Retail Management Walmart


2/17

WALMARTThe 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 WMTand has itsheadquarters in Bentonville, Arkansas

Walmart operates over 11,000 retail unitsunder 71 banners in 27 countries and e-commercewebsites in 10 countries

The company employs 2.2 million associatesaround the world 1.3 million in the U.S. alone

Every Day Low Price (EDLP) is the cornerstone of the companysstrategy

Wal-Mart topped Fortune magazines list of top 500 companies in the world, successively for

three years in 2004.

Walmart U.S.

WalmartInternational

Sams Club

Walmart Global

eCommerce

Different types of storesWalmart 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 amongcustomers 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


3/17

History & Global Expansion

1962Retail Revolution began when Sam Walton opened first Walmart store; 1969Company

officially incorporated as Wal-Mart Stores, Inc.

Walmart went National; 1970Became publicly traded company; 1971First Distributioncenter and Home Office opened; 1972Listed on NYSE (WMT); 1979WalmartFoundation established

1980Reached $1 billion in annual sales; 1983First Sams Club opened; 1987 -installed the largest private satellite communication system in the U.S., linking thecompany's operations through voice, data and video communication

1991Walmart went international opening Sams Club in Mexico City; 1994 Expanded

into Canada; 1996Opened first stores in China; 1997First $100 billion sales year;1998Neighborhood market format introduced; 1999Entered U.K.

2000Walmart.com was founded; 2002Company topped Fortune 500 ranking of America'slargest 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


4/17

Evolution

1962 - 1964 1964 - 1981 1968 - 1981

1981 - 19921992 - 20082008 - present


5/17

Impact on the Economy

Dying Real

Estate

As the retail jobs are lost, the owners of retail stores are left with no option butto close down the stores due to which the prices of the real estate drops by asignificant amount.

Government

Subsidies

Government has been providing subsidies to Walmart for opening stores indifferent regions. As a result, huge amount of tax payers money is beingutilized to set up stores by Walmart. Also, a huge amount of tax payersmoneyis used for providing Medicaid for Walmartsemployees. Thus, Walmart enjoysthe privilege of shelling out very low wages for its employees

Unemployment

Everyday Low Prices methodology followed by Walmart is responsible fordestroying 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 oncustomers. This is one of the reasons why FDI in retail was opposed in Indiaby retail shop owners.

Unethical

Practices

Walmart has been accused of following unethical practices when it comes topaying salaries for its associates. The associates are paid in terms of numberof hours worked. The managers are encouraged to reduce the number ofhours an associate has actually worked due to which many associates havesued the company.

EnvironmentalFootprint Walmart has also been sued in courts for its environmental unfriendly practices.


6/17

Entry

Strategi

es

Acquisitions

Exporting

Franchising

Wholly ownedsubsidiary

Licensing

Greenfieldventures

Strategic alliances

Turnkey projects

Joint ventures India- JV with Bharti Airtel- Failed

Brazil- Acquired Ahold Store

Argentina-entered in 1995 by setting up100%-owned greenfield stores

Entry strategy adopted by Walmart in major markets

Costa Rica, Guatemala, Honduras,Nicaragua-acquisition of Central

American Retail Holdings Company in2007

Korea-1999 entered by acquiring four

units from Macro

Mexico-50:50 joint venture with theleading retailer

Hong Kong- JV with Thai partner

China

Reason forfailure

Failed to localize,made an offer to

Emart for acquisition.Made an exit selling its

stores to Emart

Selection of wrong

partnersThai partner instead ofcompany from Taiwan

or Hong Kong

Selection of wrongpartners

Bharti Itself had

intentions to become aretail giant

Acquisitions and

Greenfieldinvestments have

yielded better

results for

Walmart


7/17

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 softwareISSUES in JAPAN

Wal-Marts retail model was not the right fit as Japanese consumers were not very priceconscious and preferred conveniently located stores

Faced trouble with procurements as the Japanese retail sector was a multi-layered networkof suppliers


8/17

Entered China in 1996

Adopted a slow growth approach

The company sold goods worth $940 millionand purchased goods valued at $18 billionfrom Chinese manufacturers in 2004

Implemented global practice of Every Day

Low Prices (EDPL)

Localized its offerings to Chinese consumerswith significant innovations

ISSUES in CHINA

Domestic retailers had the advantage of an

established supply chain network andknowledge of local taste and preferences, inaddition to support from the government inChina

Carrefour gained a lot of ground due to rapidexpansion

Walmart in CHINA


9/17

Walmart-Strategies for success

Reduce Cost

Minimize bargaining

power of powerfulsuppliers

Remove costly stepsin value chain

Raise prices

Minimizing bargaining

power of powerfulbuyers

Increased ability todifferentiate

Minimize strategicrisks

Reduce the threat ofsupplier buyer cutoff

Minimize technologyspillovers

Increasedresponsiveness

Bring theorganization 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
http://anirbankar.com/2011/06/03/wal-mart-international-strategy-case-study/


10/17

Walmart- Customization in different Geographies

Suppliers

Supplier relationship iscritical

Different qualitystandards

Culture Collisions

Product requirementsBuying patterns

Human Resources

Labour lawsMotivating localemployees

Technology

Online shoppingTechnology breaksthrough geographicallimitation

Competition

Different levels ofcompetition and entrybarriers

Key focus: Stores were located In

small towns and ruralareas with population

Documents

Retail Management Walmart