This action might not be possible to undo. Are you sure you want to continue?
1. A Retrospective on its Growth
2. Innovative Business Model
How Did Sam Walton Get These Ideas?
3. Wal-Mart Today: The Challenges
Retreat from Germany in 2006 Sluggish Growth in the US Market Clamour at Home: The Price of Becoming Big
Global Ambitions Re-thinking “One-Size-Fits-All” Approach Flexible Workforce
4. Wal-Mart‟s Response
Dr. Lakshmi Mohan
How Wal-Mart Got There - A Retrospective on Its Growth
The Numbers: How “Big” is Big? IT: The Driver of the EDLP strategy Management Process … Partnership with Suppliers … Partnership with Employees … Obsessive Focus on Costs
Dr. Lakshmi Mohan
Wal-Mart: A Behemoth …
1962 : Sam Walton launched his first store
Location : Bentonville, a backwater in Arkansas, “a state where chickens outnumber people” Today : World‟s Largest Retailer Four times as big as #2 Retailer, Carrefour
5,482 stores in 14 countries as of Oct 31, 2005
Revenues: 285B vs GE: $152B Second-largest Company after ExxonMobil ($298B) Workforce: 1.3 M Biggest private sector employer in the world
Dr. Lakshmi Mohan
Profit-sharing for staff Partnerships for suppliers Large investment in IT … To keep inventory low Customers got friendly service AND.Walton’s Business Model was Different… Located stores in small towns since big retailers such as Kmart and Sears dominated large towns Kept overhead low Offered incentives . “Everyday Low Price” Dr. Lakshmi Mohan 4 .
0. March 2002 Dr.. 60% of U. Opened since 1985 over 1000 massive dept.3 Million ….000 ….. bigger than 4 football fields • # of employees worldwide: 1. In every continent but Antarctica Value of 100 shares bought in 1970 @ $16. S. More than the US Postal service ..: $56 billion in 2001 ….000 • • • • # of Suppliers : 30.28 million ….50 per share: $11./grocery supercenters. Lord of the Things • Annual 2001 sales: $220 billion – Pre-text Profits: $9.Wal-Mart after 40 years ……. at 200.S.. ft. Retail Sales • #1 Food Retailer in the U.5 million Wal-Mart‟s % of P&G's $40 billion in annual sales : 15% P&G has a 150-strong Bentonville office & Senior EVP dedicated to Wal-Mart Typical starting hourly wage: $6. Lakshmi Mohan .50 5 Source: Business 2.. # in China : 4.000 sq.
30% of retail price spent on keeping inventory in 3 warehouses • Walton eliminated the wholesaler • He instituted JIT inventory practices using “real-time” flow of information from a store‟s sales floors to the supplier‟s plants that dictated: What to produce? When to ship? To which stores? Dr. Lakshmi Mohan 6 . Wholesaler Retailer • 20% .Inventory Walton figured out that most of the costs gets added after the product leaves the factory and moves through the supply chain: Mfg.A Simple But Powerful Idea: Minimize the “Bad I” .
Set industry standards in IT 1969 1980 1985 2003 : Used computers to track store inventory : Adopted bar codes : Electronic Data Interchange (EDI) with suppliers : Mandated its 100 largest suppliers to place RFID (Radio Frequency Identification) tags on the boxes and pallets shipped to Wal-mart stores by January 2005 Late 80‟s : Wireless scanning guns Focus of IT Investments: Applications that directly enhanced its core value proposition – EDLP – and increase sales through micromerchandising Dr. Lakshmi Mohan 7 .IT is Critical for Wal-Mart’s “Everyday Low Price” Strategy Invested in most of the waves of retail IT systems earlier and more aggressively than its competitors .
The better your information about what‟s selling and what‟s not. since the reports of the vendors are available to all retailers who subscribe to that service. store by store. the better you can avoid the twin perils of retailing too little inventory or too much Very Secretive About Its Information Systems Custom-designed systems built by employees kept competitors off the trail Hardware and software vendors bound by non-disclosure agreements In 2001. Lakshmi Mohan 8 . Dr. Wal-Mart summarily announced that it would no longer share sales data with market research vendors like Information Resources Inc and AC Nielsen.IT: Only Area Where Wal-Mart Outspent Competitors Walton recognized early on that timely information is the key to maximizing sales and minimizing costs.
If you‟re coming to Bentonville.” Dr.Wal-Mart’s Fetishness About Secrecy . one of the two largest book store chains in the US. who was Amazon‟s Supplier Amazon Lacked Core Competence in Distribution Recruited 15 current employees of Wal-Mart and its vendors who had intimate knowledge of Wal-Mart‟s computer systems behind the superefficient distribution system. and most talented people wherever they might be. and launched an online book store to compete with Amazon AND Bertelsmann bought the largest book distributor in the US. went into a joint venture with Barnes & Noble.” Wal-Mart‟s Response “There‟s a lot of computer talent out there in the Valley. We‟re interested in hiring the brightest. Lakshmi Mohan 9 . hardest working. you‟re looking for something special.Sued Amazon for “Stealing Its Computer Secrets” 1997: Amazon Forced to Set Up Distribution Network Because Bertelsmann. the German media giant. Amazon‟s Stand “We‟re not interested in other people‟s trade secrets.
2002 Dr. NOT Adversaries Implemented a Collaborative Planning. Sept. Lakshmi Mohan 10 . 30.Sharing Sales Data With Suppliers . Forecasting and Replenishment (CPFR) Program JIT Inventory Program Reduced Carrying Costs .10% Less Than Competitors “CPFR has blurred the lines between Wal-Mart and the Supplier: You‟re both working to the same end: To sell as much product as possible without either of us having too much inventory”. Source: Computerworld.Key to Low-Price Leadership Treat Suppliers as Partners.for Both Wal-Mart AND Its Suppliers Wal-Mart‟s Cost of Goods : 5% .
2005 Dr. Government‟s – More than all of the Internet‟s fixed pages BUT ALL THAT DATA IS USELESS UNLESS IT IS USED Information is shared with its own Buyers AND Suppliers * Wall Street Journal.Wal-Mart’s Data Warehouse Current Level of Storage Capacity : 570 Terabytes * – Second only to the U. Dec 3-4.S. Lakshmi Mohan 11 .
Nov 14. 2004 Dr. The Pre-Hurricane top-selling item was beer! ” Source: New York Times. Lakshmi Mohan 12 . instead of waiting for it to happen” Example : Analysis of purchases during Hurricane Charley indicated products to be stocked in Florida‟s Wal-Mart ahead of Hurricane Frances that hit a few weeks later “Not just the usual flash-lights. but NOT overstocked “Predict what is going to happen. for example. strawberry Pop-Tarts whose sales rates was 7 times the normal rate.Wal-Mart’s Buyers Helps to time merchandise deliveries Its shelves stay stocked.Value of the Data Warehouse . but.
Suppliers Wal-Mart opened its data vault in January 1999 to its suppliers – cements Wal-Mart‟s power over them Extranet built by Wal-Mart. “They are very strict with their suppliers. Vast and detailed data on sales and inventory exceeds what many manufacturers know about their own products. Retail Link. allows suppliers to see how their products are selling in different stores and which ones need to be replenished.Value of the Data Warehouse . Lakshmi Mohan 13 .” Dr. but they give them the data they need.
Obvious examples: .All That Data Is Mined! .To see how the purchases of the different items are related.Tiny baggies next to the pretzel boxes so Mom can pack snacks for the kids A not so obvious example! . Lakshmi Mohan 14 . 1997 Dr.Customers who buy Barbie dolls (it sells one every 20 seconds) have a 60% likelihood of buying one of three types of candy bars Source: Forbes.Doing it since 1990 Analysis of its 90 million shopping cart transactions per week .Charcoal and tongs go alongside the barbecue grills . .Company can then better identify items to market together. Sep 5.
Micromerchandising Pays Off Sales per square foot 500 400 Dollars ($) 300 200 100 0 2000 2001 Year 2002 Kmart Target Wal-Mart Dr. Lakshmi Mohan 15 .
$ thousand 1995 Wal-Mart 1999 148 Wal-Mart 181 Kmart 109 Kmart 133 Sears 87 Sears 118 Dr. Target‟s vice-chairman acknowledges that his company is “the world‟s premier student of Wal-Mart”. Lakshmi Mohan 16 .Wal-Mart Stays Ahead of Competition! Competitors began to adopt many of Wal-Mart‟s IT innovations including EDI and wireless bar code scanning in earnest in the mid1990s. Still Wal-Mart‟s productivity. Sales per employee. measured by real sales per employee. is higher than competitors.
The Wal-Mart Effect on Retail 1987: .Wal-Mart‟s Market Share: 27% .Productivity advantage widened to 48% 1995-99: . 2002. 1 Dr.Wal-Mart raised the bar further by increasing its own efficiency by another 20% Source: “Retail: The Wal-Mart Effect”.Wal-Mart‟s Market Share: 9% .But 40% more productive than its competitors 1995: . No.Managed to increase their productivity by 28% .Competitors reacted by adopting Wal-Mart‟s innovations . The McKinsey Quarterly. Lakshmi Mohan 17 .
Lakshmi Mohan Selling. Costs As a % of Sales 15.Wal-Mart Changed Retailing Economics Company (Latest 12 months in 1994-95) Wal-Mart Circuit City K-Mart* Caldor* Bradlees* Federated Dept. Stores Source: Business Week.4% 33.0% 22.2% 24. General & Admin.4% 29. 1995 Dr. Nov 27.8% (19.3% *Now in Chapter 11 bankruptcy proceedings 18 .4% in 1984) 19.
Dr.IT Innovation Is NOT Enough… … At least half of Wal-Mart‟s productivity edge stems from managerial innovations that improve the efficiency of stores and have nothing to do with IT. Lakshmi Mohan 19 . Better training of cashiers and monitoring of utilization can increase productivity rates at checkout counters by 10% to 20%. For Example: Cross-training of employees allows them to function effectively in more than one department at a time.
a cashier. Shirley Cox. 5.” “After nearly 25 years at the company. No class system. The employee can take it in cash or Wal-Mart stock when they leave the company.Wal-Mart’s Management Process Key Features 1. Lakshmi Mohan 20 .900 workers moved up to management jobs … 60% of the 30.000 managers are former hourly workers Dr.000 of company stock…. But she retired in her 40s on $250.” 2. Low Wages… But “Golden Cuffs” … Started a Profit-Sharing Plan in 1971 for ALL Employees “ Based on profit growth. still earned barely $7. thus fending off all attempts at unionization … ALL employees are called “associates” drumming home the notion that managers and workers are partners 3. we contribute a % of the employee‟s wages to his/her plan. you can make a fortune on the stock. Promote from within … In 1996.00 an hour. the stock is a prevailing theme for everyone at Wal-Mart… if you hang around long enough.
Wal-Mart’s Management Process Key Features 4. She is reimbursed mileage. Empowering of Front-Lines … Wal-Mart gives them information at their finger-tips and the freedom to act.” 6. I tell them a store at a time. Lakshmi Mohan 21 . Keeping Track of Competitors‟ Prices “Later that afternoon.” 5. Management will not tolerate “shrinkage” Loss. she leaves the store for an hour to compare prices at nearby Kmart and Target stores. If a competitor‟s prices are the same or lower than Wal-Mart‟s.5% Dr. and we constantly challenge that unit to make it the best. theft and damage of inventory is capped at around 1% Other retailers settle for 3% . she consults with her supervisor about cutting her own prices up to 5 %. “If someone asks me how we manage a $100 billion company.
dingy and cheaply furnished. Work Ethic. Walton believed that executives should spend more time on the selling floor than behind desks. On the road. they discussed their findings. assembled a small airforce that whisked them around the country. To make sure they did. Dr. an avid pilot.Wal-Mart’s Management Process Key Features 7. Walton. He drove around in an aged Ford pickup truck and wore inexpensive clothes. at a meeting in corporate headquarters in Bentonville. Wal-Mart‟s corporate offices are cramped. Disdain for Extravagance and Customer-Centric Lead by Example: Walton was a model of frugality and modesty who continually warned against complacency and sloth. Every Saturday. visiting Wal-Mart‟s Monday through Friday. they stayed in budget hotels. and ate at family restaurants. Lakshmi Mohan 22 .
head of Wal-Mart International. pay for their coffee and are told to bring back pens from conferences ! Another penny-saving practice: call vendors collect ! Expenses on a buying trip should not exceed 1% of the cost of the items purchased. sits in a tiny office on the same floor as his staff.In Practice No signs of opulence or ego at the company‟s headquarters.“A Model of Frugality” . Executives take out their own rubbish. Lakshmi Mohan 23 . Lee Scott. the current CEO. drives a VW beetle and shares a hotel room. Dr. John Menzer.
In the Founder’s Words … There‟s no two ways about it: I‟m cheap. really upsets me … Why should we stay so cheap when we‟re a $50+B company: Because we believe in the value of the dollar. Dr. and even then they had to practically tie me up and hold me down to do it. in addition to quality and service. it comes right out of our customers‟ pockets. who‟re really just looting from the top and aren‟t watching out for anybody but themselves. Wal-Mart never bought a jet until we hit $40B in sales and expanded as far away as California and Maine. A lot of what goes on these days with high-flying companies and these overpaid CEOs. we have to save them money. We exist to provide value to our customers. Every time Wal-Mart spends one dollar foolishly. which means that. Lakshmi Mohan 24 .
“The Bigger Wal-Mart Gets. Lakshmi Mohan 25 . The More Essential It Is We Think Small” Walton‟s Management Principles (circa 1990. I‟d hate to work at a place like that and I worry every single day about Wal-Mart becoming that way. But I think the way we have applied them at Wal-Mart has been just a little bit different. At our size today. 1528 stores) For several decades now we‟ve worked hard at building a company that‟s simple and streamlined and takes its directions from the grassroots. Nothing at all profound about any of our principles – in fact. It‟s a pretty tall order for an outfit that is spreading out all over the country as fast as we can. they‟re all common sense. there‟s all sorts of pressure to regiment and standardize and operate as a centrally driven chain. Most of them can be found in any number of books or articles on management theory. Dr.
Dr. That is not something we can simply do in some general way. What it means is that our customers are supporting us. department by department. customer by customer. We have to do it store by store. and keep making things better for the folks who shop in our stores. but its something we‟ve constantly had to stay on top of. Lakshmi Mohan 26 . It isn‟t something we can command from the executive offices because we want it to happen. Because our sales and earnings keep going up doesn‟t mean that we‟re smarter than everyone else. or that we can make it happen because we‟re so big. We know what we have to do: keep lowering our prices. associate by associate. keep improving our service. Think One Store At a Time That sounds easy enough.Most Important.
Lakshmi Mohan 27 .Store Within A Store: “Push Responsibility – And Authority – Down” … “Toward that department head who‟s stocking the shelves and talking to the customer. It‟s a big responsibility and a big opportunity.” What sets us apart is that we train our department heads to be managers of their own businesses. In some cases. They know their costs. rather than keep everything secretive. And. This works only because we decided a long time ago to share so much information about the company with our associates. these businesses are bigger in annual sales than a lot of our first Wal-Mart stores. Dr. their markup. we give them incentives to want to win. their overhead and profit margins. We let them see all the numbers so they know exactly how they are doing within the store and within the company.
Sales Review Meetings at Corporate . Get that information out to all our other beach stores around the country. Penney‟s – that discusses their sales at the end of the week in any smaller breakdown than by region. we like to spend time focusing on a single store. “I don‟t know any other large retail company – Kmart.if we‟re talking about the store in Harrisburg. Focus on a Single Store Enables us to improve that store Learn a particular way in which. and how we‟re doing.” Dr. whether a 20% increase is good or bad. and how that store is doing against a single competitor in that particular market. what the payroll is doing. We talk about individual stores . Sears. Illinois. who the competitors are. Lakshmi Mohan 28 . the Panama City Beach Wal-Mart is outsmarting the competition on beach towels. everybody here is expected to know something about that store – how to measure its performance. say. We talk about what that store is doing right and what it‟s doing wrong.One Store At A Time When we sit down at our Saturday morning meetings to talk about our business.
I have continued to visit stores almost constantly ever since. We stay in the air to keep our ear to the ground. I‟m proud to say – in our hangars out at the Rogers. We have 12 airplanes – only one of them is a jet. but with almost 2. Lakshmi Mohan 29 . That‟s why we at Wal-Mart are fanatics about our managers and buyers getting off their chairs here in Bentonville. and getting out into those stores. It can tell you down to the dime what you‟ve sold.000 stores today.Keep Your Ear To The Ground A computer is not – and will never be – a substitute for getting out in your stores and learning what‟s going on. Dr. and that‟s why they are there. what the competition was up to. But it can never tell you how much you could have sold. what kind of job our managers were doing. airport. a lot of other folks have to get in on the act. Of course. Our whole travel system is really an outgrowth of the way I managed those 9 stores back in 1960. I would get in my old Tri-Pacer and fly to those stores once a week to find out what was selling what wasn‟t. what the stores were looking like. what the customers had on their minds. Arkansas.
In addition to the field work. Get-Down-In-The-Store Stuff” … Our district managers are doing the job that I did back in 1960. They stay out 3 to 4 days. usually coming back in on Thursday. But the really valuable intelligence that surfaces in these sessions is what everybody has brought from the stores. But we also have 18 Regional Managers based here in Bentonville. It‟s a condition of their employment. Dr.The Real “Hands-On. they pile into those airplanes and head across the country to the stores in their region. Then they gather with the senior management of the company – all of whom should also have been visiting stores earlier in the week if they expect to ask any intelligent questions or know the first thing about what‟s going on – for our Friday morning merchandising meeting. Lakshmi Mohan 30 . We‟ve drummed into their heads that they should come back with atleast one idea that will pay for the trip. Every Monday morning. we have computer printouts at the meetings which tell us what‟s selling and what‟s not.
18. Fortune. Arkansas.S.The World Comes to Bentonville! It Buys the Most Company Tandy Brands Accessories Clorox Revlon PJR Tobacco Procter & Gamble % of its total sales to Wal-Mart 39% 23% 20% 20% 17% It Sells the Most Products Company Dog Food Disposable diapers Photographic film Toothpaste Pain remedies Dr. Does Not Come to the World .Bentonville. Feb. 2003 31 . Lakshmi Mohan Wal-Mart’s U. market share 36% 32% 30% 26% 21% Source: “One Nation Under Wal-Mart.
Keeps a Supplier Scorecard Punctuality of deliveries Data-documented problems about meeting orders or returns of defective products by customers Suppliers not meeting sales targets would face tougher negotiations in the future from the steely Wal-Mart buyers. Think of the impact of shedding $50B of inventory. RFID Mandate to Top 100 Suppliers in 2003 In the Horizon: Scan-based Trading “Suppliers own each product until it is sold. The impact will probably be felt by suppliers.” … Meta Group Retail Analyst Dr.As the Company Grew. Wal-Mart will never take those orders onto its books. Lakshmi Mohan 32 . but none are likely to complain. It Exercised Its Muscle on Suppliers Wal-Mart meets with each Supplier to establish sales goals for the coming year after review of sales results for past weeks and months.
Wal-Mart Lives in a World of Supply & Command, Instead of a World of Supply & Demand
An Example: Cross-Docking
Pre-assembled orders for individual stores from a supplier‟s truck go seamlessly from an unloading dock at Wal-Mart‟s Distribution Center directly into a truck bound for stores … Get goods into stores without even unpacking them – let alone allowing them to sit in storage ! “Until we reached a billion dollars, a lot of suppliers just ignored us way out here in the Arkansas Outback. Now, of course, we‟re too big too ignore.”
Dr. Lakshmi Mohan
Vendor-Financed Inventory !
How Cross-Docking Works
At Wal-Mart‟s new distribution centers, P&G‟s trucks are unloaded directly to trucks that will head for Wal-Mart Stores. The toothpaste is never even put on warehouse shelves. Once a truck is full, it heads to the stores. Products are put on the shelf within 4 hours, and are usually sold within 24 hours. Despite this tight delivery schedule, Wal-Mart has 10 days to pay P&G.
Benefit of Cross-Docking: Vendor-Financed Inventory
“Sell the goods before we have to pay.”
Dr. Lakshmi Mohan
How Wal-Mart Drives a Tough Bargain
Suppliers are shown to “the row”, a long corridor of drab, windowless cubicles at the Bentonville headquarters, each adorned with a notice that Wal-Mart‟s buyers do not accept bribes. It‟s like a scene from a bazaar: sweaters spill out of suitcases and haggling over prices continues all day.
… “We were grapes, but now we are raisins. They suck you dry.” “There‟s a difference between being tough and being obnoxious. Every buyer has to be tough, That‟s the job.”
Dr. Lakshmi Mohan
How Wal-Mart Drives a Tough Bargain
Buyers are told: “You‟re not negotiating for Wal-Mart. You are negotiating for your customer. And your customer deserves the best price you can get. Don‟t ever feel sorry for a vendor. He knows what he can sell for, and we want his bottom price.” Vendors are told to quote the best price: “If they told me it‟s a dollar, I would say, „Fine, I‟ll consider it, but I‟m going to go to your competitor, and if he says 90 cents, he‟s going to get the business. So make sure a dollar is your best price.‟ If that‟s being hard-nosed then we ought to be as hard-nosed as we can be. You have to be fair and upfront and honest, but you have to drive your bargain because you‟re dealing for millions and millions of customers who expect the best price they can get. If you buy that thing for $1.25, you‟ve just bought somebody else‟s inefficiency.”
Dr. Lakshmi Mohan
A Telling Example of Wal-Mart’s Growth - Went Past Toys “R” Us by 1998
Toys “R” Us: Largest Toy Retailer in the U.S.
--- Value Proposition: Choice, Quality, Reasonable Price --- Displaced Dept. Stores and small specialist toy retailers --- 25% share of the market – Before Wal-Mart!
Wal-Mart: Largest Toy Retailer: 25% market share --- Toys “R” Us Share: 15% (2003 Sales: $11B) --- Value Proposition: One better than Toys “R” Us: Rock-Bottom PRICES
--- Super-efficient supply chain --- Mass retailer, with a broad diverse array of products --- Can afford to use toys as a loss-leader (lose money on toy sales) to lure in customers who then purchase higher-margin goods - Toys “R” Us just doesn‟t have that luxury
Source: Wall Street Journal, August 31, 2004
Dr. Lakshmi Mohan
Lakshmi Mohan 38 .41 Years of Nonstop Growth Dr.
“Sense & Respond” Management Process of Wal-Mart : Why They are Unbeatable Disappointing sales on Friday.Wal-Mart knows it literally at the end of the day Because of their state-of-the-art information system Dr. 2004 (the day after Thanksgiving). Lakshmi Mohan 39 . Traditionally the biggest shopping day of the year . Nov 26.
On Tuesday. Dr.fastcompany. the president of Wal-Mart.How did Wal-Mart Management respond to it? 1. A team met over the weekend to finalize the list and contact suppliers. Michael Duke. Source: www. Within a couple of hours. had gotten messages on his Blackberry that sales were off at stores around the country.com 40 . 4. Lakshmi Mohan 2. stores nationwide offered the new prices. He brainstormed with execs and store managers about which products to mark down. 3.
the company conducted a meeting with 500 employees asking for more ideas -.com 41 . and a new ad campaign was underway. Lakshmi Mohan Source: www. Dr. it represents a heck of a comeback. The next day.fastcompany.and acted on 21 of their recommendations. 7. On Saturday. The result? The retailer expects December sales to be up three percent.How did Wal-Mart Management respond to it? 5. the displays were up. 6. On Thursday. Wal-Mart broadcast a video for its stores suggesting new displays. Alth ugh it's not the holiday season it had initially hoped for.
It could be the absence of an important product in the store’s backroom or in the distribution centre that serves the store. Lakshmi Mohan 42 . Nov. and we are within hours. depending on the event. 14. We can tell people that they need to go do something. on Florida in 2004” Source: New York Times.” “The event may be a truck’s failure to drop off or pick up something. problems are referred to as “exceptions”. one after another. it could be an act of nature like the hurricanes that descended. We are pretty near realtime. Or. 2004 Dr. We keep watching everything that just happened.Wal-Mart’s Exception Management – Driven by IT “At Wal-Mart.
June 1993 He died in April 1992. Lakshmi Mohan 43 . Bantam Paperback. “Sam Walton: Made in America – My Story”. 3. 2. Use of IT Cost Control Partnership with Suppliers Partnership with Employees How did a Small-town Merchant get these Innovative Ideas? Walton tells it all in his folksy. Dr.What Is It Grounded On? 1. 4.Reflecting on the Wal-Mart Business Model . after fighting a two-year battle against a form of bone cancer. conversational style in his autobiography.
Lakshmi Mohan 44 . and we were dependent on the people in the stores to keep records of everything manually – this was at a time when quite a few people were beginning to go into computerization. We had lists of items we were supposed to carry. Dr.How did Walton Get IT? 1966 – Store #5 was under construction I knew we had to get better organized than we were.
One of the speakers was from the National Mass Retailers‟ Institute Abe Marks. I visited with Abe a number of times at his New York office. and I was curious. and he was a very open guy. Dr. I made up my mind I was going to learn something about IBM computers. He shared with me how he used computers to control your merchandise. New York. So I enrolled in an IBM school for retailers in Poughkeepsie. Head of a Discount Retailer in Connecticut.How did Walton Get IT? I had read a lot about that. Lakshmi Mohan 45 .
no matter where they might be … Gave him the ability to open many stores.“Best Utilizer of Information To Control Absentee Ownerships” “Sam knew that you are putting your stores where you.What is selling? What is not? . Lakshmi Mohan 46 .” Need Timely “I” to Service the Stores . and run them well. aren‟t.How much merchandise is in the store? . he had to learn to control it.” Dr. If he wanted to grow. and be profitable. operating those few stores that he had – that he couldn‟t expand beyond that horizon unless he had the capability to capture this information on paper so that he could control his operations. He realized – even at the rudimentary level he was on in 1966. as management.What is to be ordered? Marked down? Key Metric: Inventory Turnover Ratio of Sales to Inventory Higher Inventory Turnover Less Working Capital “The man is a genius.
50 Initial Investment of $1. Lakshmi Mohan 47 . 1970 100 shares in 1970 @ $16.Growth of Wal-Mart Stores Year 1962 1966 1968 1970* 1972 1974 1976 1978 1980 1990 # of Stores 1 5 13 32 51 78 125 195 276 1.650 in 1970 worth $3M in 1990 Dr.50 Nine Two-For-One Stock Splits 51.200 26.528 Sales (million $) 31 78 168 340 678 1.200 shares in 1990 @ $62.000 * Went public on Oct 1.
to work for somebody he knew next to nothing about. Kansas. Arkansas. he wasn‟t interested just then in moving to Bentonville. and started wooing him right there. Dr. Like so many of them. then the smart young CFO at Duckwall Stores in Abilene. I was looking to have a good. Later on. That‟s where I first met Ron Mayer. we changed his mind … He joined Wal-Mart in 1968 as VP for finance and distribution. bright systems person.How Did Walton Manage IT? I knew I‟d never be any whizbang computer guy myself. and I figured I might find one there. Lakshmi Mohan 48 . so I had another reason for going to that school. I targeted him as the guy we needed at Wal-Mart.
or may be it wasn‟t the end-all they promised it would be. Dr. spend what you need. but I just couldn‟t bring myself to say. I knew we needed it. The truth is: I did want it. we as a company have been ahead of most other retailers in investing in sophisticated equipment and technology. sure. It was important to me to make them think that may be the technology wasn‟t as good as they thought it was. I always questioned everything.How Did Walton Manage IT? From Ron Mayer‟s arrival on. The funny thing is: everybody at Wal-Mart knows that I have fought all these technology expenditures as hard as I could. Lakshmi Mohan 49 . OK.
we had all this data pouring into Bentonvile over phone lines. “The technology did not really exist to do this for a retailer in the early Eighties. we had a real logjam of stuff coming in from the field. I like my numbers as quickly as I can get them. so that we could track sales and inventories across the company.Jack Shewmaker Dr. especially in-store transactions. But we got it working. Lakshmi Mohan 50 . But we got together with Macom & Hughes Corporation and worked out a contract … Committed $24 M to build it … It was not an immediate success. everybody has one” . 1983: Satellite Communication System Once we had those scanners in the stores. Now. The quicker we get that information. the quicker we can act on it.Growth of IT in Wal-Mart 1978: Bar Coding & SKU Inventory System When Jack Shewmaker became our COO in 1978. Those lines have a limited capacity. so as we added more and more stores. he worked really hard at getting me to invest in more and better computer systems.
we built this huge building right next to our offices – around 135. ft. and everyone at the time told me how much room we‟d have to grow.Value of IT in Wal-Mart . What I like about it is the kind of information we can pull out of it on a moment‟s notice. Lakshmi Mohan 51 . Well. And. – just to house the computers. Dr. when I look back. it‟s no wonder … We‟ve spent almost $700 M building up the computer and satellite systems we have … I‟m told it‟s the largest Civilian database in the world – even bigger than AT&T‟s. None of that matters to me.According to Walton A few years ago. already it‟s completely full of computer equipment.000 sq. I mean it was really empty in there just 2 or 3 years ago.
and tell you exactly how many of them we‟ve bought over the last year and a quarter and exactly how many of them we‟ve sold.According to Walton We keep a 65-week rolling history of every single item we stock. say a little combination TV/VCR like I use here in my office. I can pick anything. Dr. It makes it tough for a vendor to know more about how his product is doing in our stores than we do. but the degree to which we can retrieve it in our computer does give us the competitive advantage. We‟ve always known that information gives you a certain power. Lakshmi Mohan 52 . every district. Not only overall.Value of IT in Wal-Mart . every store. but in every region.
no systems coordination. We were simply two giant entities going our separate ways. During that time on the river. no planning together. asked me to join him on a canoe trip down the Spring River. So I went along.Partnership with Suppliers . with P&G at the time. we both decided that the entire relationship between vendor and retailer was at issue. oblivious to the excess costs created by this obsolete system. No sharing of information.P. and who wanted to meet me and talk about some things relating to our two companies. Both focused on the end-user – the customer – but each did it independently of the other. Lakshmi Mohan 53 . and it turned out to be the most productive float trip I ever took with George.Started with P&G One day my close friend. who was a V. He said he was bringing along an old friend named Lou Pritchett. Dr. George Billingslay.
Within three months. we had created a P&G / Wal-Mart team to build a whole new kind of vendor relationship. and then use that information to make its own production and shipping plans more efficiently. We broke new ground by using IT to manage our business together. Lakshmi Mohan 54 .Sharing of Information .Key for “Win-Win” Partnership We assembled the top ten officers of both the companies in Bentonville for two days of soul-searching and thinking. P&G could monitor Wal-Mart‟s sales and inventory data. Dr. with one of the most important outcomes being that we started sharing information by computer. We formed a partnership to conduct our business. instead of just to audit it.
Dr. And if the associates treat the customers well. It‟s the only reason our company has been consistently able to outperform the competition – and even our own expectations.Employees: Key to Customer Loyalty The way management treats the associates is exactly how the associates will then treat the customers. the customers will retain again … And. Our relationships with the associates is a partnership in the truest sense. and those customers are loyal to us because our associates treat them better than salespeople in other stores do. THAT IS WHERE THE REAL PROFIT IS Satisfied. loyal. repeat customer are at the heart of Wal-Mart‟s spectacular profit margins. Lakshmi Mohan 55 .
and I guess that wage was as little as we could get by with at the time. … I would love to tell you all that. The managers were fine.Sam Walton’s Confession … Now I would love to tell you that this partnership was all part of my master plan from the beginning. that as a young man I had same sort of vision of a great retailer company in which all the employees would be awarded a stake in the business That I saw them having the opportunity to participate in many of the decisions that would determine the profitability of that business. Lakshmi Mohan 56 . but we really didn‟t do much for the clerks except pay them an hourly wage. I was so chintzy I really didn‟t pay my employees well. Dr. but unfortunately none of it would be true! In the beginning.
Lakshmi Mohan 57 . and. I was so obsessed with turning in a profit margin of 6% or higher. payroll is one of the most important parts of overhead. really the principle that became the foundation of Wal-Mart‟s success … Back then.Walton Saw the Light … In the very early days of the business. whether it‟s in salaries or incentives or bonuses or stock discounts – the more profit will accrue to the company. I was so doggoned competitive. Eureka ! .Then. that I was blinded to the most basic truth. no matter how you slice it in the retail business. Dr. and it‟s still true today … The larger truth that I failed to see turned out to be another of these paradoxes – like the discounters‟ principle of the less you charge. and so determined to do well. the more you will earn … AND. HERE IT IS: The more you share profits with your associates. Overhead is one of the most crucial things you have to fight to maintain your profit margin That was true then.
Later on. managers-only profit sharing plan when we took the company public in 1970. and started a profitsharing plan for all the associates … Profit-sharing has been the carrot that‟s kept Wal-Mart headed forward. we corrected my big error of the year before.“The Idea for Sharing Profits & Benefits … NOT From Me. Lakshmi Mohan 58 . I suggested to him that. unless those people were on board. the top people might not last long either ….” “We didn‟t include our associates in the initial. he really bought it. I think it was the first time I realized how little the company was doing for them. I remember it because he didn‟t really appreciate my point of view then. and about all the money and benefits that he was paying the officers of the company in order to keep his top people. and when he bought it. But From Helen” “We were on a trip. He explained that the people in the store didn‟t get any of those benefits …. and we were talking about the high salary that Sam was earning. I knew he was thinking about it. There was nobody around preaching that philosophy in those days… In 1971.” Dr.
Our shrinkage % is about half the industry average. in 1980.Our Shrink Incentive Plan” Unaccounted-for inventory loss – theft – is one of the biggest enemies of profitability in the retail business. If a store holds shrinkage below the company‟s goal. we decided the best way to control the problem was to share with the associates any profitability the company gained by reducing shrinkage. every associate in that store gets a bonus that could be as much as $200. Dr.“One of the Most Successful Bonuses . So. Lakshmi Mohan 59 .
Employees Monitor Shrinkage ! Most associates don‟t want to think that they‟re working alongside anyone who does enjoy stealing. share in the reward. Everybody in that store becomes a partner in trying to stop shrinkage. to allow any of your fellow associates to fall into that trap. there‟s a real incentive to not ignore any customers who might want to walk off with something. where you are directly rewarded for honesty. they. under a plan like this. So. Lakshmi Mohan 60 . or. and when they succeed. Dr. along with the company in which they already hold stock. worse.
That‟s why we‟ve spent hundreds of millions of dollars on computers and satellites – to spread all the little details around the company as fast as possible. But I just believe the value of sharing it with our associates is much greater than any downside there may be to sharing it with folks on the outside. up-to the-minute sales date that tells them what‟s selling in their own store. But they were worth the cost. It‟s only because of IT that our store managers have a really clear sense of how they‟re doing most of the time. some of that information flows to the street. We‟ve been doing this from the days when we only had a handful of stores.Empowering Front-Line Employees . They get all kinds of information transmitted to them over the satellite on an amazingly timely basis like.Sharing Rather Than Hoarding. Nowadays. Obviously. We‟ve kept doing it as we have grown. It doesn‟t seem to have hurt us much so far. Dr. Information The only way they can possibly do their jobs to the best of their abilities. Lakshmi Mohan 61 . I see management articles about information sharing as a new source of power in corporations. for example.
Every time we save them a dollar. it comes out of our customers‟ pockets. that puts us one more step ahead of the competition.. Lakshmi Mohan 62 .“Control Your Expenses Better Than Your Competition” Obsessive Focus on Costs “Every time Wal-Mart spends one dollar foolishly. frugality is still ingrained in Wal-Mart‟s culture. Dr.” – Sam Walton Fifteen years after his death. which is where we always plan to be.
who was a country boy. The minute you do that. you start building resentment and your whole team idea begins to strain at the seams. “I‟m not saying every company should necessarily be as chintzy as Wal-Mart. Lakshmi Mohan 63 .” “If American management is going to say to their workers that we‟re all in this together. He drove an old pick-up truck. Everybody‟s not in the discount business. and flew economy class.” Dr. It‟s not fair for me to ride one way and ask everybody else to ride another way. they‟re going to have to stop this foolishness of paying themselves $3M and $4M bonuses every year and riding around everywhere in limos and corporate jets like they‟re so much better than everybody else.Walton Led By Example Frugality came naturally to Walton. consumed by trying to save every possible dollar for their customers … I feel it‟s upto me as a leader to set an example.
In fact.For Corporate Overhead Expenses “When we had about 5 stores.The “2 Percent Formula” . Most companies then charged 5% of their sales to run their offices. Dr. But we have always operated lean. We have had our people do more than in their companies.000 stores. And. It has been our heritage. I tried to operate on a 2% general office expense structure. that we would be more productive and more efficient than our competition. Lakshmi Mohan 64 .” We have not changed that basic formula from 5 stores to 2. that includes tremendous expenses for computer support and distribution center support – everything that we supply centrally in the way of support for the stores. our obsession. we are actually operating at a far lower % today in office overhead than we did 30 years ago. I just pulled it out of the air.
we don‟t need you. Fight Bureaucracy A lot of first-time visitors are shocked by our executive offices. Some folks have a tendency to build up big staffs around them to emphasize their own importance. Dr. Just ask our shareholders. A lot of bureaucracy is really the product of some empire builder‟s ego.Stay Lean. Lakshmi Mohan 65 . We don‟t need any of that at Wal-Mart. and they must be working fine. If you‟re not serving the customer. or supporting the folks who do. Most people say my office and those of the other Wal-Mart executives look like something you‟d find in a truck terminal … We sure as heck won‟t win any interior decorating awards. but they‟re all we need.
and a combination of the two”. 66 . Lakshmi Mohan “Tried German managers. 2006 Dr. Metro Pre-tax Loss: $ 1 B on the Deal Source: Financial Times. Global Sales: $ 312 B Struggled from the outset against stiff local competition Closed 10 of the initial 95 stores Sold its 85 stores to Germany‟s largest retailer.5 B. US managers. Losses: $ 127. July 29-30.A PARADOX ! Wal-Mart Retreats from Germany in July 2006 Entered Germany in 1997 Bought two struggling German retail chains 95 stores in 1999 Persisted for 8 years before admitting defeat Too afraid to tarnish its image … by pulling out of the world‟s third largest economy Fiscal 2006 Sales: $ 2.5 M Total International Sales: $ 63 B.
the guardian of EDLP But Germany already had a number of homegrown discounters Regulations restrict store hours and other retailing basics Carrefour. Wal-Mart‟s biggest global competitor.A Tough One to Crack German shoppers are frugal … “People in this country only ever look out for one thing – PRICE” This trait should have been a boon for Wal-Mart . operates in 29 countries … But has steered clear of Germany “It is clearly a very challenging market for us that we have not figured out.Germany’s Discount Retail Market . Lakshmi Mohan 67 .” – Wal-Mart CEO. April 2006 Dr.
Lakshmi Mohan 68 .S.000 items vs.German Discounters . 100. July 31. 2006 Dr.Proved to be A Real Match for Wal-Mart Power of Privately-held Discounters – Aldi & Lidl Grown their market share to 40% vs. Source: Asian Wall Street Journal. < 2% for Wal-Mart Had discovered the efficiency of drab out-of-town store sites and economies of scale that made their suppliers sweat Kept costs AND prices low Underpriced Wal-Mart Sell a limited selection in each store … 850 to 1.000 at Wal-Mart Stock mainly their own brands 80% of German consumers are 20 minutes from an Aldi Aldi has invaded Wal-Mart‟s home turf – opened more than 700 stores in the U.
” “We screwed up in Germany. Dec 6. Lakshmi Mohan 69 .BIG Mistake Made by Wal-Mart . 2001 Dr.Exported Its Culture Wholesale … Did NOT Adapt to the German Market Little feel for German shoppers They care more about price than having their bags packed. “The German consumer does not like extra service as he‟s worried that he‟ll have to pay for it. Our biggest mistake was putting our name up before we had the service and low prices” .Head of Wal-Mart International. The Economist.” Bag-packers were reassigned ! Little feel for German staff as well “They hid in the toilets to escape the morning Wal-Mart cheer.
Germany Was Not The Only Failure … Before Germany. Lakshmi Mohan 70 . South Korea Sold its 16 stores in May 2006 Another Problem Child: Japan Took a stake in the Seiyu store chain – over 400 stores in 2002 Faced Problems Similar to Germany Sluggish domestic consumer market Challenge of adapting its global strengths to the different cultural expectations of its Japanese customers Dr.
into something closer to its discount store model? Source: The Financial Times. 2006 Dr.Seiyu Store Chain Still Hangs Heavily Took Full Management Control of Seiyu Invested an additional $565M in Dec 2005 Became the majority owner of Seiyu Ended the uneasy effort to cooperate with the previous Japanese-led management Dispatched former COO of Wal-Mart International to take command of the Seiyu operation Challenges in Japan Low-cost format is not established in the market Will Japanese consumers respond to its efforts to turn Seiyu.The Japan Expansion . Lakshmi Mohan 71 . July 29-30. a conventional Japanese department store.
> 6% for Target Q2 Profit in FY07 likely to fall 23% despite 14% rise in sales … First time in 10 years Stock Price Down 35% from Peak in Dec 1999 Despite $11B Earnings on $312B Revenue for FY06 … 10% rise from previous year US Division: 78% of Total Sales BIG Challenge in the US Market Can‟t rely solely on building hundreds of new stores each year to perpetuate growth Must find ways to generate more sales at existing US stores 72 Source: Wall Street Journal. Sept 7. Lakshmi Mohan .Impacting Wal-Mart Share Price Sales Growth at Existing Stores Sliding Since the Late 1990s FY06: 3% same-store sales gains vs. 2006 & Economic Times.Maturing US Business . 9% in 1999. Aug 15. 2006 Dr.
The Price of Becoming a Behemoth . Lakshmi Mohan 73 . manufacturing jobs as both Wal-Mart & its Vendors turn to cheaper overseas sources 6 women filed a suit in 2001 alleging that Wal-Mart doesn‟t fairly pay & promote women Federal judge ruled in 2004 that the suit could proceed as a class action covering 1. Crushes Kmarts and mom-and-pops alike Decline in U.A Rash of Lawsuits & Negative Publicity Its Giant Stores: Symbols of “Big Retail” Blamed for the destruction of entire communities “Eliminates jobs when it moves into a new community” “Drives down retail wages in that community since Wal-Mart‟s low price forces other businesses to lower their prices and hence their wages.S.6M current and former female employees Company‟s Pursuit of Low Prices Class Action Suit for Sex-Discrimination Dr.
Is There Such a Thing as “Too Much Information”? Wal-Mart‟s Unusually Detail-Rich Human-Resources Database Contains data on … … Performance reviews … Seniority & Time Spent with the Company … Which Store ? Judge Has Allowed Use of the Database To compare whether men and women working in the same store were paid differently Whether women were fairly promoted compared to men Dr. Lakshmi Mohan 74 .
we might have transferred him. everyone would leave us alone.” Source: Wall Street Journal. and if you took care of your business. Lakshmi Mohan 75 . we will fight and take each issue to the wall. sexists. Where we‟re wrong. including every kind of person known to man – racists. so our detractors don‟t have a foothold in attacking us.” Impact of Lawsuits “Sam Walton believed that there were only two types of employees he wouldn‟t give a second chance to – those who abused people and those who stole” … … We have 1. instead of dealing with it severely.Wal-Mart CEO Rebuts Critics … “ We used to believe you could run the company out of Bentonville. employees and customers.5 million employees. Oct 6. … “The number of people not doing the right thing is a small %. he has to go. … In today‟s world. we change. If someone made a negative racial comment in the past. 2004 Dr. etc. Where we‟re right. But it is unfair when that number is seen as representative of a wider institutional pattern.” “What we‟re trying to do now is reach out.
Lakshmi Mohan 76 . community groups and the media … Playing the role of the Company‟s public defender and explainer … To avoid future growth being constrained by political barriers.Response to Charges of Discrimination Started companywide computer postings of management openings Hired a Director of Diversity Executive managers‟ bonuses based on diversity targets CEO personally stands to forfeit $600K of his bonus if the company falls short of company goals CEO is also getting out more. and worry more about how it is perceived Dr. Wal-Mart will have to raise its head from Bentonville. meeting with investors.
… Over 75% of our workers are full-time.000 people applied for 500 openings. … We pay more than our Competitors.Response to Charges of “Low Wages” The United Food & Commercial Workers union has been successful in creating in people‟s minds the perception that we pay inadequate wages & benefits. … We opened a store in Phoenix recently and 5. Lakshmi Mohan 77 . Dr. I like the free-enterprise system in this country … … Two-thirds of our managers are promoted from the ranks of hourly employees. … We paid $2B last year in health benefits.
if a competitor‟s prices are lower. even if it means below our cost. Lakshmi Mohan 78 . and our profits are exceptionally good. Dr. … It‟s one of the highest margin businesses. we will drop our prices. which means. … We say we sell for less.“Driving Out Competitors” I get irritated as sin when I read that we historically sell our toys at a loss… … We have a phenomenal toy business.
EDLP has been good for consumers Criticism Leveled Against Wal-Mart: “To benefit your customers.” “Say we do business with a certain manufacturer and give them all the shelf space for their products. But doesn‟t that encourage manufacturers to move jobs overseas. PepsiCo to drive out unnecessary costs – inventory buildup. Lakshmi Mohan 79 . Kellogg.Unpopularity is Hard for Wal-Mart’s Executives to Understand … … After all. you drive down prices as low as possible. Ultimately. Isn‟t that a vicious circle and does that really benefit America ?” CEO‟s Response: “We have a history of working with companies like P&G. Manufacturers are putting themselves at risk. And other retailers are sourcing a similar item overseas and offering greater value. packaging expenses – from the business and pass the savings onto the customer. the customer will make the decision. so they can‟t afford to buy as much at Wal-Mart.” Dr. which puts some of your customers out of work.
” Exit from South Korea & Germany in 2006 … Put it farther from its target of getting a third of its sales and profit growth overseas … Fallen behind Carrefour in expanding globally – will operate in 11 countries outside the U. 2006 80 .. Lakshmi Mohan Source: Economic Times. 29 Carrefor Deepened its India Focus in 2006 … Set up a liaism office in Bangalore to undertake its Indian market research … “The Indian market is much less competitive than Germany and Korea.S.Wal-Mart’s Global Ambitions International Revenues: 20% of Total Sales in FY06 … Fastest-growing business segment Focused on Asia & Latin America … Bought a stake in Central America‟s largest retailer in late 2005 – gained a majority stake in March 2006 … 60 retail outlets & 30.000 employees in China … “We have plans to open 20 new stores in China this year. vs. August 14. and its middle class is hungry for modern retailing prices and products sold by Western retailers like Wal-Mart” Dr.
” Dr.In China: August 2006 After years of fighting unionization efforts at its stores in the U.Wal-Mart Opens Doors to Unions .S. care about their welfare. Lakshmi Mohan 81 . unions at the national. have “The function of Chinese unions is to urge workers to participate in the work. “Wal-Mart Supports China‟s Efforts to Build a Harmonious Society.” Statement from the All China Federation: “If Wal-Mart union members are subjected to unfair treatment at work.” – Company Announcement Will collaborate with the All China Federation because the two groups had the “mutual aim” to establish grassroots unions Unions in China do not have the history of bargaining power that unions in Europe and the U. city and district level will strive all out to protect employees‟ legitimate rights.. and to organize recreational activities for them. WalMart decided to allow unions in China after years of pressure from the All China Federation of Trade Unions Unionization is required under Chinese law. provincial.S.
African-Americans. – Huge shift for a Company that grew on the strength of standardization Test Run of Localization Theory in Mexico – Six Different formats with different merchandise mix to better target different income levels … The Bodega stores catered to low-income customers with basic breads. while the Superama stores lured the affluent with rich deserts and fancier display cases … Sales per sq.” – CEO of U.To Boost Sales.S. Stores into 6 Different Models Affluent Shoppers. Empty-Nesters.ft rose by 10% Dr. Hispanics. By offering customers all the same things. Suburbanite & Rural Residents “Wal-Mart is all things to all people. stores and architect of the new approach. Wal-Mart Drops One-Size-Fits-All Approach Break Its 3. you end up under-serving everyone because you don‟t have an offering that is specific to that customer segment.400 U.S. Lakshmi Mohan 82 .
000 different items targeting the well-heeled … About 3% of the approx. Texas: Affluent Shoppers – 3.000 items in an average Wal-Mart supercenter – Twice the number of organic products – Expanded the wine section with 1. 100. Lakshmi Mohan 83 .S.000 bottles. at prices ranging from $4 to $500 – Removed the Gun Department – Expanded the Home-Fitness Equipment area Dr.“Address Specific Customer Segments With a Precison That Better Meets Their Needs & Wants” Segmentation of U. Market based on ethnicity and lifestyle in addition to income New Store in Plano.
Dr. shoppers‟ eyes glaze over and they stop noticing what is on a shelf … Designed shelves that jut out with a rounded edge where special items are displayed. large and small … “Welcome” instead of “Entrance” over the front stores … Aisles are at least a foot wider than at the typical Wal-Mart … Special displays of products that normally mark Wal-Mart‟s main aisles have been removed … Research showed that after about 8 ft.. Lakshmi Mohan 84 .Hears the Customer’s Voice ! – Interviewed 50 women in North Dallas … Complained how cluttered Wal-Mart store seems – Made changes.
Lakshmi Mohan 85 . baby things.. Sept 7.” … A 19-year-old African-American shopper. rhythm and blues. make up. almost 4 times the size at an average Wal-mart “This Wal-Mart has stuff for all your needs . and hip-hop music section to 92 ft. who is holding a friend‟s baby. Source: Wall Street Journal. 2006 Dr.Another Example: New Store In Largely White Suburb of Chicago Determined that Shoppers would be Predominantly AfricanAmerican from nearby Chicago Study of the area showed it had a high number of premature births Store stocked up on clothes and baby-bottle nipples geared for preemies … Both have been strong sellers Doubled the amount of cosmetics for African-American women Increased the gospel.the right music.
Moved 27 Regional GMs from Bentonville to the Regions … “By reading the newspapers.s in areas such as ethnology. Lakshmi Mohan 86 . and research and evaluation … Segmented its shoppers using census data and customer feedback. food and consumer electronics Dr.. adding Ph. into demographic groups. food science. Gave Local Store Managers More Say in What Products to Carry … Added new field staff responsible for following trends in fashion.” Regional GM for 132 stores in Illinois. watching the TV stations and being part of the community.Localization Strategy Entailed Shaking Up the Management Structure Beefed up its Marketing Dept. among other things. who moved to a Chicago suburb. I have a better flavour for what‟s going on.D.
and to “express your style” – “Create your own web pages and videos” – Winners to be used in a Wal-Mart cable television commercial. the world‟s biggest marketing agency.To Reach Out to Fashion-Conscious Youth Consumers Back-to-school Season Marketing Campaign in July 2006 – “The Hub-School My Way”. 2006 87 .First Venture Into Interactive Consumer-Generated Advertising . Dr. possibly also for cinema release. jointly sponsored by Sony and put together by a unit of Omnicon. Instead of a small number of ad agency executives creating the best ads. July 21. An online competition inviting high school students – “To check out what styles are on the horizon”. Lakshmi Mohan Source: The Financial Times. “We are just scratching the surface. millions of people will be contributing to creating the best ads – a huge change that will really enhance brand advertising.” – Chief Executive of ViTrue. which provides marketers with the technology to create interactive advertising.
the investors Invested in Software-Generated Workforce Optimization – Meet heavy shopping hours with more help – Scale down during slower periods. who quits and does not return Dr. Lakshmi Mohan 88 .A Flexible Workforce A New Plan for Manning Stores: Employees‟ Work Schedule Tailored to the Demands of Customer Shopping Habits – To improve the bottom-line … Despite the risk of more bad PR on worker issues … Something to cheer its loudest critics now. unhappy about spreading her work week over 4 days instead of 3.Back to Basics for Wal-Mart . generally weekday afternoons – Shorter lines at the register mean more happy customers who are more likely to return – More important to the business than a cashier.
Locations by end-2007 – “Our surveys indicate that customers had a better shopping experience.S. Dr. Target & Lowes. everything you do will draw reaction.Will It Work ? Piloted in 39 Stores – Roll-out to All U.” – Affects 1M workers Already Drawing Union Wrath – But.S. have already rolled out such a plan in the U. when you‟re the biggest player on the block. 2007 89 . Jan 9. Lakshmi Mohan Source: Times of India. that is nothing new. so what‟s one more – Two other major chains. But. of course. – The United Food & Commercial Workers already devote 10 pages of their Web site to Wal-Mart bashing.
“Never underestimate them. “Just because we are simple doesn‟t mean we are unintelligent. Dec 6. Lakshmi Mohan 90 .” – Wal-Mart CEO Source: The Economist. 2001 Dr. Wal-Mart has made mistakes. but it has also got more things right than its rivals. who mistake its small-town simplicity for naivety at their peril.At the End of the Day … … Few doubt that Wal-Mart has both the patience and the resources to stay on top.” – A Retail Analyst Certainly. It makes the kill more of a surprise. They foster an image as country hicks.
This action might not be possible to undo. Are you sure you want to continue?
We've moved you to where you read on your other device.
Get the full title to continue listening from where you left off, or restart the preview.