1960’s: Retail Revolution Sam Walton's strategy was built on an unshakeable foundation: The Lowest Prices Anytime, Anywhere. 1962 On July 2, 1962, Sam Walton opened the first Wal-Mart store in Rogers, Arkansas. 1967 The Walton family owned 24 stores, ringing up $12.7 million in sales. 1969
The Company officially incorporated as Wal-Mart Stores, Inc. 1970’s: Wal-Mart Goes National In the 1970s, a decade of incredible growth; "Mr. Sam" began to take Wal-Mart national, proving his vision's widespread appeal. 1970 Wal-Mart became a publicly traded company.
The first stock was sold at $16.50 per share. 1971 The first distribution center and Home Office opened in Bentonville, Ark. 1972 Wal-Mart was listed on the New York Stock Exchange (WMT). With 51 stores, Wal-Mart recorded sales of $78 million. 1975 Inspired by a visit to a Korean manufacturing facility, Sam Walton introduced the Wal-Mart cheer. 1979
The Wal-Mart Foundation was established.
1980’s: Decade of Firsts In the 1980s, the first Sam's Club opened, serving small businesses and individuals, and the first Wal-Mart Supercenter opened, combining a supermarket with general merchandise. 1980 Wal-Mart reached $1 billion in annual sales, faster than any other company at that time. Wal-Mart had 276 stores and employed 21,000 associates.
1983 The first Sam’s Club opened in Midwest City, Oklahoma. Wal-Mart replaced cash registers with computerized point-of-sale systems, enabling fast and accurate checkout. 1984 Sam Walton did the hula on Wall Street, making good on a promise to associates after the company achieved a pre-tax profit of 8% for the previous fiscal year.
1987 The company installed the largest private satellite communication system in the U.S., linking the company's operations through voice, data and video communication.
1988 The first Wal-Mart Supercenter opened in Washington, Mo., combining general merchandise and a full-scale supermarket to provide one-stop shopping convenience. David Glass was named CEO. 1990’s: America’s Top Retailer By 1990, Wal-Mart was the nation's number-one retailer. As the Wal-Mart Supercenter redefined convenience and one-stop shopping, Every Day Low Prices went international. 1991 Through a joint venture with Cifra, a Mexican retail company, Wal-Mart went global, opening a Sam’s Club in Mexico City.
1992 While receiving the Medal of Freedom, Sam Walton articulated the company’s mission of saving people money so they can live better, shortly before passing away at age 74. Rob Walton became chairman of the board.
Wal-Mart employed 371,000 associates in 1,928 stores and clubs.
1993 Wal-Mart celebrated its first $1 billion sales week 1994 Wal-Mart expanded into Canada with the purchase of 122 Woolco stores.
1996 Wal-Mart opened its first stores in China.
The Company celebrated its first $100 billion sales year.
1998 The Neighborhood Market format was introduced with three stores in Arkansas.
1999 Wal-Mart entered the United Kingdom with the acquisition of ASDA. 2000’s: New Millennium Wal-Mart entered the new millennium dedicated to offering customers a seamless shopping experience, whether they are online, in a store or on a mobile device. 2000 H. Lee Scott, Jr. succeeded David Glass as CEO. Walmart.com was founded, allowing U.S. customers to shop online. Wal-Mart employed more than 1.1 million associates in 3,989 stores and clubs worldwide.
2002 For the first time, Wal-Mart topped the Fortune 500 ranking of America's largest companies. Wal-Mart entered the Japanese market through its investment in Seiyu.
2005 Walmart took a leading role in disaster relief, contributing $18 million and 2,450 truckloads of supplies to victims of hurricanes Katrina and Rita. Walmart made a major commitment to environmental sustainability, announcing goals to create zero waste use only renewable energy and sell products that sustain people and the environment.
2006 Walmart introduced its $4 generic-drug prescription program.
2007 Walmart.com launched Site to Store service, enabling customers to make a purchase online and pick up merchandise in stores.
2009 Mike Duke became CEO. For the first time; Walmart exceeded $400 billion in annual sales. 2010 Bharti Wal-Mart, a joint venture, opened its first store in India. Wal-Mart committed $2 billion through the end of 2015 to help end hunger in the United States. Wal-Mart launched a global commitment to sustainable agriculture, aiming to strengthen local farmers and economies, while providing customers access to affordable, high-quality food.
2011 With the acquisition of Massmart in South Africa, Wal-Mart surpassed 10,000 retail units around the world. The first Wal-Mart Express stores were introduced in Arkansas. Wal-Mart established @walmartlabs, a hub for developing social, mobile and global platforms.
2012 Wal-Mart celebrated 50 years of helping people save money so they can live better. "The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good-quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience." - Sam Walton (1918-1992).
Wal-Mart Stores, Inc Branded as Walmart, Is an American public corporation that runs a chain of large discount department stores and a chain of warehouse stores. In 2010 it was the world's largest public corporation by revenue, according to the Forbes Global 2000 for that year.
The company was founded by Sam Walton in 1962, incorporated on October 31, 1969, and publicly traded on the New York Stock Exchange in 1972.
Wal-Mart, headquartered in Bentonville, Arkansas, is the largest majority private employer and the largest grocery retailer in the United States. In 2009, it generated 51% of its US$258 billion sales in the U.S. from grocery business. It also owns and operates the Sam's Club retail warehouses in North America. Walmart has 8500 stores in 15 countries, with 55 different names.
The company operates under its own name in the United States, including the 50 states. It also operates under its own name in Puerto Rico. Wal-Mart operates in Mexico as Walmex, in the United Kingdom as Asda in Japan as Seiyu, and in India as Best Price. It has wholly-owned operations in Argentina, Brazil, and Canada.
Wal-Mart's investments outside North America have had mixed results: its operations in the United Kingdom, South America and China are highly successful, while it was forced to pull out of Germany and South Korea as they were unsuccessful.
VISION: The company doesn't have one in writing. But at the annual shareholder's meeting, CEO Mike Duke did say there were 5 values guiding Wal-Mart's future: 1. Integrity 2. Opportunity 3. Family and Community 4. Purpose 5. Responsibility MISSION: As Wal-Mart continues to grow into new areas and new mediums, our success will always be attributed to our culture. Whether you walk into a Wal-Mart store in your hometown or one across the country while you’re on vacation, you can always be assured you’re getting low prices and that genuine customer service you’ve come to expect from us. You’ll feel at home in any department of any store; That’s our culture.
Wal-Mart advertised their mission statement and advertising slogan as the same: "We save people money so they can live better."
PURPOSE: In addition to its mission statement, the company looks to its founder, Sam Walton for a company "purpose": “If we work together, we’ll lower the cost of living for everyone…we’ll give the world an opportunity to see what it’s like to save and have a better life.”
* GO GLOBAL- To penetrate the markets in Mexico, Japan, Germany, United Kingdom, Brazil, Canada etc., Wal-Mart opened more than 2700 in these areas. It was successful in Canada, Mexico but failed badly in Germany and Japan and had to pull out. * GO NATIVE-
To avoid failure in china, Wal-Mart adopted the GO NATIVE strategy. It brought the local wet markets indoors and now sends Wal-Mart teams five months earl to research the pulse of the market, in the regions it intends to open the market.
* Largest Retailer in the World. * Loyal Customer Base. * Everyday Low Pricing. * Established Brand Name. * Wide Network of Stores. * Buy in Bulk. * Caters to a wide range of needs. * Continuous opening of new stores.
* Large Inventories. * Negative Publicity. * Selective Purchases of Middle Class customers. * Crowded Stores.
* Fashion goods category. * Economies of Scale. * Increasing wealth of middle class.
* Increasing Competition. * Increasing Expansion Expenses. * Increasing Energy Expenses.
OVERVIEW: Walmart Stores U.S.
Map of Walmart stores in the U.S., as of August 2010. Walmart Stores U.S. is the company's largest division, accounting for $258 billion, or 63.8 percent of total sales for financial year 2010. It consists of three retail formats that have become commonplace in the United States: Discount Stores, Supercenters, and Walmart Markets.
The retail department stores sell a variety of mostly non-grocery products, though emphasis has now shifted towards supercenters, which include more grocery items. This division also includes Wal-Mart’s online retailer, walmart.com. In September 2006, Walmart announced a pilot program to sell generic drugs at just $4 per prescription. The pilot program was launched at stores in the Tampa, Florida area, and expanded to all stores in Florida by January 2007.
While the average price of generics is $29 per prescription, compared to $102 for name-brand drugs, Walmart maintains that it is not selling at a loss, or providing as an act of charity – instead, they are using the same mechanisms of mass distribution that it uses to bring lower prices to other products. Many of Wal-Mart’s low cost generics are imported from India and made by drug makers in the country, including Ranbaxy and Cipla. On February 6, 2007, the company launched a "beta" version of a movie download service, which sold about 3,000 films and television episodes from all major studios and television networks.
The service was discontinued on December 21, 2007, due to low sales. From 2008 through 2011, Walmart operated a pilot program in the small grocery store concept called Marketside in the metropolitan Phoenix, Arizona area. They plan to take what they have learned from this concept and incorporate that into their newer Walmart Express stores which they are developing.
WALMART’S STRATEGY IN THE U.S.A: “Offering a broad assortment with even lower prices”
Walmart U.S. achieved positive comparable store sales for fiscal 2012, having posted an increase in customer traffic for the fourth quarter. Net sales surpassed $264 billion, increasing 1.5 percent, while operating income grew to $20.4 billion, a 2.2 percent increase from the prior year. Walmart improved their performance by aligning strategy with the needs of today’s customer and operating more efficiently. The expanded merchandise assortment and improved in-stock levels, coupled with strong price leadership and service from our associates, continues to resonate with customers.
Broader Assortment: Customers appreciate the opportunity to rely on Walmart for a one-stop Shopping experience; So we added back more than10,000 products across hundreds of merchandise categories during the past year. We work with suppliers to be the first to offer new innovative products and continue to fine-tune our offerings. We offer the right mix of national brands, private brands and opening price point products. We also improved in-stock levels, so customers can count on Walmart more than ever.
Delivering Everyday Low Price (EDLP): We have invigorated our fundamental price promise: Provide low prices day-in and day-out on the broadest assortment. Our price message, backed by the strongest ad match policy in the industry, ensures that we are driving price separation with competitors. The certainty of great values throughout the store has been fundamental to Walmart For 50 years. Fulfilling that brand promise inspires customer trust and loyalty.
A more efficient organization:
EDLP is the result of our everyday low cost (EDLC) philosophy. We lower costs by reducing expenses, increasing productivity and leveraging technology to improve efficiency throughout our supply chain and our operations. This year, we are accelerating and adding many efficiency measures, as we invest the savings to further lower prices.
Formats and channels that serve every need: We continue to invest in growth through a variety of channels – our core supercenters, smaller formats such as Neighborhood Market and Walmart Express, and ecommerce. Our online business continues to grow, driven by strong sales in Site to Store and Pick Up Today, which provide shopping alternatives to Walmart customers. OVERVIEW:
Bharti Enterprises tied-up with Wal-Mart Bharti for opening a chain of retail stores all over India. The two companies, in August 2007, made a surprise statement that they have signed a wholesale cash-and-carry deal. The first Best Price Modern Wholesale opened in Amritsar in May 2009. Bharti Wal-Mart Private Limited is a joint venture between Bharti Enterprises, one of India's leading business groups with interests in telecom, agri-business, insurance and retail, and Wal-Mart, the world’s leading retailer, renowned for its efficiency and expertise in logistics, supply chain management and sourcing.
The joint venture is establishing wholesale cash-and-carry stores and back-end supply chain management operations in line with Government of India guidelines. Under the agreement, Bharti and Wal-Mart hold 50:50 stakes in Bharti Wal-Mart Private Limited. The first Wholesale Cash-and-carry facility named "Best Price Modern Wholesale" opened in Amritsar in May 2009 and subsequently in Zirakpur (Near Chandigarh), Jalandhar, Kota, Bhopal, Ludhiana, Raipur, Indore, Vijayawada, Meerut, Agra, Lucknow, Jammu, Guntur, Aurangabad, Bathinda, Amravati, Hyderabad and Rajahmundry. KEY FINDINGS:
* With the opening up of Indian Retail Sector for FDI up to 51% in multi-brand retail, India is set to become hub of multinational retailers from across the globe. * Increasing per capita income and changing consumption pattern are the key drivers of fast growing Retail sector in India. * Organized retail is expected to increase its market share from 5.7% in 2011 to about 12% in 2016. Major gainers are expected to be new entrants’ likeWal-Mart and Carrefour. RECOMMENDATIONS:
* Wal-Mart should apply its “Repeatable Formula” of Lowest Price – supported with efficient supply chain and information technology for its Indian marketers as well. * Wal-Mart should focus on local customer preferences, strategic locations, regional diversity and incorporating Indian values for building a sustainable business model for India. KEY SUCCESS FACTORS FOR INDIAN MARKETS:
* Cost Leadership – Attracting Masses. * Strategic Retail Outlet Location. * Wide Range of Goods/ Variety (keeping ethnic diversity in mind). * Sales Promotion/ Marketing Campaigns in Festive Seasons. Threat of New Entrants * Carrefour to enter market. * Walmart has first mover advantage.
Threat of Substitute Products * No immediate substitutes possible to retail. Bargaining Power of Suppliers * With high volume model of Walmart, suppliers have low bargaining power. Bargaining Power of Customers * Present organized/unorganized sector unable to give low price details. COMPETITIVE RIVALRY * Large unorganized sector * Moderate to high organized sector.
With fast increasing demand and proposed model of cost leadership, Indian Retail Industry looks substantially profitable. STRENGTHS 1. Deal with suppliers – Cost Leadership. 2. Efficient Supply Chain. 3. Strategic Location. 4. Strong IT backup. 5. New Technology Implementation.| WEAKNESS 1. Unable to adapt to different cultures/countries. 2. Heavily dependent on bulk sales. 3. Late entrants. 4. No success beyond America.| OPPURTUNITIES * New economies – India/ Brazil/ China. * Rising disposable incomes. * New channels – Marketing/ Internet based models.| THREATS 1. Restriction on FDI e.g. India. 2. International law against dumping. 3. Regional competitors. 4. Law against monopoly- Anti thrust policies.|
The key to success lies in how Wal-Mart tackles local laws/ regulations and makes its repeatable formula work in new markets. NAME|Big Bazaar.(Future Group)| CATEGORY|MerchandizeDiversified.| TARGET SEGMENTS|Middle Class.| COMMENTS|Among the main competitors.|Pantaloons.(Future Group)| Apparels, Accessories.| Upper Middle ClassLower Upper Class.| Among the main competitors.| Star Bazaar.(Tata Group)|
MerchandizeDiversified.| Upper Middle ClassLower Upper Class| String Backing by Tata, Limited Research.| D.Mart.| Merchandize.| Middle/ Upper Middle Class.| Smaller Outlet, limited growth.| Shopper’s Stop.| Apparels, Accessories.| Mostly Upper Class.| Strong hold in metros, Good presence in target segment.| Lifestyle.| | | |
Wal-Mart is expected to tackle its competitors. The key for Wal-Mart lies in capturing the market and finding strategic locations for the stores.
1. FDI Restrictions: FDI Restrictions of 51% on Multi-brand Retail. Proposal for increasing the cap to be discussed in winter session. 2. Social and Political Resistance: A strong opposition from certain political parties is certainly expected-Local retailers, dealers would protest. 3. Poor infrastructure will cause friction: Indian Standards of roads, ports and freight facilities are way below global benchmark. It will lead to inefficiency in the value chain. 4. Regional Diversity: Challenge to have tactics according to regional/ ethical requirements.
Wal-Mart needs to appreciate and accommodate each of the above challenges into its strategy in order to gain benefits from the Indian Retail. Introduction: Wal-Mart has opened thousands of stores in the United States and expanded internationally. Through this model of expansion, which brings the right store formats to the communities that need them; they are creating opportunities and bringing value to customers and communities around the globe.
Today, Wal-Mart operates in more than 10,800 retail units under 69 banners in 27 countries. They employ 2.2 million associates around the world — 1.3 million in the U.S. alone. Wal-Mart’s international operations currently comprise 4,263 stores and 660,000 workers in 15 countries outside the United States.
There are wholly owned operations in Argentina, Brazil, Canada, and the UK. With 2.1 million employees worldwide, the company is the largest private employer in the U.S. and Mexico, and one of the largest in Canada. In the financial year 2010, Wal-Mart’s international division sales were $100 billion, or 24.7 percent of total sales. Wal-Mart has operated in Canada since its acquisition of 122 stores comprising the Woolco division of Woolworth Canada, Inc in 1994.
As of July 2010[update], it operates over 300 locations (including 100 Supercentres) and employs 82,000 Canadians, with a local home office in Mississauga, Ontario. Wal-Mart Canada's first three Supercentres (spelled as in Canadian English) opened on November 8, 2006, in Hamilton, London, and Aurora, Ontario. The 100th Canadian Supercentre opened on July 10, 2010, in Victoria, BC. In 2010, Wal-Mart Canada Bank was introduced in Canada with the launch of the Wal-Mart Rewards MasterCard. In the mid-1990s Wal-Mart tried with a large financial investment to get a foothold in the German retail market.
In 1997 Wal-Mart took over the supermarket chain Werkauf with its 21 stores for DEM750 million (€375 million) and in 1998 Wal-Mart took over 74 Interspar stores for DEM1.3 billion (€750 million). The German market at this point was an oligopoly with high competition among the companies which also used a similar low price strategy as Wal-Mart.
Because of this, Wal-Mart's low price strategy yielded no competitive advantage. Also Wal-Mart's corporate culture was not viewed positively among employees and customers in Germany, particularly Wal-Mart's "statement of ethics", which restricted relationships between employees and led to a public discussion in the media, resulting in a bad reputation for Wal-Mart among customers. In July 2006, Wal-Mart announced its withdrawal from Germany due to sustained losses.
The stores were sold to the German company Metro during Wal-Mart's fiscal third quarter. Wal-Mart did not disclose its losses from its ill fated German investment, but they were estimated around €3 billion. In 2004, Wal-Mart bought the 116 stores in the Bompreço supermarket chain in northeastern Brazil. In November 2006, the company announced a joint venture with Bharti Enterprises to open retail stores in India. As foreign corporations were not allowed to directly enter the retail sector in India, Wal-Mart operated through franchises and handled the wholesale end.
The partnership involves two joint ventures; Bharti manages the front end involving opening of retail outlets, while Wal-Mart takes care of the back end, such as cold chains and logistics. Bharti Wal-Mart operates stores in India under the brand name "Best Price Modern Wholesale".
The first store opened in Amritsar in May 2012. On September 14, 2012, the Government of India approved 51 percent FDI in multi-brand retails, subject to approvals by individual states, effective September 20, 2012. In an interview with The Wall Street Journal, Wal-Mart Stores Inc President and CEO, Asia Scott Price, stated that Wal-Mart would be capable of opening stores in India within a time frame of 2 years.
Price also said that the company expects to continue its partnership with Bharti Enterprises in operating Best Price Modern Wholesale. Expansion into India faced some significant problems. Sales in 2006 for Wal-Mart's UK subsidiary, Asda (which retains the name it had before acquisition by Wal-Mart), accounted for 42.7 percent of sales of Wal-Mart’s international division. In contrast to the US operations, Asda was originally and still remains primarily a grocery chain, but with a stronger focus on non-food items than most UK supermarket chains other than Tesco.
As of 2011[update], Asda had 523 stores. In addition to small suburban Asda stores, larger stores are branded Asda Wal-Mart Supercentres, as well as Asda Superstores and Asda Living. In addition to its wholly owned international operations, Wal-Mart has joint ventures in China and several majority-owned subsidiaries. Wal-Mart’s majority-owned subsidiary in Mexico is Walmex. In Japan, Wal-Mart owns 100 percent of Seiyu as of 2008. Additionally, Wal-Mart owns 51 percent of the Central American Retail Holding Company (CARHCO), consisting of more than 360 supermarkets and other stores in Guatemala, El Salvador, Honduras, Nicaragua, and Costa Rica.
In 2008, Wal-Mart named German retailing veteran Stephan Fanderl as the president of Wal-Mart Emerging Markets-East in an effort to, "explore retail business opportunities in Russia and neighboring markets." The market is estimated to be worth more than US$140 billion per year in food sales alone. In January 2009, the company acquired a controlling interest in the largest grocer in Chile.
On September 28, 2010, Wal-Mart announced it would buy Massmart Holdings Ltd. of Johannesburg, South Africa in a deal worth over $4 billion, giving the company its first stores in Africa. In December 2011, Walmart neither confirmed nor denied speculation that it was eyeing opportunities in Pakistan. "We have not made any announcements concerning Pakistan," said Megan Murphy, Wal-Mart’s international corporate affairs manager in an e-mail. Wal-Mart does not comment on market entry speculation, she added.
Murphy, however, said their priorities are to "concentrate on the markets where we already have operations and look for growth opportunities in markets where customers want to see us and where it makes sense for our long-term growth." In February 2012, Wal-Mart announced that the company raises its stake to 51 percent in Chinese Online Supermarket Yihaodian to tap rising consumer wealth and help the company offer more products.
The stake expansion is subject to Chinese government regulatory approval. As of December 2012, internal investigations ongoing into possible violations of the Federal Corrupt Practices Act. Wal-Mart has invested $99 million in the internal investigations, which have expanded beyond Mexico to implicate operations in China, Brazil, and India. The case has added fuel to the debate as to whether foreign investment will result in increased prosperity, or if it merely allows local retail trade and economic policy to be taken over by "foreign financial and corporate interests.”
Locations of Walmart at a glance: Total retail units on July 31, 2013| 10,955| Wal-Mart U.S.A| 4,092| Sam’s Club| 621| Wal-Mart International| 6,242|
WALMART’S STRATEGY OVERSEAS: “Meeting local needs and leveraging global resources”.
Walmart International is focused on a key objective – driving aggressive growth, while improving return on investment. Net sales, including currency and acquisitions, increased 15.2 percent to $125.9 billion for fiscal 2012. Operating income was $6.2 billion, increasing 10.8 percent from the prior year. In fiscal 2012, Walmart opened a record 612 new stores through organic growth. Including acquisitions, added 1,094 stores and 42.2 million Square feet around the world.
For the past three years, Walmart maintained disciplined growth, with an average square footage increase of 8.0 percent, excluding acquisitions. They believe EDLP is the right business model for our customers in all of our markets, and with a focus on EDLC, they intend to be the low-cost leader in every market where they can operate.
Meeting local needs is central to our growth. We align our formats, assortment and service from our associates with the fastest-growing customer demographics in each market. We continue to grow through new stores, comparable store sales and e-commerce. In high-growth markets, such as Brazil, China and Mexico, we pursue middle-income customers who look for quality and value. And in More mature markets, such as Canada and the U.K. we continue to find ways to expand our customers base.
”Powered by Walmart” is the cornerstone of how we maximize value by balancing global leverage. We share best practices across geographies in store operations, logistics, information technology and other areas. Working together where it makes us better allows us to save money, be faster to market and keeps our associates keenly focused on serving customers. Leveraging Wal-Mart’s global scale and expertise allows us to deliver the merchandise our customers want at the lowest price.
Be first in e-commerce solutions. We are building new solutions that strengthen our e-commerce offerings in developed markets and take advantage of the explosive growth of online retailing in emerging markets. ASDA’s online grocery sales continue to grow in the U.K., and e-commerce offerings are expanding in Brazil, Canada, China and Japan. COUNTRY|
CANADA| MODE| Acquired a weak player| STRATEGY| High brand recognition segment| RESULTS| Very Successful| UK| Acquired ASDA| M&A Synergies| Successful – Competition from Tesco| GERMANY| Acquired a big player i.e. Werkauf| Leveraged Acquired Network| FAILED – Cultural and operational issues| CHINA| Greenfield operations| Sourced on Chinese suppliers, focus on need gaps| Neutral –Labour union and Law suit issues|
Success and Failure of Walmart was mainly driven by the local culture, consumer need gaps and tackling government issues Marketing Objectives:
“Expand multi-channel initiatives” Strategies: * Develop and execute a global ecommerce strategy * Accelerate global online channel growth * Have accessible stores available for all of the customers’ needs Tactics: * Conduct research on customers * Use new formats, such as Walmart Express™, in urban and rural markets. * Open Wal-Mart’s first convenience format stores, Walmart Express, in the second quarter. * Complete specific transactions
• Investing in global ecommerce (online commerce) * Create technology platforms and applications for every Walmart market * Deepening their understanding of consumer trends and creating new analytical tools. * Leveraging multi-channel innovations like Site-to-Store®, Pick Up TodaySM and Fed-Ex® Site to Store “Grow in the United States”
Strategies: * Keep improving Sam’s Club® * Maintain excellent customer service – Give the customers what they want: quality products at affordable prices * Implement a four-point plan to improve comparable store sales. * Implement productivity initiatives
Tactics: * Open more supercenters * Attract more customers and Sam’s Club members * Use new formats, such as Walmart Express™, in urban and rural markets. * Open Walmart’s first convenience format stores, Walmart Express, in the second quarter. * Expanding their assortment, reallocating selling space and enhancing productivity initiatives to reduce costs.
* Adding services to their pharmacies, such as free monthly health screenings and hearing centers. * Continue to add exciting brands in key categories, including apparel, jewelry, technology and entertainment. * Conduct research on customers
* Deepening their understanding of consumer trends and creating new analytical tools.
“Improve returns” Strategies: * Balance their commitment to aggressive growth with their long-term plan * Achieve positive comparable store sales [through four-point plan] * Enhance shareholder value Tactics: * Opening supercenters in new regions of Canada and changing the competitive environment in Brazil with a shift to EDLP [everyday low prices]. * Leveraging multi-channel innovations like Site-to-Store®, Pick Up TodaySM and Fed-Ex® Site to Store * Expanding their assortment, reallocating selling space and enhancing productivity initiatives to reduce costs.
* Adding services to their pharmacies, such as free monthly health screenings and hearing centers. * Continue to add exciting brands in key categories, including apparel, jewelry, technology and entertainment. * Deepening their understanding of consumer trends and creating new analytical tools. * Attract more customers and Sam’s Club members
* Use new formats, such as Walmart Express™, in urban and rural markets. * Open Wal-Mart’s first convenience format stores, Walmart Express, in the second quarter. * Marketing Strategies of Walmart: * Constant Improvement. * Shared Passion, Vision & Organization Culture. * Customer Focus. * Speed. * Execution. * Improvements in Basic Operations. * Community Involvement.
What Walmart does to achieve this? * Competitively Reduced Cost (Puts All Gains & Savings Into Reducing Prices). * One- Stop Shopping. * Keeps Customer Shopping: Added Food & Services. * Consumer-centric Sales. * Localization. * Co-operated Suppliers. * Retail & Shop-ability: Aisles, Lighting & Signs Store-manager Autonomy.
Product Strategy| 1. Lowest prices across-board the product lines. 2. Product USP: core competency.(Low prices , In-stock positions , Customer service)| Service Strategy| 1. Respect for the individual. 2. High standards of service. 3. Constant strives for excellence Service Strategy.|
PRODUCT: * Walmart has a wide variety of products; all are of 'general use' meaning they sell items that any household would need, from food to sporting goods. * Walmart hosts products regarding electronics, movies, music, books, furniture, all types of baby, men and women wear, health care and pharmacy products, accessories, toys, grocery products etc. * Reliable and warranted products are provided to customers purchasing any type of goods online or directly through stores. * Initiatives have been taken for food items for maintaining its nutritional value.
PRICE: * Always low prices. * Discount packages. * Prices of grocery items in Walmart stores are 15% less than the local stores.
PLACE: * Sam’s Club, Walmart stores U.S and Walmart International are three divisions in which Walmart is working. * Walmart outlets are marketing with different names in Mexico, Japan, India, Brazil, Canada, UK, China and South America. * One-stop shopping is part of their placement issues.
* The outlets of Walmart are huge buildings covering 197,000 square feet.
PROMOTION: * Online orders placing shipment to the desired place is a major revenue source. * Website of Walmart is very efficiently working and the contents are very well-organized and easily reachable. * Discount seasonal offers and bulk discount offers are given. * Sometimes product rates are fixed at a very low price for a limited period of time. *
Mobile Marketing: The rising popularity of mobile technology is bringing rapid change across multiple aspects of daily life, from entertainment to healthcare. Among the areas undergoing the most extensive evolution is the retail industry. During the 2011 holiday shopping season, about 50% of cell phone owners used their mobile device while inside a store to read product reviews or research prices, according to a survey by the Pew Internet & American Life Project.
Taking note of the mobile commerce trend, retailers are crafting marketing strategies that target this newest breed of digital consumer. For example, Walmart is developing a marketing strategy that will cater to shoppers who use mobile devices while in the retail giant’s stores. Walmart executives have predicted that mobile devices will account for about 40% of the company’s online traffic during the 2012 holiday season, triple the level of the 2011 holiday season. “Almost every facet of our lives has been transformed by a Smartphone,” Walmart Vice President Gibu Thomas said at a November 2012 conference. In 2011, Walmart acquired Kosmix, a social media company that centered on e-commerce by aggregating real-time information from various online sources and sorting it by topic.
“Social networking and mobile applications are increasingly becoming a part of our customers’ day-to-day lives globally, influencing how they think about shopping,” Walmart Vice Chairman Eduardo Castro-Wright said at the time. Walmart Updates iPhone App for Holidays
As of September 2012, about 45% of American adults owned a Smartphone, according to the Pew Internet survey. Ownership was higher (68%) in households with annual incomes of $75,000 or more, as well as among ages 18 to 29, where 66% of adults had Smartphone. In addition to using their mobile devices to research and price consumer goods, shoppers also are using them to make purchases.
A study by Google and the research firm Ipsos found that 41% of consumers who used a Smartphone to help with purchasing decisions during the 2011 holiday shopping season also used the phone to buy an item. In preparation for the 2012 holiday shopping season, Walmart has updated its iPhone and Android apps.
Among other features, the apps make it easier for customers to find and buy items online when a particular store doesn’t have the product in stock. Smartphone owners can also use the apps to make shopping lists by speaking into the phone and to find items via an interactive store map. Walmart also has been testing an app feature that would allow shoppers to scan items as they shop, allowing for an expedited self-checkout. Social Media Marketing:
Social media is one of the most important marketing channels for brands, as it offers unique opportunities to communicate with customers. Walmart has actually published its own social media guidelines, which include things like 'don't be rude' and 'keep it real'. This is how Walmart uses social media:
1. Facebook : Walmart has put a huge amount of effort into developing its Facebook presence, and has embraced the timeline to showcase how the brand has grown over time. It has populated its timeline with an image for almost every year since it was established in 1962, although many just show when Walmart opened a store in a new US state. The retailer has clocked up a whopping 32m fans – who it entertains with a confusingly broad range of updates.
A majority of Wal-Mart’s posts are just product suggestions, but it also includes caption competitions and sports chat, as well as trumpeting its sustainability credentials. Most of its posts achieve thousands of ‘likes’ and hundreds of comments. However not everything Walmart touches on Facebook turns to gold. In October 2011 it partnered with the social network to create 3,500 pages for its local stores across the US. 2. Twitter: Walmart mainly uses Twitter to post questions; with topics ranging from sports, caption contests and requests for retweets if users agree with a certain statement. Most of its tweets only get a handful of responses, and it does a good job of answering those users.
However it also responds to hundreds of tweets a day from other users, and has the hashtag #WalmartElves to help customers who are looking for gift inspiration. Clearly Walmart sees the value of using Twitter to engage with its customers rather than just using it to churn out marketing messages. It has managed to clock up 307,000 followers, which is impressive but still some way behind rival retailer Target which has more than half a million. Walmart also operates several other Twitter accounts that focus on its sustainable initiatives, healthy food, and charity and community programs. However these are far less popular than its main account, and all have around 10,000 followers.
3. Pinterest: Walmart appears to have two Pinterest accounts; one aimed more at product ideas and one that promotes green living. The product-focused account has more than 12,000 followers and has created 65 boards, while the green living account has just over 2,000 followers.
The main account uses fantastic imagery to promote creative ideas and special occasions such as Mother’s Day and Easter, and created seven new boards for Christmas alone. A majority of its pins link back to the Walmart ecommerce site, but it also occasionally pins content from third party sites.
COUPONS: Walmart provides its customers coupons which can be printed online from www.coupons.walmart.com and used in their next visit. Walmart Coupon Policy: They accept the following types of coupons: 1. Print-at-home internet coupons * Must be legible Must have "Manufacturer Coupon" printed on them * Must have a valid remit address for the manufacturer * Must have a valid expiration date * Must have a scannable bar code * Buy one, get one free (BOGO) coupons with a specified price * Are acceptable in black and white or color * May not be duplicated
2. Manufacturers' coupons * For dollar/cents off * For free items (except those printed off the Internet) * Buy one, get one free (BOGO) coupons * Must have "Manufacturer Coupon" printed on the coupon * Must have a valid remit address for the manufacturer * Must have a valid expiration date * Must have a scannable bar code * May not be duplicated
3. Competitors' coupons * A specific item for a specified price, for example, $2.99 * Buy one, get one free (BOGO) coupons for items with a specified price * Have a valid expiration date * Are acceptable in black and white 4. Soft drink container caps 5. Checkout coupons * Printed at our competitors' registers for dollar/cents off on a specific item * Must have "Manufacturer Coupon" with specific item requirements printed on them * Must have a valid remit address for the manufacturer * Must have a valid expiration date
* Must have a scannable bar code * Are acceptable in black and white * May not be duplicated
SAMPLES: Walmart provides its customers free samples, so they can try it before they buy it. They give samples of newest brands and latest products.
* Wal-Mart HR strategy: Wal-Mart’s success in Human Resource Management is keeping their workforce of 1.3million from unionizing, while adding to it and pursuing other HR activities to further Wal-Mart’s success. Wal-Mart would not have been able to expand and have the same level of success without hiring and taking care of quality employees. * Some of Wal-Mart’s human resource activities include employee advancement, employee recruitment on college universities, and employee training and development.
Additionally, while most firms have slowed down their hiring of new employees, Wal-Mart has sought out new ways to attract and to compensate for their further expansion over the next five years. * Looking at Wal-Mart’s Human Resource Management, one of the most important aspects is Wal-Mart’s employee advancement program.
Currently, 65% of the company’s managers began working hourly jobs, such as cashiers.Wal-Mart has taken great efforts to ensure that there are opportunities for their employees to rise up through the ranks so to speak. This availability of opportunities to advance past low-paying hourly wage jobs undoubtedly is part of the reason that Wal-Mart was voted as one of Fortune magazine’s most admired companies and was distinguished as one of the best companies to work for in the U.S.
* In the realm of employee recruitment and employee training and development, Wal-Mart has targeted college students to add to their workforce. Wal-Mart achieves this recruitment by fanning out over 80 college campuses. While they are at these colleges; they are also able to expand their demographics by looking at minority fraternities and sororities, which brings all types of people from different backgrounds, races, and genders together in the Wal-Mart family.
* Having a wide variety demographic for a workforce, only serves to attract more people to seek employment with Wal-Mart because they are able to show that they have a very open hiring process. Beyond this recruitment, Wal-Mart has taken an additional step with college students by offering management training for college students while they are still in school so they are more developed and prepared upon their graduation. This program serves the purpose of making college students consider careers with Wal-Mart, and over the last two years, the program has had immense success.
* The results of these Human Resource activities speak for themselves. Wal-Mart has achieved a very good retention rate for their employees, and the proof of this is their focus on adding to their workforce over the next five years by hiring 800,000 new employees bringing the total over two million. Despite the reports that Wal-Mart’s employees are under paid and not given benefits, Wal-Mart has not wavered. * Employees, as much as 60%, have gone on record saying that they stay with Wal-Mart because the benefits allow them to take care of their families. If employees were unhappy and leaving at a considerable rate, then the focus would be on filling these open spaces rather than expanding their workforce.
“ASSOCIATES” Internal Promotions Retention Motivation to same culture Discounted rates of shares of the company for its employees. * The discrepancy between Wal-Mart’s poor HR leading indicators and its high degree of financial success has to do with the introduction and extensive use of technology in its processes.
By increasing the level of automation in its warehouses and stores, Wal-Mart has reduced the importance of employee satisfaction. * The smooth flow of operations is less dependent on employees, allowing Wal-Mart to hire individuals with low levels of education for minimum wage compensation. * This increase in the use of technology also means that very little employee training is necessary for successful execution of job tasks.
The minimal training significantly reduces the investment that Wal-Mart has in each employee, which makes them easily replaceable as there is not a large financial or temporal penalty in getting a new person up to speed on their responsibilities. * The reputation this builds for Wal-Mart is not favorable and could result in a reduced customer value proposition and loss in customers, but image and corporate social responsibility are not the only factors driving customer value. * Additional factors include price and convenience, two things that Wal-Mart is very good at delivering.
* The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India.
* New locations and store types offer Wal-Mart opportunities to exploit market development. They diversified from large super centers, to local and mall-based sites. * Being a global retailer means that you are exposed to political problems in the countries that you operate in.
Production Process: Walton figured out that most of the costs get added after the product leaves the factory and moves through the supply chain: Manufacturer Wholesaler Retailer
* 20% - 30% of retail price spent on keeping inventory in 3 warehouses * Walton eliminated the wholesaler. * He instituted Just in time (JIT) inventory practices using “real-time” flow of information from a store’s sales floors to the supplier’s plants that dictated: What to produce? When to ship? To which stores?
This was a simple yet a very powerful idea adopted by Walton for the production. It helped minimize the “BAD I”- INVENTORY and was a success.
* Wal-Mart emphasized the need to reduce purchasing costs and offer the best price to the customer. The company directly procured from manufacturers, by passing all intermediaries.
* Wal-Mart finalizes a purchase deal only when it is fully confident that the products being bought are not available elsewhere at a lower price.
* Wal-Mart spends a significant amount of time meeting vendors and understanding their cost structure.
* By making the process transparent, the retailer can be certain that the manufacturers are doing their best to cut down costs. USING EDI FOR PROCUREMENT:
* The computer systems of Wal-Mart were connected to those of its suppliers. * EDI (Electronic data interchange) enabled the suppliers to download purchase orders along with store-to-store sales information relating to their products sold. * On receiving information about the sales of various products, the suppliers shipped the required goods to Wal-Mart’s distribution centers.
Logistics Management: * An important feature of Wal-Mart’s logistics infrastructure was its fast and responsive transportation system.
* The distribution centers were serviced by more than 3500 company owned trucks.
* Wal-Mart believed that it needed drivers who were committed and dedicated to customer service. * The company hired only experienced drivers who had driven more than 300,000 accident-free miles, with no major traffic violation.
CROSS DOCKING: * To make its distribution process more efficient, Wal-Mart also made use of a logistics technique called “cross-docking.” * In this system, the finished goods were directly picked up from the manufacturing plant, sorted out and then directly supplied to the customers.
* The system reduced the handling and storage of finished goods, virtually eliminating the role of the distribution centers and stores. * The manufacturer directly forwarded the goods to a place called the “staging area.” * The goods were packed here according to the orders received from different stores and then directly sent to the respective customers.
INVENTORY MANAGEMENT: * Wal-Mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country. * With the rapid expansion, it was essential to have a good communication system. * Hence, Wal-Mart set up its own satellite communication system in 1983. * Wal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks, reducing pack sizes across many product categories, and timely price markdowns.
* Instead of cutting the inventory across the board, Wal-Mart made full use of its IT capabilities to make more inventories available in the case of items that customers wanted most, while reducing the overall inventory levels. * Employees at the stores had the “Magic Wand,” a hand-held computer which was linked to in-store terminals through a radio frequency network.
* These helped them to keep track of the inventory in stores, deliveries, and backup merchandise in stock at the distribution centers. * The order management and store replenishment of goods were entirely executed with the help of computers through the Point-of-Sales (POS) system. * Through this system, it was possible to monitor and track the sales and merchandise stock levels on the store shelves.
1. Massive buying power: Wal-Mart is providing its customers with everyday low prices hence giving them value for their money. Wal-Mart is able to provide low prices as it has massive buying power. Furthermore, there are tough negotiations with buyers helping it drive down costs. 2. Operational excellence:
The philosophy behind operational excellence is high expectations. High expectations lead to high productivity, high productivity means efficient processes, efficient processes means lower costs. These lower costs mean more profits and savings which enable it to open more stores making it more financially stable and enabling it to achieve economies of scale. Greater scale in turn means lower prices which are then passed on to the consumers. 3. Strong logistics & distribution network:
Besides the low prices, the products are made available to consumers with minimal inconvenience. Wal-Mart has developed a strong logistics and distribution network and following the hurricane Katrina it was able to supply its stores with products quickly when other stores were out of stock for many items. It uses an inventory management technique called cross-docking of products in its distribution centers which helps in reducing the inventory costs as the time inventory is piled up in warehouses is reduced. Wal-Mart has its own tractors and trailers which enables it to keep its shelves full and drive sales. Out of stock can mean havoc for Wal-Mart.
4. Excellent customer service: It has developed a culture where employees are expected to think out of the box and provide customers with excellent service. Therefore it is just not following operational excellence but building relations with customers which today is the key to any organization’s success. 5. Cutting costs and saving expenses:
Wal-Mart tries to cut costs out of their operations such as distribution centers, home office, fleet etc. When the sales are not high, expenses are also controlled and managers are not hesitant to even cut their own hours. The culture is driven from the top and the top management sets example for others to follow. 1. Low Wages but “Golden Cuffs”:
Started a Profit-Sharing Plan in 1971 for ALL Employees. “Based on profit growth, we contribute a % of the employee’s wages to his/her plan. The employee can take it in cash or Wal-Mart stock when they leave the company.”
“After nearly 25 years at the company, Shirley Cox, a cashier, still earned barely $7.00 an hour. But she retired in her 40s on $250,000 of company stock…. the stock is a prevailing theme for everyone at Wal-Mart; if you hang around long enough, you can make a fortune on the stock.” 2. No class system, thus fending off all attempts at unionization: ALL employees are called “associates” drumming home the notion that managers and workers are partners. 3. Promote from within:
In 1996, 5,900 workers moved up to management jobs. 60% of the 30,000 managers are former hourly workers. 4. Empowering of Front-Lines Wal-Mart gives them information at their finger-tips and the freedom to act. “If someone asks me how we manage a $100 billion company, I tell them a store at a time, and we constantly challenge that unit to make it the best.” -Walton. 5. Keeping Track of Competitors’ Prices
Kmart and Target store prices are tracked and compared, if the competitor’s prices are less than Wal-Mart’s price, the supervisor is consulted to cut down prices up to 5%. . 6. Management will not tolerate “shrinkage”
Loss, theft and damage of inventory is capped at around 1%. Other retailers settle for 3% - 5%.
* Market Strategy of Wal-Mart 1. Everyday Low prices (EDLP) 2. Employs both “Clicks & Bricks” and “Bricks & Mortar” strategy * Organizational Development 3. Specialty Division 4. Retail Division * Competitive Advantage 5. Price match guarantee * Market opportunity 6. B2B Single firm network 7. B2C E-Trailer Business Model
Let's be the friendliest – offer a smile of welcome and assistance to all who do us a favor by entering our stores. Give better service – over and beyond what our customers expect. Exceed your customers' expectations – If you do, they'll come back over and over again." – Sam Walton
The way management treats the associates is exactly how the associates will then treat the customers, and if the associates treat the customers well, the customers will retain again; And THAT IS WHERE THE REAL PROFIT IS. Satisfied, loyal, repeat customers are at the heart of Wal-Mart’s spectacular profit margins, and those customers are loyal to Walmart because their associates treat them better than salespeople in other stores do. It’s the main reason our company has been consistently able to outperform the competition – and even our own expectations.
Beliefs of Walton:
* Providing great customer service,
* Showing respect for the individual, and
* Striving for excellence
* WALMART FAILED IN GERMANY:
Walmart Did NOT Adapt to the German Market due to cultural problems.
Cultural Hubris “The problem was the company’s business philosophy, which had always worked so well,” wrote Frankfurt’s Börsenzeitung in what pretty much amounted to an obituary. “It’s people-centered – but that doesn’t actually work when the people aren’t American.” The company gave the job of masterminding Wal-Mart Germany to an American who didn’t speak a word of German. The Germans weren’t fond of the Walmart practice of hiring old people to greet them at the door, nor were the German workers impressed with morning warm-up sessions. Economic Hubris
They have all kinds of laws over here against the kind of disruptive market “capitalism” that has decimated small towns across America, (and still threatens the world economy IMHO): 1. You can’t sell below cost in the Eurozone countries just to run your competition our of business, even if you have a billion dollars to give it a go.
2. You can’t abuse the workforce with “falling wages” and expect the government to subsidize your slave-wage workforce with food stamps and healthcare just to make ONE corporation rich at the expense of the society at large. Playing by the same rules as everybody else proved FATAL for Walmart here in Germany.
This Atlantic Times summed up Wal-Mart’s German problem nicely back in 2006, One consequence was less competitive prices than those of their rivals. “We screwed up in Germany. Our biggest mistake was putting our name up before we had the service and low prices” -Head of Walmart International, the Economist, December 6, 2011.
* WALMART FAILED IN SOUTH KOREA:
Walmart sold 16 of its South Korean outlets to Shinsegae, a local retailer, for $882 million. Walmart failed to adjust the taste of South Korean consumers. The Vice Chair of Walmart, Michael Duke said: “As we continue to focus our efforts where we can have greatest impact on our growth strategy, it became increasingly clear that in South Korea’s current environment it would be difficult for us to reach the scale we desired.”
* WALMART FAILED IN JAPAN: Cultural misunderstanding: Wal-Mart failed to grasp the consumer and retail environment in Japan. With a population of 127 million, the highest per capita income and the second largest economy in the world, Japan is a very attractive market for retailers. The opportunity exists, but there is much more research and planning that needed to be done before expansion began. Instead of adapting business operations to the Japanese culture, the company essentially assumed the Japanese would readily adapt to Wal-Mart’s. This was not the case.
For example, in Japan there is a much larger need for local store customization. Consumer buyer behavior is much different than in the United States, with purchasing patterns and product selection varying greatly between regions. They have a tendency to buy smaller quantities in regular intervals rather than the more American idea of “stocking up.” Similarly, the concept of large retail stores is foreign. Retailers with the highest growth rate are small specialty stores; quite the opposite of Wal-Mart.
The culture tends to buy more fresh produce than pre-packaged goods as well (something Wal-Mart does not usually specialize in). Lastly, the Japanese view high price as equaling high quality. This mentality causes them to purchase 40% of the world’s luxury goods annually. Packaging and appearance of goods play a huge role in their purchasing decisions. When looking at Wal-Marts product selection, it is obvious they do not usually cater to luxury-brand customers. All of these cultural misunderstandings lead Wal-Mart away from success in Japan. Inability to carry out a low cost strategy
Given the above facts, it is obvious that the idea of ”Every Day Low Prices” does not appeal to the Japanese market in the same way it does in the American, Mexican and Canadian markets. This is a very different culture and population to cater to. Wal-Mart’s low cost marketing strategy may not be as effective globally as it is domestically. They earn their profits through high volume sales over differentiation, and this approach is just not as successful in Japan. Supply chain inefficiencies
In Japan there are strong and close-knit supplier webs that provide retailers with their goods. This country puts a higher value on close, local relationships, making it very difficult for foreign firms to enter the industry. With so many changes in products due to local store specifications, it forces firms to deal with many different suppliers. This is not f