RETAIL & SERVICES

WALMART
 RETAIL CHAINS
Chain stores are retail outlets that


share a brand and central

management, and usually have
standardized business methods and
practices.
•
 WAL-MART
– Founded in January 2000,
Walmart.com is a subsidiary of Wal-
Mart Stores, Inc.
– Wal-Mart is the largest retail store in
the United States, and is larger than
any other retail chain in the world.
– According to the Fortune 500 index of
the wealthiest and most powerful
corporations in the world, Wal-Mart
holds the number one spot, ranked
by its total sales.

 History
• The birth of discount retailing
– Most people think discount retailing began in 1962 – the
year that Kmart, Target, and Walmart first opened. But
actually, the chain of variety stores Sam Walton
owned during the 1950s faced stiff competition from
many regional discount stores.
•
• 1962 – Walmart begins
– Before opening Walmart, Sam travelled the country
studying everything he could about discount retailing.
He became convinced American consumers wanted a
new type of store. Trusting his vision, Sam and his wife
Helen put up 95 percent of the money for the first
Walmart store in Rogers, Ark.
•
• 1972 – Walmart goes public
– Discounters such as Kmart quickly expanded in the 1960s,
while Sam only had enough money to build 15 Walmart
 History
• The 1980s – Walmart comes of age
– In 1983, the first Sam’s Club members-warehouse store opened. The
first Supercenter opened in 1988, featuring a complete grocery, and
36 departments of general merchandise. By 1989, there were 1,402
Walmart stores and 123 Sam’s Club locations. Employment had
increased tenfold. Sales had grown from $1 billion in 1980, to $26
billion.


• The 21st century – one of the most successful retailers in the world
– Today, 8,576 stores and club locations in 15 countries employ more
than 2.1 million associates, serving more than 176 million
customers a year. Our history is a perfect example of how to
manage growth without losing sight of your values. Our most basic
value has always been, and always will be, customer service.


• Sam’s secret — give your customers what they want

– In his autobiography, Sam said, "… if you think about it from the point
of view of the customer, you want everything: a wide assortment of
quality merchandise; the lowest possible prices; guaranteed
 WAL-MART BUSINESSES

• Wal-Mart Stores:
– This division has the largest share of
company sales and were the nation’s
largest discount chain. This division
generate approximately 75% of profit
•
• Wal-Mart Supercenters:
– This division were the company’s
fastest growing division and included
Super centres, hyper marts, and
Bud’s Warehouse.

WAL-MART BUSINESSES
• Sam’s Clubs:
– This division is the largest wholesale
club in the country in 1993, and it
generates approximately 10% of
gross margin in 1993
•
• McLane Company:
– Wal-Mart acquired this company in
1990 as retail grocery supplier to
service its supercenters and Sam’s
Club
•
• Wal-Mart International expansion:
– Perspective on future growth by
 WAL-MART LOCATIONS
• Argentina
• Brazil
• Canada
• Chile
• China
• Costa Rica
• El Salvador
• Guatemala
• Honduras
• India
• Japan
• Mexico
• Nicaragua
• United Kingdom

 Why is Wal-Mart so
Successful?
• Is it Good Strategy or Good Strategy
Implementation?
• The Wal-Mart Philosophy -- Wal-Mart
is successful not only because it
makes sound strategic
management decisions, but also for
its innovative implementation of
those strategic decisions.
 Strategies
• Everyday Low Pricing
• Customer value and service
• Partnership with its associates
• Community involvement
• cross-docking inventory system
• massively parallel processor
• automated reordering system
• Super Center
 Strategies
• Universal Bar Code Identification
Technology
• Radio Frequency identification
Technology
• Human Resource Culture
• Overtime Woes
 STRATEGIC PROFIT MODEL
(SPM)
SPM is the visualization of an
organization's finances to provide the
ability to understand and analyze
financial performance and return on
investment (ROI)
•
 STRATEGIC PROFIT MODEL
(SPM)
• It considers Return on Assets (ROA) as
the most informative and significant
measure of the profitability of a
business.
• It identifies two focus areas to
improve the ROA through:
üProfit Margin Management
üAsset Management
 COMPONENTS OF SPM
Net Sales
Gross margin
-
Cost of goods
sold
PROFIT MANAGEMENT
- Net profit
Variable
expenses Net profit
margin
+ Total
expenses Net Sales
Fixed
expenses
Return on
x assets
Inventory
Net sales
TESSA

+ Asset
Accounts Total current turnover
receivable assets
Total assets
+ +
Other current
Fixed assets
assets
GANAM
PROFIT MARGIN : WAL-MART
TOTAL ASSET TURNOVER :
WALMART
RETURN ON ASSETS
 WAL-MART INDIA
• In August 2007, Walmart announced
an agreement with Bharti
Enterprises to establish a joint
venture, Bharti Walmart Private
Limited.
•
• Wal-Mart’s first outlet was set to
launch in the city of Amritsar,
Punjab in North India.
•
 WAL-MART INDIA
• 50:50 joint venture:
– In India, Wal-Mart has a 50:50 joint venture with
Bharti Enterprises in the wholesale cash-and-carry
segment.
•
• Direct Farm Program:
– Wal-Mart’s Direct Farm Program in India is a
partnership with 110 small and marginal farmers
near Ludhiana in Punjab where it encourages
cultivation of safe, high-quality, seasonal
vegetables. Farmers are advised at every stage of
cultivation by field agronomists.
–
• Wal-Mart India in 2010:
– In 2010, Bharti-Wal-Mart plans to launch seven Best
Price Modern Wholesale Cash-And-Carry stores
 W A L -M A R T IN D IA
• Sourcing from India:
– Wal-Mart has a large sourcing business in India.
The retail major sources goods worth $125
million a year from Punjab. In 2010, Wal-Mart
is planning to increase sourcing from India to
strengthen its global business.
–
• Training centres:
– Inheriting a model from its U.S. parent, Bharti-
WalMart (Best Price Modern Wholesale)
intends to set up its own training centres to
train less-privileged youth to work in retail
stores.
–

 CHALLENGES IN INDIA
• The tax structure in India favors
small retail business
• Lack of adequate infrastructure
facilities
• High cost of real estate
• Dissimilarity in consumer groups
• Restrictions in Foreign Direct
Investment
 CHALLENGES IN INDIA
• Competition from local retailers like
Reliance and Future Group.
• Shortage of trained manpower
• Low retail management skill
• Shortage of retail study options
• Example – Mayawati opposing the
entry of big retailers in UP.
•

 FUTURE OF WAL MART
• Less no of conventional Wal Mart
stores.
• Testing a rent car operations.
• Publishing
• Operate a fleet of jets to fly customer
across the friendly sky.
• An ambitious rating and labeling
system.
•
NEW OFFERINGS
 INCREASE IN NO. OF
STORES
In China, for example,
Wal-Mart plans to grow
30 to 50 percent in
square footage each
year for the foreseeable
future

There is room for 4,000

additional Supercenters
in the U.S. market..
 Wal-Mart Hints At Future
‘Green Rating’ Labelling For
Products
• Installed solar PV systems to power a
few of its stores.
• Purchased renewable energy offsets.
• Donated to environmental/social
charitable organizations.
• Wal-Mart has plans to determine the
environmental and social
implications of every product it
sells on its shelves.
• Carbon Reduction Level
D A N KE SC H Ö N

T H A N K YO U

G R A C IA S

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