Industry Analysis - Retail

Company – Wal-Mart
Save money. Live better.

Group 1

Kalpesh Agarwal - PGPM508_01 Sivaram Gunavel - PGPM508_12

Chetan Mahindra - PGPM508_23 Jaspal Singh - PGPM508_47
Overview of  Retail is sale of goods to end
user, not for resale but for use and
Retail Industry
consumption
 Global Retail Industry – Revenue

$11,326.8 billion (2008), CAGR –

80%
4.1% (2004-2008)
14%  Global Retail Industry – Revenue

Forecast (2013) $14,347.3 billion

6% – Increase of 26.7% over 2008
Industry Group Segmentation
Speciality Retail  Specialty Retail

 Multiline Retail
Multiline Retail
Catalog and Internet Retail
 Catalog and Internet Retail
Overview of Retail Industry
Global Retail Industry Group Global Retail Industry Group
Value Value - Forecast
Global Retail Industry Group Value Global Retail Industry Group Value
12000 0.07 Forecast
11395 0.06 16000 6.00%
11500 11326.8
14347.3
0.05 14000 13648 5.00%
11000 10794.2 12944.4
12284.6
0.04 11708.6 4.00%
10500 12000 11326.8
$ billion

10199.5 3.00%
0.03

$ billion
10000 10000
9646.1 0.02 2.00%
9500 8000
0.01 1.00%

9000 0 6000 0.00%

8500 -0.01 4000 -1.00%

2004 2005 2006 2007 2008 2008 2009 2010 2011 2012 2013
Year Year

$ billion % Growth $ billion % Growth

Global Retail Market Segmentation

Global Market Segmentation Global Top 10 Retailers

Rest of Top 10 Global Retailers
World
Rank Name of Company Country of Origin
6.90%
1 Wal-Mart US
Asia Pacific 2 Carrefour S.A France
26.50%
3 The Home Depot US
4 Tesco UK
5 Metro AG Germany
6 The Kroger Co. US
North & Europe
South 7 Target Corp. US
34.00%
America 8 Costco Wholesale Corp. US
32.60% 9 Sears Holding Corp. US
10 Schwarz Unternehmens Germany
Source: 2008 Global Power of Retailing (Deloitte)
Porter’s Five Force Analysis
NEW ENTRANTS Moderate
Diversification/
M&A .
Easy to Enter but
Less tough to survive

CUSTOMERS
SUPPLIERS COMPETITION
POWER
POWER Less bargaining
Major Player: Wal-
Highly dependent
on the Industry
Mart, Costco, Carre Power but No
four, Home Depot Switching Cost

SUBSTITUTES
Very High Departmental Store
Moderate
/General
Merchandising Store
Varies from Low
to High based on
Geography
Retail Opportunities
 Opening: Market is just beginning its Retail story
 Peaking: Market is developing quickly
 Declining: Market is big, new entrants getting tighter
 Closing: Market have high penetration
Company Over view – Wal-Mart
Mission of Wal-Mart
SAVING PEOPLE MONEY SO THEY CAN LIVE BETTER
 Largest Retailer – Revenue $405,607 million

Business Segment
 Wal Mart Stores

 Sam’s Club

 International Segment
SWOT
STRENGTHS WEAKNESS
• Powerful Retail • Self Cannibalization
Brand, Large scale of • Involvement in numerous
operations worldwide legal issues
• One Stop Retail • Continuous Product Recall
destination • Community Relations
• Strategic business Problem
programs
• Efficient working capital
Management

OPPORTUNITY THREATS
Global Food Safety Initiative Intense competition
Standard Price matching program by
Increasing demand of Online Target
sales Foreign currency fluctuation
Increasing opportunity in
Growing economy
Value Chain
Salient Features – Wal-Mart Winning
Strategy
 Strong Distribution, Inventory Management System
 Differentiated Pricing
 Cost Advantage Strategy
 IT Advantage

3 Basics beliefs of the Company

 Respect for the Individual

 Service to the Customer

 Striving for Excellence

Corporate Strategy
 Dominance in Retail Market
 Expansion in US and International Market
 Creation of Positive Brand and Company Recognition
 Branching into new sectors of Retail
Key Strategic Moves by Wal-Mart
 Acquisition of McLane Company in year 1990
 Diversification in Grocery and Food Retailing
 Razor thin margin – provides Great Value to customer
 Acquiring of PACE club of K Mart
Sustainability of Wal-Mart Strategy
 Leader in discount Retailing
 Size and Volume of Wal-Mart gives itself advantage over its
suppliers and competitors
 Extensive distribution and network
 Discounting Retailing format to work in International Market as
not much competition
 Extensive IT infrastructure provides leverage over competitors
Recommendation
 Must adopt a friendlier corporate attitude
 It needs to relax its anti-unionization policy
 Improve public perception that Wal-Mart can destroy
communities
 International expansion should be done with the help of Local
retailers