By

A case Study Analysis Abhirup Anand

WALMART: NAVIGATING Aman Arora
A CHANGING RETAIL Ariz Aftab
Avik Ghosh
LANDSCAPE Belgam Rakesh
• Founded by Sam Walton in 1962 in Rogers, Arkansas
• Motive : to serve rural America with wide range of products
at lowest possible price.
• Walmart consisted of 3 business units:
1. Walmart U.S. accounting for 60% of total sales
2. Walmart international accounting for 28% of total sales
3. Sam’s Club accounting for 12% of total sales.

• Vision- “To give the customer and communities an

opportunity to see what it’s like to save and have a better
life”

• Tagline-“Save money, Live better”

 1962-1971
Single store located in rural area without access to modern retailers.

Broadening of product line i.e. including electronic goods, health and beauty products.

Walmart going public in 1970 with Walton’s family holding 69% ownership.

Word of mouth marketing within employees.

Self-service shopping started by Walmart.

First distribution centre in 1969 to bring down the costs.

Distribution costs were 2% of sales, comparatively lower than competitors.

Competitors: - Kmart, Sears, Target.

 1972-1990
Strategy: Stores within 300 miles of town.

Lowest gross margins among national retail chains.

Walmart’s growth accelerated by acquiring 106 Kuhn’s big k stores.

“Buy American”: Focused on selling American’s manufactured products.

None of the workers joined union.

Sam’s club wholesale store targeted small business owners.

“Aggressive Hospitality”: Customers were received by people greeters and customers
were given improved services.
Opening of supercentres in 1988.

Pricing strategy: “Everyday low prices”

 Supplier Issues

In early 1980’s the company started dealing directly with suppliers saving the cost of commission of 2%-
6% to distributors and manufacturers’ representatives.

In 1985, no supplier accounted for more than 2.8% of Walmart’s total purchases

By the late 1980’s Walmart built direct electronic linkages with vendors.

By 1991 brokers and manufacturers’ representatives were completely eliminated from the supply chain.

The company focused on Collaboration with vendors and developed innovative logistics practices like
Cross-Docking to save time and reduce costs.

VMI- Vendor Managed Inventory allowed for the vendors to directly manage the inventory of Walmart,
this was all possible by the continuous advancement in technology which Walmart focused on.
 Information Tech

In 1970’s Walmart invested heavily in IT, put up a computer system to link its stores and manage
inventory in its distribution centres. Distribution centres introduced laser scanners to increase
automation and point of sale electronic scanning of Uniform Product Codes was pioneered to
automate inventory control.

By 1987, Walmart had fully implemented a satellite network, involving a $24 million investment
that linked all operating units with the Bentonville office via voice, data transmission and one-
way video.

Technology plays a key role in Walmart’s supply chain, serving as the foundation of their supply
chain strategy. Walmart has the largest information technology infrastructure of any private
company in the world, and it is this state-of-the-art technology and network design that allows
Walmart to accurately forecast demand, track and predict inventory levels, create highly efficient
transportation routes, manage customer relationships, and service response logistics.
 HR Issues

In 1988, United Food Commercial Workers criticized Walmart for not

employing union workers.

By 2000, the company had become the largest private employer in U.S.

The company was criticized for low wage rates and inadequate allocation of
resources to health insurance.

From the compensation management perspective, Walmart has also showed

very aggressive HR policies and activities to fit the “low-cost” strategy.

Philanthropic Programs targeted at associates: Volunteerism Always Pays,

Associate in Critical Need Trust and United Way giving program.
 The Resistance of Walmart
Walmart Increased Sales during Recession
Campus, universities, including basic groceries.

Walmart expanded its online strategy , Walmart online sales in 2011 estimated 7.7 billion vs amazon 61
billion , Walmart provided same day pick up from stores for online orders

It partnered with general electric to educate consumers abt compact fluorescent bulbs

Another focus was on renewable energy

Walmart and sam club working together to donate unsold food and launched a nationwide organics
recycling program to reduce food waste

Walmart introduced the sustainable value network

Walmart collaborated with green dot to provide low cost money management services
 The Horizons of Changing Retail
Scenario
Doug McMillon- CEO from feb, 2014

Retailing was undergoing Transition

Customers wanted products quickly, conveniently available, transparency in the content

It managed procurement directly instead of relying on 3 rd parties- reducing price &

cost

Online retailing was gaining share, 244 Mn in 2015 to 270 Mn by 270.

Traditional discount and convenience stores were loosing ground and so Traditional giant
retailers like
 Walmart in 2017
By 2017:
 Market share of Walmart – 96.4%; Target-3.6% in supercenter segment
 Grocery store format: Walmart-1.3%; kroger’s-15.4; safeway-6.2%; publix-
5.5%; whole food-2.5
 Total grocery sales in U.S: WM-43%; Kroger-13; Costco-10; amazon-2.7
 Kroger: larger assortment at higher prices than WM
 LOYALTY program- gets discount on fuel when bought groceries
 Large fresh with high quality, good, organic food and a floral section

 Dollar general: limited assortment at low prices. 81% of their stores are
within 20 min drive from WM
 TARGET: Upscale discounter with higher prices, trendier merchandise and
a more spacious layout with
 wider aisles.
 Focused on more affluent clientele.
 WALMART IN 2017
 Ecommerce : amazon-
4672 Walmarts 23.2%; WM-3.9%, APPLE-
660 Sam’s Club 3.5; staples-3.1; target-0.8%.
 Same day shipping in 13 u.s
240 neighbourhood
cities. 200 distribution
market stores facilities within 20miles of
3522 supercentres 31% of U.S population.
Vented food outlets  In 2017, acquired Whole
Mcdonalds, nail salons, tax foods, a premium grocery
store chain which had
prep services etc annual revenue of $16bn,
Discount stores 448 stores, 15 distribution
centers, 89000 workers.
US Store Locations Map
 Present Scenario
Product Assortment
 One stop Destination for everything
 Bakery, Diary, Electronics, Apparel, Toys Household etc.
 19 in house healthcare stores, Petrol pumps, service
centres etc
Savings Catcher
 Companies like Tesco, Amazon, Carrefour, Metro AG,
Costco etc. are the major competitors of Walmart
competing in one or more segments globally.
 Sustainability Leaders
 Store operations
18% Emission Vehicle
reduction and washing
Efficiency 2025 systems

Rooftop Water
heating, shortage
cooling units, regions
Solar powered

Suppliers
Walmart
Sustainability Recycled
Index packaging

Web Based Tool Partnerships

in China
 Organisations and HR
CEO Doug
McMillon
announced in 2016
that the company
would join
NGOs, Public Leadership
Turnover rate had Schools, Recruitment Group
been 44%, close to Multilateral for Responsible
industry average institutions etc recruitment

200,000 women Female 55%, 44%

for first job in of colour, 200,00
retailing markets veterans

Supply Chain ECommerce

 157 Distribution centres Walmart.com , Jet.com and samsclub.com
 100 stores in a 150 mile radius 2nd largest internet retailer after Amazon in 2015.
from daily shipments California’s silicon valley – Bangalore – Sao Paolo
 Efficient Truck Fleet Omni channel
 Cross Docking Marc lore took over Walmart
Home delivery
 Philanthrophy

Walmart Foundation established in 1982, gave scholarships and played a role in coordinating giving with
local managers and expanded giving groups like Children’s Miracle Network Hospital.

In 1987 Walton Family Foundation a separate entity began operations.

In 2005 the company mobilized its logistics network to provide food clothing and housing relief to
people affected by hurricane Katrina, it also donated $20 million cash along with 100 truckload of
goods.

Move to 100% renewable energy, to produce zero waste, to sell products that were environment
friendly.

Corporate Giving Program called Walmart givingVolunteerism Always Pays program

Competitive Profile Matrix
 Competitive Advantage

Strength in
A Large Base
Both In- Broad
of Broad
Store and Financial USP of Operations
Customers products
Online Services Lowest price Handling
That Buy Pet assortments
Grocery Offerings
Products
Sales
Segmentation
Amazon vs Walmart
 Recommendations:
The Road Ahead
Branding: “Walmart is a brand that is
synonymous with low cost and not high end.
Amazon deals with luxury as much as it deals
with low cost items.
Supply Chain and Logistics Innovation
Creating a community of third party sellers,
which increases the scale and scope of
Amazon’s offerings, without adding to capital
expenses and risks.