WAL*MART CASE STUDY

Group No. 6/Sec-4

Name FT No.
Abhay Shah FT174002
Anugraha
Kabra FT174018
Jayshree
Bhatt FT174034
Piyush Bhise FT174052
Ravi Raj FT174067
Shivani
Serukai FT174083
Vipul Gupta FT174099
 Wal*Mart Inc.

And such was the fulcrum of Walmart

Strategies.
 How It Reached Here

Sustaining the high return on equity (avg. 33% over 20 years)

Focus on low prices to ensure high sales ( Revenue - $300 per
square foot) and identifying unchallenged territories.
Heavy investment in Information technology.
Discount Retailing

Came into practice in the mid

1950s.
Discount retailing for
merchandise at discount
stores by lowering the gross
margins by 10-15%.
Not-so-luxurious fixtures,
limited in-store selling and
scarce ancillary services like
delivery and credit.
Entry of players in this
segment during the 1960s
Exit of players over the
subsequent years led to
concentration of the markets.
 SWOT
1. Deal with Suppliers Cost Leadership
2. Efficient supply chain.
Strengths
3. Strategic location/facilities at store
4. New Technology implementation

1. Unable to adapt to different cultures e.g.

Weaknesses Germany
2. Highly driven by bulk sales.
3. Little success seen outside the Americas
1. New and rising economies with huge
customer base India, China, Brazil
Opportunities 2. Rise in the disposable incomes of people.
3. Entry of channels Marketing, e-commerce,
Internet based models

1. Geopolitics. E.g. - restriction of FDI in India

Threats 2. Regional competitors.
3. Law against monopoly and predatory
pricing.
Sources of Competitive
Advantage of Wal*Mart
Retail Discounting
 Merchandising

Tailored to individual markets, and in many cases,

to individual stores.

Low advertisement expenses and satisfaction

guaranteed policy.

Competition No direct competition from large

discounters and price advantage over regional
competitors
Stores and Locations

70% leased stores, and ownership

of the rest, leading to very low
rental expense.

Stores located strategically, where

future expansion was possible.

Lower operating expenses,

compared to industry and better
square footage utilization.

Extensive use of technology for

security, payments, data collection
and analysis, communications, etc.
 Distribution

Hub and Spoke Distribution network.

Five full or partial truckloads a week.

Huge distribution centers operating

24 hours a day by a staff of 700
associates.

Expanded distribution centers

Million square foot distribution
centers that served around 150
stores within an average radius of
200miles, EACH!!!
 Management

Strong and efficient Vendor management No-

nonsense negotiation, at an estimated savings of
3-4%.

Effective Human Resource Management With

528,000 full and part time staff, Wal*Mart was
recognized as one of the 100 best companies to
work for in the America.

Firm, humble, disciplinarian management across

managers, Vice Presidents, and associates.
Sams Club
Warehouse clubs, an idea
originated by Price Club,
used high-volume low cost
merchandizing and passed
the savings on to members,
with a gross margin of 9-
10%.

Offering of a limited number

of Stock keeping units in
simple, warehouse type
buildings.
Supercenters

Combination of
Supermarket and discount
store, with limited package
sizes and brands.

Grocery section competed

with supermarkets.

Acquired McLane
company(1990), a Texas
retail grocery supplier.

Introduction of
supercenters led to
impressive growth from
$11.8bn(1992) to
14.6bn(1993).
Effectiveness of Diversification
in the Food Industry
The entry in the food segment via supercenters
was a brilliant diversification strategy.

Because of Wal*Marts existing capacities and

extensive market reach, such a diversification
fares well.

Acquisitions and tie ups with grocery

supermarkets leads to enhanced capabilities and
thus a greater market share
 Future Outlook for Discount
Retailing
The emergence of e-retail and start-ups, could pose a
hindrance to Wal*Marts growth in the discount retailing
segment. Because e-retailers have almost negligible
operating and fixed costs, compared to brick and mortar
stores, they have a greater capacity of lowering prices.

Moreover, ultra-competitive sales strategies such as

predatory pricing and value added services such as cash
on delivery and ease of transactions on the go, give
customers added incentive to overlook discount retailing
giants, including Wal*Mart.

As customer priorities shift towards a service oriented

satisfaction, Wal*Mart should try to adopt a blue ocean
strategy like the supercenter segment or adopt an e-
retailing strategy that synergizes with its existing