Walmart 2013). Walmart’s mission is ‘Save people money, so they can live better’ (Walmart Annual Report 2008).

2. Value of the production or service provided for customer

2.1 Product or service provided by Walmart Walmart provides a wide array of products like toys, electronics, groceries, jewelry, ladies, men and children’s apparel, Pharmaceuticals, automotive, books, gardening, groceries, sporting goods, candy, magazines, crafts, pets, flowers, office supplies, swimming pool peripheral products, paint, video recorders and DVD at reasonable price.

2.2 Key product or service attributes of Walmart Walmart China persists in local sourcing, have established partnerships with close to 20000 suppliers in China, over 95% of the products is sourced locally (About us, Walmart 2013).  In China, Walmart firmly believes in three core values

– respect for the individual, service to the customer and striving for excellence. Managment provides a friendly, pleasant experience shopping in Walmart every day. All opinion is respected, created a unique corporate culture that is key to Walmart’s competitive edge. Policy of satisfaction guaranteed refund and exchange allows customers to be fully confident of Wal-Mart’s product and quality.

2.3 Type of research undertaken Questionnaire is the most common marketing research method. Street Interview is more accuracy, higher response rate, fuller and more complete answers for collecting statistical information. They are used to evaluate the standard of customer satisfaction with a particular service, product or experience. To identify factors that influencing satisfaction and dissatisfaction. Find out the current status or situation of a product or service.

Estimate the distribution of characteristics in a potential customer population or help establish customer service standards. In this survey, sample size is 50 and sampling frame random and each element of population has an equal chance of been selected. Quantitative data such as ordinal scale and diagrammatic rating scale was used in this questionnaire.

Positive phrasing is easier to understand for respondent, respondents are asked using a Likert Scale (e.g.1= Strongly Disagree, =Strongly Agree). Five pilot testing done on 2 November for test question’s wording, sequencing layout, duration understanding practicality training exercise. Questionnaire (Appendices 1) has some fine tune after pilot test. Street interview carried out on 9 November 2013 in Walmart Supercenter Shenzhen Yuanling Branch, each interview was taking approximately 5 minutes to complete.

2.4 Purpose of research The purpose of this survey is to determine if Walmart is fulfilling the needs of consumers and was developed to evaluating Walmart’s service system is affecting consumer attitudes. Investigate Walmart’s external customer’s needs as existing customer and potential customer, finding the elements that influence customer satisfaction and loyalty to Walmart’s supermarkets in China.

Questionnaires focus in five areas to evaluate customers satisfaction shopping in Walmart, there are Shopping convenience, Personal service, Price, Post purchase service and In-store goods.

2.5 Post research review Compare with other survey methodology, street interview more costing and less anonymity. Since the sample size is small in this survey, it may not representative for all customers.

This survey mainly focuses on elements that

affect customer’s satisfaction in Walmart Shenzhen Yanling Branch. Evaluation of customers from different countries toward different supermarkets is no included. Also, this study has not search out the specific factors that affect customers satisfaction with the same supermarket based in different countries, which may some difference in customer satisfaction with a particular supermarket in different cultural backgrounds.

2.6 Conclusions drawn from research Total 50 questionnaires were completed. The result (Appendices

2) show that satisfaction against the expectation, purchase experiences influencing the customer satisfaction, probability to rebuy and probability to recommend to others. Price and Post-purchase service has the greatest impact on satisfaction. In- store goods also have greater impact upon loyalty.

The results of investigation, generally speaking, most of consumers are recognized Walmart proving service, especially they are satisfied to after service. Almost 78% satisfied the post-purchase replace guarantee service.60% customers satisfied the supermarket’s pricing. But a small part of people considered that some service is not good. Customers found that not easy to find a parking space in stores (Figure 1) and enough store infrastructure such as kids trolleys service and washroom (Figure 2).

Figure 1

Figure 2

2.7 List of Customer Values Five values of Walmart’s product or service for the customer was identified in this survey.

1. Price plays a main role in the competition of Walmart in


2. In-store goods, Walmart operate on a large scale implies more product categories, stronger influence consumer loyalty than other Chinese counterparts.

3. Stores infrastructure, long opening hours will help customers make their shopping experience easier and convenience.

4. Personal service is a fact that all customers prefer they are treated in a friendly manner.

5. Post sales service of Walmart has significantly greater influence on the consumer satisfaction. Walmart will give you a full refund or replacement if customers are not satisfied with their purchase. The findings explained that consumers are more sensitive to the after-sale service.

2.8 Prioritising Customer Values of Walmart Pricing is the most important influence on consumer satisfaction. Consumers regard price as the top consideration, 42% respondent concern price as highest priority which would certainly benefits Walmart emphasizing “everyday low price” and provide more opportunities for Walmart further expansion.

Table 1

Priority of concern shopping in Walmart

Factors 1st rank %

Cost 21 42%

Quality of product 3 6%

Quality of service 7 14%

Convenience 14 28%

Ethical Issues 0 0%

Personalization 5 10%

Style / Fashion 0 0%

Table 1 shows the areas of concern in priority when shopping in Walmart, as can be seen, 21 consumers have made cost as first priority.

3. Customer value is understood and met by Walmart 3.1 Basic customer requirements noticed by Walmart Fred Martels, People Solution Strategies 2003 published a report title: Walmart supercenters customer loyalty survey,  has studies Walmart’s customer loyalty, the top value is “Competitive prices” followed by “In-stock products”. The “Product variety” placed third in the customers’ standings. The survey results provided some surprises customers emphasized the importance of how they feel in the store – “being treated with respect” ranked fourth. Traditional Chinese’s stores have not paid much attention to service quality, which has resulted in lower consumer satisfaction.

Customer satisfaction is the outcome felt by customers who have experienced a company’s performance that fulfilled expectation and delighted when their expectations are exceeded. Satisfied customers remain loyal longer, buy more, are less price sensitive, and talk favourably about the company. (Kotle, 1994; Cardozo, 1965). Understand the customer requirements could help better develop strategies to remain competitive. Wal-Mart associates know it is not good enough to simply be grateful to customers for shopping in stores, keeps the customers coming back to Wal-Mart again and again.

3.2 Customer value considered in product material and service elements China consumers apparently are not accustomed to the stiff, unfriendly service of national supermarket. Opposite, Walmart have already established an image of good post-purchase service in the mind of consumers and customers take their after-sale service for granted is essential to consumer satisfaction.

Walmart’s value proposition is bases on offering everyday low price (dlp) this is the core of Walmart’s business model.

Basker (2007) stated that not only the sells convenience is associated by providing the wide range of products and

services to choose from but also with one-step is possible to make all the shopping needed, from groceries to pharmacy save time and money.

3.3 Customer value considered in product package and service presentation Personnel trained to “greet” customer when they enter in Walmart store, identify their needs and assist them in any way possible, this is particularly acute when the customer is in a buying mood. To make customer shopping experience finish on a good environment, checkout staff will be happy to help them pack their bags. The checkout operator are trained specifically to make sure products (e.g. frozen, breakables, freshet) are packed accordingly,

3.4 Mechanism to measure customer satisfaction by Walmart Improving customer service is very important for Walmart, it will benefit Walmart a lot, such as enhances sales. Walmart conduct online survey at the website to evaluate In-store satisfaction. The Survey is designed to get customer feedback about the recent shopping experience. Once customer complete the survey, will entered in a drawing for one of five$1000 Walmart shopping cards. 3.5 Other aspect of customer value which is considered by


People’s lifestyles have changed in the last generation, most common of people simply cannot get to local stores to shop if they only open form 8:00a.m. to 5:00p.m.. Walmart China by necessity tune with today’s societal needs, offer a convenient opening hours from 8a.m. to 10:30p.m. to meet  new generation lifestyle. Staff motivation influencing service attitude, the article Luce (2005) report that low wages and small benefits for the ordinary workers in Walmart. Therefore, Walmart in terms of financial reward and other forms of motivation is constantly evaluated and adapted to ensure the satisfaction of the staffs thus ensure the satisfaction of customers.

4. The Impact on value chain activities Innovative progression of technology through Walmart is a key success and made more efficiency in supply chain. Information technology aspect of the retail giant has kept Walmart’s prices lower than its competition allowed Walmart to focus on the business itself with efficient mobility and low prices.

Ellen F, et al (2009) explain Enterprise Resource Planning (ERP) is an enterprise-wide information system, coordinate information for planning and controlling all operations activities, help to manage business processes, using a common database and shared management reporting tools.

Operations and thus adding value. Walmart ERP share common data, produce and access information in a real time environment, computerized inventory control and production planning, ability to prepare a master production schedule, materials, and to generate purchase orders. Data-Mining of ERP help Walmart effectively communicate with other department such as Sale, Accounting and Human Resources, enables all employees in difference department to gain information in real time.

4.1 Sales activities High speed computer system and various delivery centers and various branches of power interconnection, when goods inventories decreased to a certain number, the computer will notify headquarters sets are available.

Headquarters will arrange the shipment form the center of most supply stores, over the whole process 36 hours to complete, so that companies can quickly grasp the sales and market demand trends replenish inventory storage accelerated capital operation to reduce inventory risk. Walmart sales and marketing functions often use systems customer relationship management (CRM) to manage the complexities of customer requirements promises and transactions, learning more about customers’ expectation in order to develop stronger relationship. CRM brings customer’s information to gain insight into their behavour and value. Systems also provide Walmart in customer data  analysis and support e-commerce storefronts.

4.2 Customer, materials and information Efficient of information sharing and distribution throughout the chain can reduce demand fluctuation. Walmart understanding customers’ needs, designing appropriated products, monitoring real time demand, better customer relationship management, ability to co-ordinate output with demand. Supply Chain Management (SCM) System, is activities between a company and its suppliers.

SCM support the planning of the best way to fill orders and help tracking of products and components in the supply chain. Walmart and Procter & Gamble (P&G) have become well-known for their cooperation is the use of SCM. When P&G products are scanned in Walmart store, P&G will receives information on the sale via satellite and thus P&G knows when should be shipped more products. Related cost savings are passed on, at least in part, to Walmart customers.

To integrate customer order information so that it moves seamlessly between all functions from order intake to customer fulfillment to inventory monitoring. This also presents the opportunity to make this information visible to the customer. To standardize and speed up manufacturing processes in an effort to increase productivity and decrease costs. To reduce inventory by speeding up the internal movement of work-in-process and finished goods inventory.

Walmart has chosen to adopt Radio Frequency Identification (RFID) technology to improve its SCM. REID uses a system to communicate through embedded tages with electromagnetic waves, this technology replace traditional bar codes in order to exchange data between a terminal and the electronic product codes (EPC) which is attached to the delivery box for identification and tracking. RFIDs provide accurate data about stocks levels, information and deliver the benefit of accurate inventory management.

4.3 Accounts, billing and receivable Walmart using ERP system to integrate financial information so that all users work from a single information source, Integration of financial information with sales and operations activities, such as Supplier payments, Customer involving and receipts. The speed of financial data collection by Walmart facilitates its faster and automated cash movement.

4.4 Procurement of goods/service and distribution of the same Technology driven supply chain, in 1987 Walmart launched its own communications satellite network, enabling real time communication between stores, distribution centers, to ensure its shelf can replenish the goods with 48 hours. Logistics derives from technological improvement, reduces defects and costs in warehousing costs.

Walmart add value in information Technology development, use their world-class inventory database to identify specific products and discounted prices considerably. The information systems is open to supply chain partners whose computer is linked to their central computers.

To improving relationships with suppliers, Walmart primarily through computer networking and Electronic Data Interchange (EDI) systems to share information with suppliers to establish stable, long term partnerships, coordinate the development of the company as a commodity to provide high quality low price guarantee brought.

5. Conclusion

A key factor in the success of Walmart is providing many services for their customer. In order to gains more profit and increasing sales. Walmart provides a wide array of products and hard goods at reasonable price. The Walmart business strategy is offer the common price everyday, what they did is saving customer money. Another key factor in the success of Walmart’s reassure guarantee that is if customer are not delighted with the purchase, Walmart will give you a refund and replace.

Walmart’s customer services are met the customers’ needs and wants. This survey also find out the impact of improved customer service to enhance Walmart’s sale and how this events influence on the customer care in China. If Walmart real point of difference form all their other competitors in China, Walmart should consider provide more stores infrastructure which can help customers make their shopping experience that more easier and hassle free.

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