wall mart- retail case
TRANSCRIPT
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Wal Mart- An overview…
The Wal-Mart company, the world's largest retailer and second-largest corporation, is a dominant
US business. This study investigates whether there are significant long-run relationships between
the business of Wal-Mart and the overall US economy as measured by an array of traditional
macro-level variables. Analysis reveals that Wal-Mart sales generally move counter to overall
economic conditions, dampened in more prosperous economic periods and buoyed in more
sluggish economic environments. Consequently, trends in Wal-Mart sales may serve as a rather
non-traditional contrarian economic bellwether. Wal-Mart Stores, Inc. branded as Wal Mart, is
an American multinational retail corporation that runs chains of large discount department stores
and warehouse stores. Wal Mart remains a family-owned business, as the company is controlled
by the Walton family, who own a 48 percent stake in Wal Mart. It is also one of the world's most
valuable companies. The company was founded by Sam Walton in 1962, incorporated on
October 31, 1969, and publicly traded on the New York Stock Exchange in 1972. It is
headquartered in Bentonville, Arkansas. Wal Mart is also the largest grocery retailer in the
United States. Wal Mart has 8,500 stores in 15 countries, under 55 different names.
Wall Mart- The International Picture…
Wal-Mart’s international operations currently comprise 4,263 stores and 660,000 workers in 15
countries outside the United States. There are wholly owned operations in Argentina, Brazil,
Canada, and the UK. With 2.1 million employees worldwide, the company is the largest private
employer in the U.S. and Mexico, and one of the largest in Canada. In the financial year 2010,
Wal-Mart’s international division sales were $100 billion, or 24.7 percent of total sales. Wal-
Mart has operated in Canada since its acquisition of 122 stores. In 2010, Wal-Mart Canada Bank
was introduced in Canada with the launch of the Wal-Mart Rewards MasterCard. In the mid-
1990s Wal-Mart tried with a large financial investment to get a foothold in the German retail
market. In 1997 Wal-Mart took over the supermarket chain Wertkauf with its 21 stores. Wal-
Mart’s "Big Box – Low Price" Model, a price strategy that works well in the U.S., was not
successful in Germany. In 2004, Wal-Mart bought the 116 stores in the Bompreço supermarket
chain in northeastern Brazil. Sales in 2006 for Wal-Mart’s UK subsidiary, Asda accounted for
42.7 percent of sales of Wal-Mart’s international division. In contrast to the US operations, Asda
was originally and still remains primarily a grocery chain, but with a stronger focus on non-food
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items than most UK supermarket chains other than Tesco. Wal-Mart has joint ventures in China
and several majority-owned subsidiaries. Wal-Mart’s majority-owned subsidiary in Mexico
is Walmex. In Japan, Wal-Mart owns 100 percent of Seiyu as of 2008. In January 2009, the
company acquired a controlling interest in the largest grocer in Chile.
Wall Mart’s Presence Table…
Four Ps of Wall Mart…
Product- the Company is hosting products regarding electronics, movies, music, books,
furniture, and all types of baby products, pharmaceutical products, jewellery, toys, photography,
grocery and many more. They provide facility of online shopping and safe shipping. A very
reliable and warranted system is provided to the customers purchasing any type of goods either
online or directly through mega stores. Wal-Mart mostly exhibit private labeled brands and
brands like Cott Beverages were exclusively marketed at Wal-Mart outlets.
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Price- Universal bar code is the bench mark of this company and specifically an achievement for
the founder. Prices of the grocery items at the Wal-Mart stores are as low as 15% of the local
market. Electronic items and technological market rates are as lower as possible. Their price
policy welcomes only those producers who are producing at the huge demand of the company,
others being thrown out of the market.
Place- Sam’s Club, Wal-Mart stores U.S, and Wal-Mart International are the three divisions in
which Wal-Mart is working. Wal-Mart outlets are marketing with different names in Mexico,
Japan, India, Brazil, UK, Canada, South America and China. Wal-Mart is a huge network of
apparel stores, small markets, cash and carry stores, membership warehouse clubs, supercenters,
food and drugs, etc. The outlets are huge buildings with an average area of 197,000 square feet.
38 Mega stores are operating in different countries with almost 1500 employees serving there in
each store.
Promotion- Online order placing shipment at the desired place is the major revenue earning
source. Have an efficient working website and the database is designed to facilitate the
customers and the contents are very well organized and easily reachable. Basically the company
started with the discount principle but still apart from routine discount seasonal discount offers
and bulk discount offers are also given, and sometimes products rates are fixed at very low price
for a very limited period of time.
Wall Mart- Situational Analysis (Going Global)…
Why Global- One and only reason is to survive in this competitive market.
Other reasons for growth are-
Capital market expectations – continuous sales and profits.
Expectations of its own employees.
Saturated domestic market.
U.S. just 4% of the global population.
Emerging markets- Tremendous opportunities.
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Wall Mart- INDIA Chapter…
In November 2006, the company announced a joint venture with Bharti Enterprises to open retail
stores in India. As foreign corporations were not allowed to directly enter the retail sector in
India, Walmart operated through franchises and handled the wholesale end.[92] The partnership
involves two joint ventures; Bharti manages the front end involving opening of retail outlets,
while Walmart takes care of the back end, such as cold chains and logistics.
Wall Mart- Reason for Entry
India is a tremendous potential market where middleclass population comprises of 300 million. It
has consumer class of 105 million growing at a rate of 10% and with an annual average
household income of $3000. Demographics- 60% of the Indian population is in the age group of
20-30 and is more inclined towards modern shopping. GDP growth is about 6-8%.
Wall Mart- Opportunities in India
India’s retail trade is estimated at $206 billion and growing at 5% annually and only 3% of
market is organized comprising of shopping malls. India is a vast market for food retailing and
one can add value to the customers by means of low price and wide range of merchandise.
Step 1: DECIDING COUNTRY- Specifics of the business, competitive and
economic environments.
Acquiring an existing player.
Starting new stores on own. Joint Ventures.
Step 2: DECIDING STRATEGY.
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Wall Mart- Challenges in India
A protest from the small grocery retailers (Kirana) is the main threat for them. FDI entry
restriction is the second most reason. Competition from Indian retailers including Pantaloon,
Shoper’s Stop, Piramals and the political controversies at each state.
Wall Mart- Operations…
Supply Chain Integration in developing countries by Wal-Mart.
Wall Mart- Marketing Strategy
Mission/Vision: To give ordinary folk the chance to buy the same thing as rich people.
Product Strategy: Lowest prices across-board the product lines.
Product U S P: Core competency, Low prices, In-stock positions, Customer service.
Service Strategy: Respect for the individual, high standards of service and constant strive for
excellence.
Segmentation: Middle class, Lower Middle class.
TOTAL DELIVERY TIME
YOU PLACE YOUR
ORDER
PROCESSING TIME
WE SHIP YOUR
ORDER
SHIPPING TIME
DELIVERY
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Positioning: Consistent positioning – “Always Low Price”
Activities: Food retail, Non-Food retail, and online food retail.
Intangibles: Personalized customer service.
SWOT
S trength
Efficient supply chain management
Service innovation and technology
Large convenience stores, which offer one stop solution for all the customer needs.
Least cost of packaging
Strong penetration strategies
Infrastructure (financial strength)
W eakness
Poor public image
Late entrant in international market.
Unable to adapt to different countries
Un-unionized & Strict labor laws
Were unable to handle media
High law suits against the company.
Greater global footprints makes for difficulty in inventory management
Opp ortun ity
Many countries are still left
Unorganized retail
Globalization (diminishing trade barriers)
Cold Storage market.
Increase in consumer purchasing power
E-business
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Unemployment
T hreats
Competitors
Anti-outsourcing laws coming into force
An increasingly environment conscious consumer base
Exposure to the political and socio-economic upheavals across the world
Recommendation
Understanding the consumer behavior is needed. Market segmentation is to be done. Format of
the stores should be super centers or hypermarkets. And lastly Wal-Mart to adopt a blended
model of its traditional format with the reality of Indian real estate.