Walmart Case Study Presentation

2. • Walmart is more than just Earth’s largest
retailer
• The finances, footprint, and personnel of this
behemoth dwarfs entire industries and
countries
• Walmart’s epic 400+ billion annual revenues
eclipse the GDPs of more than 170 countries
and its 2,100,000 employees would form the
second largest standing army on the planet

6. How does Wal Mart compete?
• Walmart went to small towns and rural areas
• Walmart knows its competitors and adopts
their best practices
• Merchandising is tailored to individual
markets and even to individual stores
• Local store managers have a lot more
leverage with prices inorder to maximise local
sales

7. How does Wal Mart compete?
• Opened discount stores at locations where
they could expand in the future
• They have always maintained technological
superiority over their competitors
• Introduced the concept of cross docking
• Stores are grouped together and hence
resupply by trucks is easy
• Vendors also operate in Walmart territory

8. How does Wal Mart compete?
• Inventory is reduced because they share point
of sales data with their suppliers and that
helps in quick replenishment
• Profit is actively shared with employees
• Shrink incentive plan
• ‘Yes we can Sam’ program

9. How does Wal Mart compete?
Supercenters
• Limited number of brands and SKU’s
• Open 24 hours a day, 7 days a week
• Have salons, delis, seafood shops, photo labs, dry cleaners

10. How does it differentiate from other
retailers?
 Walmart
• Walmart build their own warehouse & bought in volume at attractive prices
• Located stores in isolated rural areas & small towns which every other retailer
ignored
• In mid 1980s, Walmart was located in areas which were not served by any of its
competitors
• Kept prices lower than everybody else’s
• Walmart knew its competitors intimately & copied their best ideas
 Other discount stores
• Other discount stores charged gross margin 10-15% lower than conventional
departmental stores
• But fixtures were unluxurious, in-store selling was limited, ancillary services such
as delivery and credit were scarce

11. How does it differentiate from other
retailers?
 Merchandising
• Merchandise was tailored to individual markets/stores through “traiting”
• Promotional strategy of “everyday low prices”
• Walmart had few promotions. Offered only 13 major circulars per year
• “Satisfaction guaranteed” policy where merchandise could be returned to Walmart
stores with no questions asked
 Store operations
• Leased about 70% of Walmart stores
• Rental expense was 3% of discount store sales compared to 3.3% for direct
competitors
• Sales per sq.ft of $300 as compared with Traget’s $209 & Kmart’s $147
• Devoted 10% of its square footage to inventory as against industry average of 25%
• Introduced scanning of uniform product code(UPC)

12. How does it differentiate from other
retailers?
Distribution
• Cross-docking transferred products directly from in-bound
vehicles to store-bound vehicles without ever sitting in the
inventory
• Walmart used technology effectively to reduce inventory
costs & increase sales
• It spent 1.5% of discount store sales on information systems
as compared with 1.3 % for direct competitors

13. How does it differentiate from other
retailers?
Diversification
 Sam’s Club
• Warehouse clubs used high-volume, low-cost merchandising, minimum handling cost
• Limited no. of SKUs resulted in high inventory turnover rate
• Sam’s club opened clubs close to one another without giving competitors any openings in
many market places
 Supercenter
• Supercenter was a combination of super markets & discount stores, which offered limited
packaged sizes & brands in order to keep costs low
• Walmarts Supercenter comprised of a huge grocery section along with the discount section
which gave them profits of $50 per square foot
 Going International
• Walmart entered the growing economies of the world to grow their business globally
• Mexico, Canada, Argentina, Brazil, Singapore, Hong kong and China were the new centers of
Walmart

14. Porter’s Five Forces

15. Porter’s Five Forces
Weak Bargaining power
Largest account for most of
the producers
Suppliers

16. Porter’s Five Forces
Threat of new entrants Threat of
is weak Entry
Wal-mart’s great scale
of operations
It would take years or
may be decade to for a
new player to be on the
same level
Today even big players
also have extreme
difficult time matching
the costs and prices Wal-
mart provides

17. Porter’s Five Forces
Weak bargaining power
of buyers
Broad base of customers
and a significant demand
for low prices
Buyers

18. Porter’s Five Forces
Low threat of substitute
product
Wal-mart exerts a great
deal of effort in making sure
they are innovative &
meeting customer demands
Substitutes

19. Porter’s Five Forces
Fairly weak
competitors
Even though market
is crowded Wal-mart
has the lowest
costs, prices
Rivalry

20. Will it Continue?
• At this time of economical crisis of
unprecedented scale, concept like Wal-Marts
is everybody’s delight
• Wal-Mart has been aggressively trying to
expand internationally, this is the right time
for them
• People worldwide will kill for cheaper
alternatives for their daily requirements

21. Will it Continue?
Success Enablers
• Favourable macro-economic conditions
• Absence of “direct” competitors
• “Associates” v/s “Employees”
• The “Wal-Mart Culture”
• Operational Efficiency

22. Will it Continue?
Behind Every Successful Store…
• Clear Vision
• Shared Dream
• Sheer “Economy of Scale”
• Technological Superiority

23. Will it Continue?
Stumbling Blocks
• Legislation
• “Overly” Efficient
• Brand Image:-
– Annihilation of “Local Business”
– Destroyer of “Way of Life / Culture”
– Promoter of “Sweatshops”
– Promoter of “Foreign Produced Goods”
• Brand Perception:-
– Low Cost v/s Quality & Buying Experience
– Relation with “U.S.A. Global Image”