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Roll no.

: - 257 ( Sunday Batch)

Subject : - Economics

Topic : - Wal-Mart Stores Inc.


Introduction

"The secret of successful retailing is to give your customers


what they want. And really, if you think about it from your point of view as a customer, you
want everything: a wide assortment of good-quality merchandise; the lowest possible prices;
guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient
hours; free parking; a pleasant shopping experience."
- Sam Walton (1918-1992)

The world’s largest retailer Wal-Mart stores Inc. began in


Rogers, Arkansas, in USA in 1962 when Sam Walton opened his first Wal-Mart discount
store. Walton was a man of simple tastes & took keen interest in people. He believed in 3
guiding principles:-

1. Customer value & service

2. Partnership with its associates

3. Community involvement

Wal-Mart is the largest retail store in the United States, and is


larger than any other retail chain in the world. According to Fortune 500 index Wal-Mart
holds number one spot which is ranked by its total sales. Today Company is global giant with
over 1.8 million associates worldwide & nearly 6,500 stores & wholesale clubs across 15
countries. In 2001 Wal-Mart has biggest single day history been $ 1.25 billion.

Today, Wal-Mart’s competitions in retail market are K-mart &


Target which come behind Wal-Mart.

Operations of Wal-Marts

Operations of Wal-Mart divided in 3 retails subsidiaries:-

1. Wal-Mart Stores Division

2. Sam’s Club

3. Wal-Mart International

Wal-Mart does business under nine different retail formats:-

1. Super markets

2. Food & Drugs

3. General merchandise stores


4. Small market

5. Cash & carry stores

6. Membership warehouse clubs

7. Apparel stores

8. Soft discount store

9. Restaurants

Success behind Wal-Mart stores

A key strategy of Wal-Mart is to dominate the retail market. It


operates according to their “Every day low price” philosophy. It is a primary discount retailer
because they sell their product at lowest possible price. Sam Walton outlines that the essence
of successful discount retailing to cut the price as much as possible & earn profit on the
increased volume of sale.

Another reason is that Wal-Mart has invested heavily in its


unique cross-docking inventory system. It helps to reduce its cost of sale. With this system,
goods continuously delivered to stores within 48 hours.

A company owned transportation system also assist Wal-Mart


in shipping goods from warehouse to store in less than 48 hours. This allows Wal-Mart to
replenish the service 4 times faster than its competitor.

Weakness of Wal-Mart

Extensive labour problems are common in Wal-Mart. Wage


issue, shift-scheduling & work place rights abuses are cited by labour group.

Wal-Mart failed to provide equal employment opportunities to


women.

In retail industry Wal-Mart has remained non-unionised. This is


unethical behaviour as the National Labour Relations Act states that employer should not
discourage employees from forming a union.

Wal-Mart in India
In August 2007, Wal-Mart announced an agreement with
Bharti Enterprises to establish a joint venture, Bharti Wal-Mart Private Limited, for
wholesale cash-and-carry and back-end supply chain management operations in India. Over
the next seven years, the venture is expected to open 10 to 15 wholesale cash-and-carry
facilities and employ approximately 5,000.

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