The document discusses the history and operations of Walmart, beginning with the origins of discount retailing in the US in the 1950s. It notes Walmart and Kmart's founding in the 1960s and their growth through innovations in the 1980s and 1990s with larger supercenter formats. The summary provides details on Walmart's operations as of 2003, including over 4,600 stores across the US, supply chain and distribution networks, merchandising and pricing strategies, and management practices emphasizing responsibility, control, commitment and strategic analysis that contributed to its success.

1. Wal-Mart

2. Discount Retailing in the United States Began in the mid - 1950sWal-Mart, Kmart, Target - Started in 1962Stagnated during the 1970s1980s – Kmart – largest discount retailer Wal-Mart – Second largest Innovations – Denser display, UPC scanning Hypermarket failed evolved smaller format

3. Continued…1990s- Came Supercenter2001- Supercenters to account for more than 1 billion dollars Blurred the traditional boundaries between discount retailers and traditional markets 2002- Kmart, biggest retail bankruptcy ever

5. Wal-Mart Stores, Inc. Headquarter – Bentonville2003 Stores - 4,688 Area - 561 million square feet 73% stores - located in united states

6. Sam WaltonBorn on 29 march 1918 in Kingfisher, Oklahoma Good athlete Student leader Entrepreneur1945 – First variety format franchised Ben Franklin

7. 1962 – First Discount city store in Rogers, Arkansas

8. David Glass – Said...

9. Sam overcame early problem and took company public in 1970 & raised $3.3 mCont.…Hired Senior executives including David GlassInstalled private satellite network – 1980s Obsessed with work1988 – CEO - David Glass – 2000 – Lee Scott

10. Retailing FormatsDiscount StoreSupercenterNeighborhood Markets Sam’s Club

11. ProcurementExpenses – should not exceed 1% value of purchases

12. Backward integration – Saved 2-3% on goods

13. Early 1990s – EDIs

14. Sam time – Retail Link Data ware house consisted 250 terabyte of analytic database - Less than 10 minutesAugust 1997 to July 1998 – left to work for Amazon.com

15. Continued..Supply and Demand information helped

16. 8% products – out of stock

17. 1/3 Goods – Down prices

18. Included top 75% - strategic decisions

19. Small shared suppliers – Poor performed

20. Large shared supplier – Better performed

21. Wal-Mart - P & G’s largest customerContinued..Wal-Mart – China’s single largest importerChina’s eighth largest trading partner, ahead of Russia and Britain28-40% - Cost reduction on imports of high velocity friendsChild labor issueEarly 2003 - Sweetshop retailer of the year

22. DistributionBuilding stores within a day’s driveAt the end of 2003 - 43 distribution centers

23. A typical distribution centerArea - 1 million square feet Investment - $70 mOperated – 24 hours a dayStaff – 700 associatesPaid - $12-18/dayServed – 150 stores (radius 150 miles)

24. Inventory turnsInventory turns - 3.2 in 1973 t 4.4 by 193 - 7.6 by 2003Scan N Pay model

25. Distribution CostWal-Mart – 2-3% revenueOther retailers – 4-5% revenue

26. McLane A wholesale distributer acquired in 1990Sold to Berkshire HathawayLost - $1.29 b on volume of $22 b

27. Merchandising and MarketingProduct AssortmentPricingOther Marketing

28. Merchandising and MarketingWalton’s life with merchandising.Merchandising principle:Achieving very high sales per square foot by offering broad assortment of merchandise at constantly low prices in cheap but cheerful stores.

29. Product assortment/ collectionMore sales per square foot, more traffic, and require fewer markdowns. Low profit margin.

30. Cont’d

31. Dynamics of Wal-Mart StoresDominated the market15% Sales in 1995 20% Sales in 1999.

32. Private ProductsSam’s American Choice detergents= ½ prices of P&G’s Tide.Sam’s American Choice detergents= ¼ shelf space of P&G’s Tide.

33. Modular Capacity Assortment Planning System (MCAPS)ExclusivityImpulse/ destination purchasingEase of in-store display/ stockingVolume producing items based on season or monthLocal demographicsLocal community through fund raising events.

34. Cont’dMerchandising mixLoss of non-purchaser accounted to $9 billion per year

35. Pricing“Always low price. Always.”Rollback programmed10% discount on three to four key items per categoryDiscount may be continuousWhich facilitate bulk purchase benefitted unto 100’s % cause increase in revenue

37. Price-WarManagers were allowed to match or beat the lowest competing price (Max. 5%)Wal-Mart makes price checks99.8% of Kmart Stores98.7% of Target Stores (10-15% Premium charge)

38. Other MarketingWal-Mart’s advertising to sales= 0.3%Kmart’s advertising to sales= 1.2%Target’s advertising to sales= 2.2%MediaLocal TV, radio, market-level promotions,In-store television (nation’s largest media provider- half of the consumer purchase decision is made in store itself)

39. StoresMore on operational part rather than cheerful ambiance.They wanted to create “Big Box” in all rural and urban area.50 Stores8 Stores

40. Wal-Mart enters in New Market

41. CharacteristicsDiscount stores open 24 hours a day from Monday to SaturdayLimited time on Sundays.Supercenters open for 24*7.Inbound sides.Outbound sides.Credit cards services.

42. Sales/ (Foot)2$440$249$221Autonomy of Sales

43. PeopleWal-Mart success ingredient is its “associates”.Institutionalized policies and practices-Sharing performance information with associatesSoliciting their ideasOffering them incentivesOffering profit sharingMaintaining open door policy.

44. Payroll ExpenseGrowth of Supercenter format

45. Cont’dPayroll expenses= Labor related costs per employeeSales per employee (S/E)$175,000$144,000$144,000 Sales per Employee in 2003

46. Cont’dLabor related costs per employee

47. Store within a STOREReceive detail information in salesReceive detail information in profitsAdjusting the merchandising mixBeing reward for the results

48. Frame of Reference“Very competitive benefits and very competitive wages”Wal-Mart emphasizes that it offered more training than any other retailer.Promotion rate is high- 2/3 of its managers had been promoted to higher level.Successful, caring and fun place to work.

49. Critique argued that…Wal-Mart’s paying $2-3/hour less than supermarket.Less wages cause high turnover of employee.

50. Cont’dHealth insurance benefits to over 90% employees.2.2 million employees base is necessary to maintain.2/3 of hourly employees are female, they hold 1/3 of store management jobs and 15% store management position.

51. ManagementWhat management practices made Walmart Giant?

52. 1.Responsibility & trust- Learned from variety store business

53. 2.Establising check & control-Facilitated by technology

54. 3. Commitment to work

55. “Commit to your business. Believe in it more than anybody else. I think I overcome every single one of my shortcomings by the sheer passion I brought to work.” - From Sam Walton’s Autobiography

56. 4. Strategic analysis