wal mart case study

Sam’s Clubs GLOBAL INDUSTRY ANALYSIS - CASE STUDY Wal*Mart Stores, Inc. a presentation Anthony, Crystal, Sandy From YZU university 1 2 WALMART Background Sam Walton  Founder of Wal*Mart Stores, Inc. Performance of Wal*Mart  20-year average return on equity of 33%  Compound average sales growth of 35%  Market value = $57.5 billion Wal*Mart Industry average Sales per square foot $300 $210 3 WALMART Background Year 1988  CEO: David Glass  COO: Don Soderquist How to sustain the company’s phenomenal performance? 1987 1993 Net sales 15,959 67,345 Net Income 628 2,333 Number Of Stores Discount Stores 1,114 1,953 Sam’s Wholesale Clubs 84 419 Supercenters N.A. 68 4 WALMART Background Number of Stores (1994) 5 WALMART Discount Retailing Where  Emerged in the U.S. When  Mid-1950s Top 10 discounters in 1962  Wal*Mart remained only The industry became more concentrated  Discount store companies operated 5 or more stores accounted for 62% 6 WALMART Discount Retailing 7 WALMART Discount Retailing Comparative Pricing Study, 1993 8 WALMART Discount Retailing Overall Performance of Discounters 9 WALMART Wal*Mart’s Discount Stores and History of Growth Year 1945  Ben Franklin franchise store In 1950s  15 stores Year 1962  Wal*Mart Discount City store Year 1969  18 Wal*Mart stores  15 Ben Franklin franchise stores 10 WALMART Wal*Mart’s Discount Stores and History of Growth Year 1970  30 discount stores in rural states  South and Midwest  Cost of good sold  Build its own warehouse − Buy in volume at attractive prices − Store the merchandise Year 1972  Took the company public  Raised $3.3 million [...]... competitors Intense price competition WAL MART Wal* Mart s Discount Stores and SWOT Analysis WAL MART Wal* Mart s Discount Stores and Store Operation 25 WAL MART Wal* Mart s Discount Stores and Store Operation 26 Electronic scanning of uniform product code (UPC) at the POS Ensure accurate pricing Improve efficiency Reduce Shrinkage Improve communications WAL MART Wal* Mart s Discount Stores and Store Operation... inventory control WAL MART Wal* Mart s Discount Stores and Store Operation 28 Phenomenal distribution network Two step hub-andspoke WAL MART Wal* Mart s Discount Stores and Distribution 29 Phenomenal distribution network Crossdocking technique WAL MART Wal* Mart s Discount Stores and Distribution 30 Phenomenal distribution network Distribution center  Cost advantage  Stable price WAL MART Wal* Mart s Discount... Computeriz ed pick to light system WAL MART Wal* Mart s Discount Stores and Distribution 32 WAL MART Wal* Mart s Discount Stores and Distribution 33 Backward integration  No nonsense negotiator  Economies of scale  Maintain long term relationship with supplier, as powerful partner (RSP) WAL MART Wal* Mart s Discount Stores and Vendor Relationships 34 WAL MART Wal* Mart s Discount Stores and Vendor Relationships... faced 55% (Kmart), 23% (Target)  Kmart 82%, Target 85% from Wal* Mart WAL MART Wal* Mart s Discount Stores and History of Growth 14 Philosophy  Keep prices below everybody else  Trip expenses can’t exceed 1% of the purchases Spent lots of time in his own store and observe competitors Culture  Do not show off buying luxury goods Success  The way it treated its associates WAL MART Wal* Mart s Discount... Everyday-low-prices Few promotions 13 major circulars per year 1993 Satisfaction guaranteed policy WAL MART Wal* Mart s Discount Stores and Merchandising 20 Marketing slogan Lower price Store managers set up prices 2-4% pricing differential between Wal* Mart and its best competitors in most markets in early 1990s WAL MART Wal* Mart s Discount Stores and Merchandising 21 • Transportation cost 圖 22 National brand strategy... states WAL MART Wal* Mart s Discount Stores and History of Growth 11 Key strategies for growing  Locate store in isolated rural areas and small towns (population 5000~25000)  Pattern of expansion  Always push from inside out Mid-1980s  One third were located in areas that were not served by any of its competitors WAL MART Wal* Mart s Discount Stores and History of Growth 13 Year 1993  Wal* Mart faced... superiority  Build loyalty among associates, customers, and suppliers WAL MART Wal* Mart s Discount Stores and Sam’s Legacy 16 Tailor to individual market or individual store Information system A process which indexed product movements in the store to over a thousand store and market traits Using inventory and sales data WAL MART Wal* Mart s Discount Stores and Merchandising 18 Promotional strategy Everyday-low-prices... private label 26% price advantage Also sold in Sam’s Clubs and supercenters “Buy American” program WAL MART Wal* Mart s Discount Stores and Merchandising 23 Strength Cost advantage Low price & customer-oriented Strong supply chain People are key to success Weakness Ignore store decoration Since Wal- Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the... 34 WAL MART Wal* Mart s Discount Stores and Vendor Relationships 35 Backward integration  Electronic data interchange (EDI)  CPFR  Forecasting  Planning  Replenishing  Shipping applications WAL MART Wal* Mart s Discount Stores and Vendor Relationships 36 . competitors 14 WAL MART Wal* Mart s Discount Stores and History of Growth Year 1993  Wal* Mart faced 55% (Kmart), 23% (Target)  Kmart 82%, Target 85% from Wal* Mart 15 WAL MART Wal* Mart s Discount. for 62% 6 WAL MART Discount Retailing 7 WAL MART Discount Retailing Comparative Pricing Study, 1993 8 WAL MART Discount Retailing Overall Performance of Discounters 9 WAL MART Wal* Mart s Discount. ANALYSIS - CASE STUDY Wal* Mart Stores, Inc. a presentation Anthony, Crystal, Sandy From YZU university 1 2 WAL MART Background Sam Walton  Founder of Wal* Mart Stores, Inc. Performance of Wal* Mart  20-year