Describe the nature of the industry in which Wal-Mart competes
The discount retailing industry, in which Wal-Mart competes, suffered slower growth in industry sales and in new store increases by reaching maturity. This resulted in a shakeout that has left the industry very concentrated. These trends are likely to continue due to intensified competition driven by companies seeking to expand market share by gaining efficiencis and economies of scale in distribution and purchasing. Indeed, in 1993 the top 5 discounters accounted for over 70% of total industry sales. Consequently, barriers to entry are high. Other barriers to entry include the high capital expenditure requirements of leasing or buying the
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This pattern of growth, allowing it to build market share and secure volume advantages quickly, through large expenditures on warehouses, is also evident in the manner in which Wal-Mart built its stores. Wal-Mart stores were initially built of a smaller average size than its direct competitors and only if there was space in the location for future expansion; this increased Wal-Mart’s flexibility and it helped reduce unnecessary costs, as indicated by Wal-Marts lower proportion of rental expense and its significantly higher sales per square foot. Indeed, this is just one manner in which Wal-Mart, unusually for a service industry, was able to create a real competitive advantage. However, because this advantage is clearly imitable Wal-Mart has been aggressive in maintaining its technological lead.
Wal-Mart’s promotions and advertising expenses, in proportion to discount store sales and in terms of circulars offered, was significantly less than competitors; rather it touted itself, and gained recognition for, as offering ‘everyday-low prices’ on national brands. Most of the products it sold were nationally advertised baranded products, although a growing
On July 2, 1962 Sam Walton opened the very first Walmart store in Rogers, Ark. Each week, more than 140 million Americans shop at Walmart. The company has over 11,000 stores in 28 countries. In fact, just recently the company opened a new store in my neighborhood. All summer I watched them build and build and I would say to my mom, “I can’t wait for them to finish so we can stop having to go to that ghetto Walmart.” I know “ghetto Walmart?” but it’s the truth. There was one other Walmart in my neighborhood and it was known as the ghetto Walmart. So when I received the essay assignment I knew immediately where I wanted to go. At ghetto Walmart the norms became abnormal and the abnormal things started to be accepted. The Walmart Company knows how to get costumers to come into their stores, I’ll give them that, but something just went wrong with that one.
Wal-Mart Corporation is one of the largest retail stores in the world. They serve customers in meeting their needs with low cost saving items. On October 31, 1962, Wal-Mart was founded and incorporated by Sam Walton in Bentonville, Arkansas. Mr. Walton went into business because he felt that items sold were too high for the average customer to afford. His focus was to sell products at low prices to get higher volume sales at a lower profit margin. He bought bulk products from different suppliers so he could incorporate savings into his pricing to lower cost for customers. Under the savings cost concept, Wal-Mart grew rapidly and surpassed its competitors in sales and generating profits.
The company has changed how consumers look at the retail industry as a whole. The retail industry looks at companies like Wal-Mart and labels them as discount stores that only make a profit through high-volume purchases and low markups.
(1) Wal-Mart’s promotional strategy of “everyday-low-prices” meant offering customers brand name merchandise for less than department and specialty store prices.
Wal-Mart is the world's largest retail and departmental store chain. Having business operations in 27 countries with 69 different brand names, Wal-Mart is able to serve a huge number of customers per day. Wal-Mart is the fastest growing and the most successful retail brand in the world. The factors which make it the strongest brand in its industry include large customer base, sound financial strength, strong brand image, and huge supply chain network. Wal-Mart has certain weaknesses in its operations and business setup like low acceptability of certain products, high employee turnover, and less recognition of newly introduced brands. These weaknesses can be overcome by availing attractive opportunities from the market and investing more in the most profitable areas. Wal-Mart faces the biggest threat from its competitors and ever-changing customer preferences.
Wal-Mart is arguably the most dynamic corporation in the last 50 years in the United States, if not the world. Arising from its beginnings in Bentonville, Arkansas, it has grown to over 4,400 discount stores, super centers and corner markets worldwide. Wal-Mart continues to expand despite public criticism of its labor practices as well as complaints about their treatment of competitors. The many strengths of Wal-Mart, like their low cost production and marketing practices, will aid Wal-Mart as it continues to grow in the retail
Oh Walmart, how I love thee. Every fourth of the month, all six teachers of mine decide to assign a major project worth twenty percent of our grades. Being in high school, all I want to do is save my money. Thus, I go to the cheapest, yet the most reliable, department store there is. Walmart. I love walking through the grand doors of Walmart, and being greeted by the fresh scent of expired candy. As soon as I am inside, I make my way towards the easy to find office aisle. While attempting to search for the extremely short list of forty plus supplies that I need, I figure that it’s time to ask an associate for help. Just as I turn to ask, I notice a full moon. Of course not because it is night, but because the mother ahead of me decided to change her daughter’s diaper in between the
Two giants in the discount superstore market are Wal-Mart and Target and they differ slightly in their business strategies. Both companies are able to achieve a great deal of control over all of Porter’s Five Forces: supplier power, customer power, established rivals, new entrants, and substitutes but Wal-Mart seems to have a lower threat from suppliers than Target.
Wal-Mart didn’t just get by with cost-saving methods. They were ahead of their competitor’s technology wise too. Even in the 1970’s, Wal-Mart was able to track inventories in their warehouses and link it with stores. They tracked their sales data for specific items and could increase or decrease their inventory accordingly, achieving a higher efficiency than other retail companies. Another aspect that Wal-Mart felt strongly about was expanding there reaches. In 1978, they introduced a Pharmacy, auto center and jewelry divisions.
Since 1962 and the beginning of the discount retailer market Wal-Mart has been ahead of the retail game. By 1967 there were 24 Wal-Marts that had grossed 12.6 million dollars. In just 7 years Wal-mart had spread into 9 states. By 1979 Wal-Mart was the fastest store to reach a billion dollars in sales. In 2005 Wal-Mart has 3,800 domestic stores along with 3,800 stores internationally, and had made over 312 billion dollars. As you can see the Wal-Mart empire has grown monumentally. To move into this segment of the market would be tough.
Wal-Mart was known for its excellent supply chain management. Wal-mart grew in the 1960s to 1980s and benefited from improved road infrastructure and the inability of its competitors to keep up to changes in legislation. The main change was the removal of “resale price maintenance,” which had prevented retailers from discounting merchandise. A strong and efficient supply chain is the key to distribution and keeping their customers satisfied with the promise of “Everyday Low Prices.” Things within the supply chain in which Wal-Mart excelled at would include logistics, purchasing, retail decisions, and limiting the overall bullwhip effect of the supply chain.
Evidently, Wal-Mart is not doing anything to differentiate itself from rivals. It gives no frills to self-service outlets always providing the cheapest prices. Through a well-built influence with suppliers, the company has gained the power to manipulate prices and amend manufacturing procedures thus wringing out more savings for its customers. All that the company does from the frequent calls to suppliers to doubling up execs in hotel rooms aimed at saving the
I understand Walmart is a one stop shop and you can get everything you need at one place, but it does come at a price to everyone. “Many Walmart workers are forced to utilize state subsidized benefits. Three major studies—one in Georgia, one in California, and one in Massachusetts—found that Walmart was the employer that had workers most reliant on government assistance. It is estimated that Walmart employees cost taxpayers more than $1 billion nationwide” I think for Walmart to be making so much revenue they are being greedy to their employees.
Having the stores close to the distribution centers allowed them to quickly get supplies, sort it, and delivered to stores. Wal-Mart’s innovation helped them keep the lowest distribution costs in the industry. One of their innovations was cross-docking. Instead of storing the goods when they came in they would just transfer the merchandise from an inbound truck directly to a store-bound truck. Another innovation they are trying to implement is radio frequency identification (RFID) technology. All of the large distribution centers and new innovations help Wal-Mart control their costs by quickly moving merchandise to save time and money.
Wal-Mart Stores, Inc. the World’s largest retailer, has a bullseye on its back in all different directions from supermarkets cutting prices to match Wal-Mart’s price, to Costco leading the warehouse market and online retailer beating out Wal-Mart.com. In addition, 2008 brings an economic slowdown and reduction of feet through the doors of Wal-Mart Stores. Added to this, Wal-Mart has received negative publicity relating to employee compensation and benefits, forcing pricing challenges for suppliers resulting in the loss of U.S. jobs and opening stores putting locally owned retail outlets out-of-business. Wal-Mart has over 6,8001 stores worldwide with a strong internet presence supported by over 66,000 suppliers.