Wal Mart Case Study
-
Upload
ramjemanish -
Category
Documents
-
view
3.960 -
download
4
Transcript of Wal Mart Case Study
![Page 1: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/1.jpg)
Wal-Mart
![Page 2: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/2.jpg)
Discount Retailing in the United States
• Began in the mid - 1950s• Wal-Mart, Kmart, Target - Started in 1962• Stagnated during the 1970s• 1980s – Kmart – largest discount retailer Wal-Mart – Second largest Innovations – Denser display, UPC scanning Hypermarket failed evolved smaller format
![Page 3: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/3.jpg)
Continued…1990s- Came Supercenter2001- Supercenters to account for more than 1 billion
dollars Blurred the traditional boundaries between
discount retailers and traditional markets 2002- Kmart, biggest retail bankruptcy ever
![Page 4: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/4.jpg)
![Page 5: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/5.jpg)
Wal-Mart Stores, Inc.
• Headquarter – Bentonville• 2003 Stores - 4,688 Area - 561 million square feet 73% stores - located in united states
![Page 6: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/6.jpg)
Sam Walton
• Born on 29 march 1918 in Kingfisher, Oklahoma Good athlete Student leader Entrepreneur• 1945 – First variety format franchised Ben Franklin• 1962 – First Discount city store in Rogers, Arkansas • David Glass – Said...• Sam overcame early problem and took company
public in 1970 & raised $3.3 m
![Page 7: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/7.jpg)
Cont.…
• Hired Senior executives including David Glass• Installed private satellite network – 1980s • Obsessed with work• 1988 – CEO - David Glass – 2000 – Lee Scott
![Page 8: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/8.jpg)
Retailing Formats
• Discount Store• Supercenter• Neighborhood Markets • Sam’s Club
![Page 9: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/9.jpg)
Procurement
• Expenses – should not exceed 1% value of purchases
• Backward integration – Saved 2-3% on goods• Early 1990s – EDIs • Sam time – Retail Link Data ware house consisted 250 terabyte
of analytic database - Less than 10 minutesAugust 1997 to July 1998 – left to work for
Amazon.com
![Page 10: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/10.jpg)
Continued..
• Supply and Demand information helped• 8% products – out of stock• 1/3 Goods – Down prices • Included top 75% - strategic decisions• Small shared suppliers – Poor performed • Large shared supplier – Better performed • Wal-Mart - P & G’s largest customer
![Page 11: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/11.jpg)
Continued..
• Wal-Mart – China’s single largest importer• China’s eighth largest trading partner, ahead of
Russia and Britain• 28-40% - Cost reduction on imports of high
velocity friends• Child labor issue• Early 2003 - Sweetshop retailer of the year
![Page 12: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/12.jpg)
Distribution
• Building stores within a day’s drive• At the end of 2003 - 43 distribution centers
![Page 13: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/13.jpg)
A typical distribution center
• Area - 1 million square feet • Investment - $70 m• Operated – 24 hours a day• Staff – 700 associates• Paid - $12-18/day• Served – 150 stores (radius 150 miles)
![Page 14: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/14.jpg)
Inventory turns
• Inventory turns - 3.2 in 1973 t 4.4 by 193 - 7.6 by 2003• Scan N Pay model
![Page 15: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/15.jpg)
Distribution Cost
• Wal-Mart – 2-3% revenue• Other retailers – 4-5% revenue
![Page 16: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/16.jpg)
McLane
• A wholesale distributer acquired in 1990• Sold to Berkshire Hathaway• Lost - $1.29 b on volume of $22 b
![Page 17: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/17.jpg)
Merchandising and Marketing
• Product Assortment• Pricing• Other Marketing
![Page 18: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/18.jpg)
Merchandising and Marketing
• Walton’s life with merchandising.
• Merchandising principle:– Achieving very high sales per square foot by
offering broad assortment of merchandise at constantly low prices in cheap but cheerful stores.
![Page 19: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/19.jpg)
Product assortment/ collection
Soft Goods (Apparel, linen, and fabrics)
Hard Goods (Hardware, Housewares, automobile supplies, etc.)
More sales per square foot, more traffic, and require fewer markdowns. Low profit margin.
![Page 20: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/20.jpg)
Cont’d
60% Wal-Mart’s revenue
Consum-able
Goods
Soft Goods
Hard Goods
![Page 21: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/21.jpg)
Dynamics of Wal-Mart Stores
National Branded Products
Private Label Products
Dominated the market
15% Sales in 1995 20% Sales in 1999.
![Page 22: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/22.jpg)
Private Products
• Sam’s American Choice detergents= ½ prices of P&G’s Tide.
• Sam’s American Choice detergents= ¼ shelf space of P&G’s Tide.
![Page 23: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/23.jpg)
Modular Capacity Assortment Planning System (MCAPS)
• Exclusivity• Impulse/ destination purchasing• Ease of in-store display/ stocking• Volume producing items based on season or
month• Local demographics• Local community through fund raising events.
![Page 24: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/24.jpg)
Cont’d
• Merchandising mix
• Loss of non-purchaser accounted to $9 billion per year
![Page 25: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/25.jpg)
Pricing
• “Always low price. Always.”• Rollback programmed– 10% discount on three to four key items per
category– Discount may be continuous– Which facilitate bulk purchase benefitted unto
100’s % cause increase in revenue
![Page 26: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/26.jpg)
General Merchandise
Prices Nationally
Food Prices by
Zones
Increase in Sales
![Page 27: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/27.jpg)
Price-War
• Managers were allowed to match or beat the lowest competing price (Max. 5%)
• Wal-Mart makes price checks– 99.8% of Kmart Stores– 98.7% of Target Stores (10-15% Premium charge)
![Page 28: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/28.jpg)
Other Marketing
• Wal-Mart’s advertising to sales= 0.3%• Kmart’s advertising to sales= 1.2%• Target’s advertising to sales= 2.2%
• Media– Local TV, radio, market-level promotions,– In-store television (nation’s largest media
provider- half of the consumer purchase decision is made in store itself)
![Page 29: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/29.jpg)
1975
19851996
Stores• More on operational part rather than cheerful
ambiance.• They wanted to create “Big Box” in all rural
and urban area.
8 Stores
50 Stores
![Page 30: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/30.jpg)
Wal-Mart enters in New Market
• Low Prices• Saturated
Market
Local Market
• Low Prices• Competitors
Move
New Market• More Stores• Fight for gaining
Less Profit
EXIT or Survive
![Page 31: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/31.jpg)
Characteristics
• Discount stores open 24 hours a day from Monday to Saturday– Limited time on Sundays.
• Supercenters open for 24*7.• Inbound sides.• Outbound sides.• Credit cards services.
![Page 32: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/32.jpg)
Sales/ (Foot)
KmartTarget
Wal-Mart
2
$221
$249
$440
Autonomy of Sales
![Page 33: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/33.jpg)
People
• Wal-Mart success ingredient is its “associates”.• Institutionalized policies and practices-– Sharing performance information with associates– Soliciting their ideas– Offering them incentives– Offering profit sharing– Maintaining open door policy.
![Page 34: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/34.jpg)
Payroll Expense
Every 10% increase of sales in the 1990s
Decrease in Payroll expenses
Growth of Supercenter format
![Page 35: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/35.jpg)
Cont’d
Payroll expenses= Labor related costs per employee
Sales per employee (S/E)
Target Kmart
Wal-Mart$144,000
$144,000
$175,000
Sales per Employee in 2003
![Page 36: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/36.jpg)
Cont’d
1
•$7/ hour for entry level retail position in U
S
2
•Part tim
e who w
orked for 28 hours a week
to account for 30% of the retail w
orkforce
3
•Full tim
ers who w
ork for 45 weeks in a
fiscal year accounted for 15% w
orkforce
Labor related costs per employee
![Page 37: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/37.jpg)
Store within a STORE
• Receive detail information in sales• Receive detail information in profits• Adjusting the merchandising mix• Being reward for the results
![Page 38: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/38.jpg)
Frame of Reference
“Very competitive benefits and very competitive wages”• Wal-Mart emphasizes that it offered more
training than any other retailer.• Promotion rate is high- 2/3 of its managers had
been promoted to higher level.• Successful, caring and fun place to work.
![Page 39: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/39.jpg)
Critique argued that…
• Wal-Mart’s paying $2-3/hour less than supermarket.
• Less wages cause high turnover of employee.
Federal poverty line is of$14,630 in the US
A lady got $16,300 after working 3 years
Wal-Mart’s average wages is $14,000
![Page 40: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/40.jpg)
Cont’d
• Health insurance benefits to over 90% employees.
• 2.2 million employees base is necessary to maintain.
• 2/3 of hourly employees are female, they hold 1/3 of store management jobs and 15% store management position.
![Page 41: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/41.jpg)
Management
What management practices made Walmart Giant?
![Page 42: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/42.jpg)
1.Responsibility & trust
- Learned from variety store business
![Page 43: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/43.jpg)
2.Establising check & control
-Facilitated by technology
![Page 44: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/44.jpg)
3. Commitment to work
![Page 45: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/45.jpg)
“Commit to your business. Believe in it more than anybody else. I think I overcome every single one of my shortcomings by the sheer passion I brought to work.”
- From Sam Walton’s Autobiography
![Page 46: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/46.jpg)
4. Strategic analysis
![Page 47: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/47.jpg)
5. Centralization
- More managers in HQ
![Page 48: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/48.jpg)
6. Regional Vice President
-RVP as information carriers
![Page 49: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/49.jpg)
7. Saturday meetings
![Page 50: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/50.jpg)
8.AGM
![Page 51: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/51.jpg)
9. Lawsuits against Wal-Mart
![Page 52: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/52.jpg)
10. Special Units
• Media relations unit• Government affairs unit
![Page 53: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/53.jpg)
Future
• 1000 new stores in US in 5 years• International retailing & beyond• Vacation planning, internet access etc• Financial services
![Page 54: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/54.jpg)
• Regional HQs• Saturday morning meeting• AGM• Lawsuits• Special units
![Page 55: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/55.jpg)
Future
• 1000 new stores in US in 5 years• International retailing & beyond• Vacation planning, internet access etc.• Financial services
![Page 56: Wal Mart Case Study](https://reader036.fdocuments.us/reader036/viewer/2022062404/55492167b4c9054c498b877e/html5/thumbnails/56.jpg)
Thank You