Essay About Traditional Department Stores And Idea Tha Wal-Mart

Walmart Initial
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 What are elements of Walmart’s initial competitive position and how did these enable strong economic profits?
Competitive Position
Discount retailing – challenged traditional department stores by offering lower prices.
premium on imitation and adaptation; “borrowing” specific ideas from all over the world: self-service, greeters , calling employees “associates, SAM’s Club and Hypermart USA.

frugality and a plain-folks manner. Emphasis on taking care of employees and tightly controlled compensation at all levels. pride in the idea tha Wal-Mart had its own way of doing things—and moments of shared fun.

ROIC > rate of capital (since steady ROE ~21, RoA ~8 and rising NI; period: 1994-2003)
Procurement bargained hard + tried to build partnerships with a widening circle of suppliers.
sharing of information electronically. electronic data interchange (EDI) + Retail Link
Distribution by building stores within a day’s drive of the distribution center.
inventory turns as a key measure of the overall performance to 7.6 by 2003
Innovation had helped keep its distribution costs the lowest in the industry. large-scale “cross-docking” to transfer merchandise directly from inbound trucks to store-bound trucks without ever storing the goods in its distribution centers.

Merchandising and Marketing achieving very high sales per square foot by offering a broad assortment of merchandise at consistently low prices in cheap but cheerful stores.

stocked a mix of nationally branded and private label products.
“Volume Producing Item” contest between top managers to search for and champion items with high potential revenues
capability to uniquely merchandise each store let Wal-Mart offer more variety than competitors as well as reduce stockouts.
EDLP (everyday low prices) retailer; atleast 2-4% pricing differential b/w walmart and its competitors
Do well by doing good : community involvement by contribution to local charities, scholarship funding and in-store charity events
Stores: cheap but cheerful ambiance; the stores were ringed around Wal-Mart’s distribution centers, and the Discount Stores and Supercenters in particular remained relatively concentrated in small towns and rural areas

-open ~24 hours a day
Ultimate objective was always efficiency rather than decentralization
tight