A Wal-Mart Neighborhood Market
A Wal-Mart Neighborhood Market
A Wal-Mart Neighborhood Market
Image © 2006 Walmartfacts.com
A Wal-Mart Neighborhood Market
To get a sense of just how big Wal-Mart is today, consider these facts:
Wal-Mart employs 1.6 million people. To give you an idea of just
how many people that is, Idaho, the 39th most populous state, is
home to 1.4 million people.
Wal-Mart had sales of $312.43 billion in its most recent fiscal year,
which ended January 31, 2006. By comparison, the second-largest
retailer in the country, Home Depot, posted sales of $81.5 billion.
Wal-Mart has 6,200 retail outlets. In contrast, Home Depot has
2,040.
What made Wal-Mart so big, powerful and successful? Let's look at some
of its strategies, including its sophisticated use of technology, its corporate
culture of watching every expense, and above all else, its mission to keep
prices low.
Wal-Mart Strategy
Let's start with technology. Wal-Mart pushed the retail industry to establish
the universal bar code, which forced manufacturers to adopt common
labeling. The bar allowed retailers to generate all kinds of information --
creating a subtle shift of power from manufacturers to retailers. Wal-Mart
became especially good at exploiting the information behind the bar code
and is considered a pioneer in developing sophisticated technology to track
its inventory and cut the fat out of its supply chain.
The central goal of Wal-Mart is to keep retail prices low -- and the company
has been very successful at this. Experts estimate that Wal-Mart saves
shoppers at least 15 percent on a typical cart of groceries. Everything --
including the technology and corporate culture -- feeds into that ultimate
goal of delivering the lowest prices possible. Wal-Mart also pushes its
suppliers, some say relentlessly, to cut prices. In "The Wal-Mart Effect,"
author Charles Fishman discusses how the price of a four-pack of GE light
bulbs decreased from $2.19 to 88 cents during a five-year period.
In a 2003 Los Angeles Times article (part of a Pulitzer Prize-winning series
about Wal-Mart, tells of a Wal-Mart buyer named Celia Clancy, who was in
charge of clothing and demanded that each supplier either lower the price
or increase the quality every year on every item. This philosophy is known
as "plus one."
A successful company strategy has been to branch out into new sectors of
retailing. Wal-Mart has recently become a major pharmacy, automotive
repair shop, and is now moving into grocery sales. This is an example of
success - it exemplifies Sam Walton's vision of being the best retailer
around. After a store expands physically and geographically, it must then
expand in terms of what they sell; branching out and competing with other
businesses. The traditional retail business of Wal-Mart has been selling
discount and cheap house wares and plastic goods, clothing, sporting
goods, and toys. Other departments include but are not limited to
stationary and office supplies, hardware, home improvement, paint
supplies, arts and crafts, cosmetics and toiletries, shoes, books and
magazines, greeting cards, and confectionery. Wal-Mart has also
encroached into home electronics, automotive supplies, pharmaceuticals,
jewelry sales, photo finishing, travel planning, and home gardening. More
recently Wal-Mart has begun to move into the grocery store business with
its new "Neighborhood Markets." Everywhere the store has a department,
it competes with those businesses, which specialize in that sector, often
putting smaller competitors out of business. Wal-Mart can be judged by the
fear it puts into its potential competitors and by the uproar caused by them
protesting a Wal-Mart incursion, as is the case with grocers
(www.walmart.com, 2000, 2001 Annual Reports, Quinn 89-138).
As Wal-Mart continues to grow into new areas and new mediums, our
success will always be attributed to our culture. Whether you walk into a
Wal-Mart store in your hometown or one across the country while you're on
vacation, you can always be assured you're getting low prices and that
genuine customer service you've come to expect from us. You'll feel at
home in any department of any store...that's our culture.
The company has three "Basic Beliefs" or core philosophies Sam Walton
built the company on. Those beliefs are: (1) Respect for the Individual, (2)
Service to Our Customers, and (3) to Strive for Excellence. Respecting the
individual is a call for treating their employees well and pushing them to
excel in what they do. The commitment to their customers is a goal
whereby the stores respect a pricing philosophy to always sell items as low
as they can while providing excellent customer service. The third belief is
to strive for excellence, that is to expand the store, innovate, "reach further"
in to new markets and to grow. (H. Lee Scott, 2002, www.walmart.com)
A final, yet important rule, which is a strong part of the corporate culture is
Sam Waltons' "Pricing Philosophy" which underlines the company strategy
of selling items for less then their competitors, "always." (www.wal-
mart.com, corporate culture).