Industry Analysis - RetailCompany – Wal-MartSave money. Live better.

Group 1

Kalpesh Agarwal - PGPM508_01 Sivaram Gunavel - PGPM508_12

Chetan Mahindra - PGPM508_23 Jaspal Singh - PGPM508_47

Overview of

Retail Industry

Retail is sale of goods to end

user, not for resale but for use and

consumption

Global Retail Industry – Revenue

$11,326.8 billion (2008), CAGR –

4.1% (2004-2008)

Global Retail Industry – Revenue

Forecast (2013) $14,347.3 billion

– Increase of 26.7% over 2008

Industry Group Segmentation

Specialty Retail

Multiline Retail

Catalog and Internet Retail

80%

14%

6%

Speciality Retail

Multiline Retail

Catalog and Internet Retail

Overview of Retail IndustryGlobal Retail Industry Group

Value

Global Retail Industry Group

Value - Forecast

9646.1

10199.5

10794.2

11395 11326.8

-0.01

0

0.01

0.02

0.03

0.04

0.05

0.06

0.07

8500

9000

9500

10000

10500

11000

11500

12000

2004 2005 2006 2007 2008

$ b

illio

n

Year

Global Retail Industry Group Value

$ billion % Growth

11326.811708.6

12284.612944.4

1364814347.3

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

4000

6000

8000

10000

12000

14000

16000

2008 2009 2010 2011 2012 2013

$ b

illio

n

Year

Global Retail Industry Group Value Forecast

$ billion % Growth

Global Retail Market Segmentation

Global Top 10 Retailers

Europe34.00%

North & South

America32.60%

Asia Pacific26.50%

Rest of World 6.90%

Global Market Segmentation

Top 10 Global Retailers

Rank Name of Company Country of Origin

1 Wal-Mart US

2 Carrefour S.A France

3 The Home Depot US

4 Tesco UK

5 Metro AG Germany

6 The Kroger Co. US

7 Target Corp. US

8 Costco Wholesale Corp. US

9 Sears Holding Corp. US

10 Schwarz Unternehmens Germany

Source: 2008 Global Power of Retailing (Deloitte)

Porter’s Five Force Analysis

COMPETITION

Major Player: Wal-Mart, Costco, Carrefour, Home Depot

CUSTOMERS POWER

Less bargaining Power but No Switching Cost

SUBSTITUTESDepartmental Store

/General Merchandising Store

SUPPLIERS POWER

Highly dependent on the Industry

NEW ENTRANTSDiversification/

M&A . Easy to Enter but tough to survive

Moderate

Moderate

Varies from Low to High based on

Geography

Less

Very High

Retail Opportunities

Opening: Market is just beginning its Retail story

Peaking: Market is developing quickly

Declining: Market is big, new entrants getting tighter

Closing: Market have high penetration

Company Over view – Wal-Mart

Mission of Wal-Mart

SAVING PEOPLE MONEY SO THEY CAN LIVE BETTER

Largest Retailer – Revenue $405,607 million

Business Segment

Wal Mart Stores

Sam’s Club

International Segment

SWOTSTRENGTHS

• Powerful Retail Brand, Large scale of operations worldwide

• One Stop Retail destination

• Strategic business programs

• Efficient working capital Management

WEAKNESS

• Self Cannibalization

• Involvement in numerous legal issues

• Continuous Product Recall

• Community Relations Problem

OPPORTUNITY

Global Food Safety Initiative Standard

Increasing demand of Online sales

Increasing opportunity in Growing economy

THREATS

Intense competition

Price matching program by Target

Foreign currency fluctuation

Value Chain

Salient Features – Wal-Mart Winning

Strategy

Strong Distribution, Inventory Management System

Differentiated Pricing

Cost Advantage Strategy

IT Advantage

3 Basics beliefs of the Company

Respect for the Individual

Service to the Customer

Striving for Excellence

Corporate Strategy

Dominance in Retail Market

Expansion in US and International Market

Creation of Positive Brand and Company Recognition

Branching into new sectors of Retail

Key Strategic Moves by Wal-Mart

Acquisition of McLane Company in year 1990

Diversification in Grocery and Food Retailing

Razor thin margin – provides Great Value to customer

Acquiring of PACE club of K Mart

Sustainability of Wal-Mart Strategy

Leader in discount Retailing

Size and Volume of Wal-Mart gives itself advantage over its

suppliers and competitors

Extensive distribution and network

Discounting Retailing format to work in International Market as

not much competition

Extensive IT infrastructure provides leverage over competitors

Recommendation

Must adopt a friendlier corporate attitude

It needs to relax its anti-unionization policy

Improve public perception that Wal-Mart can destroy

communities

International expansion should be done with the help of Local

retailers