About the founder of the Giant
Sam Walton
Samuel Moore Walton
Born: 1918
USA
Died: 1992
Occupation: Chairman, Wal-Mart
Net worth: $15.2 Billions 1985- 1988 Forbes 400
Samuel Moore Walton (March 29, 1918 – April 6, 1992) was the founder of two American retailers, Wal-Mart and Sam's Club. He was the patriarch of the Walton family, the richest family in the world.
Early Life
Sam Walton was born to Thomas Gibson Walton and Nancy Lee Walton near Kingfisher, Oklahoma on March 29, 1918. There, he lived with his parents on their farm until 1923. Sam's father decided farming did not generate enough income on which to raise a family, so he decided to go back to a previous profession of a mortgage man. So he and his family (now with another son, James, born in 1921) moved from Oklahoma to Missouri. There they moved from one small town to another for several years. While attending 8th grade in Shelbina, Sam became the youngest Eagle Scout in the state's history. In adult life, Walton became a recipient of the Distinguished Eagle Scout Award from the Boy Scouts of America.
Walton excelled physically in high school, playing basketball and football as starting quarterback for Columbia's Hickman High School in 1935, when they won the state title. While at Hickman, he also served as vice president of the student body his junior year and as president his senior year. He performed well enough academically to become an honors student.
Growing up during the Great Depression, Walton had numerous chores to help make financial ends meet for his family. He milked the family cow, bottled the surplus and drove it to customers. Afterwards, he would deliver newspapers on a paper route. Upon graduating, he was voted "Most Versatile Boy."
Upon graduating, Walton decided to attend college, hoping to find a better way to help support his family. He attended the University of Missouri - Columbia and majored in economics and was an ROTC officer. During this time, he worked various odd jobs, including waiting tables in exchange for meals. Also during his time in college, Walton joined the estimable Zeta Phi chapter of Beta Theta Pi fraternity. He was also tapped by QEBH, the well-known secret society on campus honoring the top senior men. Upon graduating, he was voted "permanent president" of the class. He was also a member of the professional business fraternity Alpha Kappa Phi.
Walton joined JCPenney as a management trainee in Des Moines, Iowa three days after graduating from college. This position earned him $75 a month. He resigned in 1942 in anticipation of being inducted into the military for service in World War II. In the meantime, he worked at a DuPont munitions plant near Tulsa, Oklahoma. There he met his future wife, Helen Robson, in April 1942.
Robson was the valedictorian of her high school class and a graduate of the University of Oklahoma at Norman with a degree in business. She was the daughter of L.S. Robson, a prosperous banker and rancher. She and Sam were married February 14, 1943.
Soon afterwards, Walton joined the military in the US Army Intelligence Corps, supervising security at aircraft plants and prisoner of war camps.
In this position he served in the continental United States. He eventually reached the rank of captain.
Quotations
It’s a story about entrepreneurship, and risk and hard-work and knowing where you want to go and being willing to do what it takes to get there. And it’s a story about believing in your idea even when may be some other folks don’t and about sticking to your guns.”
"I guess in all my years, what I heard more often than anything was: a town of less than 50,000 populations cannot support a discount store for very long.
"I'd hate to see any descendants of mine fall into the category of what I call "idle rich"...I hope they'll feel compelled to do something productive and useful and challenging...working on cures for cancer, or figuring out ways to bring culture and education to the underprivileged, or becoming missionaries for free enterprise in the Third World. Or maybe - and this is strictly my idea - there's another Walton merchant lurking in the wings somewhere down the line. "
"There is only one boss: the customer, and he (or she) can fire everyone in the company from the chairman and down, simply by spending their money somewhere else"
Running a successful business, tens rules that worked for me”
– Sam Walton
1) Commit to your business
2) Share your profits with all your associates and treat them as partners.
3) Motivate your partners
4) Communicate everything you possibly can to your partners.
5) Appreciate everything your associates do for the business.
6) Celebrate your successes
7) Listen to everyone in your company.
8) Exceed to your customer’s expectations.
9) Control your expenses better than your competition.
10) Swim upstream: Against the common stream of the world.
Company History
The history of Wal-Mart can be traced back to the 1940s Sam Walton began his career in retailing. After being interviewed by recruiters from both Sears Roebuck and JC Penney just before graduating from the University of Missouri in Columbia, Sam accepted a job offer from JC Penney. He began working at a JC Penney store in Des Moines, Iowa on June 3, 1940, making a salary of $75 a month. During his employment there, Sam was able to meet James Cash Penney, the department store's founder, during a visit to the store. He remained at JC Penney for eighteen months.
In 1945, Sam met with Butler Brothers, a regional retailer that owned two franchise operations: a chain of department stores called Federated Stores, and a chain of variety stores called Ben Franklin. Butler Brothers offered Sam a Ben Franklin store in Newport, Arkansas. Unable to come to agreement on his lease renewal and unable to find a new location in Newport, Walton located a variety store in Bentonville, Arkansas which he would open as another Ben Franklin franchise, but called "Walton's Five and Dime."
As a typical businessman, he was always looking for better deals from his suppliers, and he realized that he could obtain higher sales volume by passing on the savings to his customers, instead of pocketing them. And in 1962, the first Wal-Mart store opened in Rogers, Arkansas. By 1967, the company grew to 24 stores across the state of Arkansas, and had reached $12.6 million in sales, and by 1968, the company opened its first stores outside of Arkansas in Sikeston, Missouri and Claremore, Oklahoma.
The First Store
In 1945, after leaving the military, Walton decided he wanted to own a department store but would settle for a variety store. With some help from his father-in-law with a loan of $20,000, plus $5000 he had saved from his time in the Army, Walton purchased a Ben Franklin variety store in Newport, Arkansas. The store was a franchise of the Butler Brothers chain.
It was here that Walton pioneered many concepts that would prove to be crucial to his success. Walton made sure the shelves were consistently stocked with a wide range of goods at low prices. His store also stayed open later than most other stores, especially during the Easter season. He also pioneered the practice of discount merchandizing by buying wholesale goods from the lowest priced supplier. This allowed him to pass on savings to his customers, which drove up his sales volume. Higher volumes allowed him to negotiate even lower purchase prices with the wholesaler on subsequent purchases. Walton's store led in sales and profits in the Butler Brothers' six-state region. One factor that made this store successful was its central location, making it accessible to a wide range of customers. In an attempt to limit the expansion of his main competitor, the Sterling Store, Walton leased a nearby Kroger store and opened it in 1950 as the "Eagle" department store, but it didn't fare as well.
Due to the variety store's enormous success, the landlord, P. K. Holmes, refused to renew the lease when it expired, desiring to pass the store onto his son. The lack of a renewal option, together with the outrageous rent of 5% of sales, was early business lessons to Walton. Despite the inherent unfairness of forcing Walton out, Holmes bought the store's inventory and fixtures for $50,000, which Walton called "a fair price."
Walton's five to Dime (a.k.a Walton's 5 - 10)
Before moving out in 1951, Walton arranged for another location for a new store. Unable to find a new location in Newport, Walton located a variety store in Bentonville, Arkansas which he would open as another Ben Franklin franchise, but called "Walton's Five and Dime." In Bentonville, the Walton’s became involved in numerous civic activities. Walton served as president of the Rotary Club and the Chamber of Commerce. He was also elected to the city council, served on the hospital board, and launched a Little League baseball program in the city in 1954.
Walton went on to found another variety store in Fayetteville, Arkansas, about 20 miles south of Bentonville in 1952. It would share the same name as the store in Bentonville but was not a Ben Franklin franchise. It went on to become as successful as the original Five and Dime. Of this time, Walton said, "I did something I would do for the rest of my run in the retail business without any shame or embarrassment whatsoever: nose around other people's stores searching for good talent."
His search turned up Willard Walker, a manager of a TG&Y variety store in Tulsa, Oklahoma. With Walker he did something else that is commonplace today, but was unusual for the time when he did it. Walton offered Walker a percentage of the store's profit, what today is known as profit sharing. Walton proceeded to visit the store once a week to handle any problems and reviewed the store's profit and loss statement once a month.
About this time, Walton introduced the concept of check-out counters at one location in the store.
Registers throughout the store were moved to one location near the exits. Customers could be rung up for all their purchases and pay for them at one time, instead of paying for several things at several locations. Walton also insisted that his stores be clean, well-lit, and on sharing profits with employees, increasing their loyalty.
The First Wal-Mart
The first true Wal-Mart opened in 1962 in Rogers, Arkansas. Wal-Mart eventually became the world's largest retailer. In 2004, more than 1.5 million people were employed by the Wal-Mart Corporation.
Walton stated, "Each Wal-Mart store should reflect the values of its customers and support the vision they hold for their community." Wal-Mart has outreach programs led by local associates who grew up in the area and understand its needs. Wal-Mart tries to become involved in local communities by holding bake sales for local charities and by offering scholarships to graduating seniors from local high schools.
Incorporation and Growth
The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. and by 1970, opened its home office in Bentonville, Arkansas, as well as its first distribution center. There were now 38 stores operating with 1,500 associates and sales of $44.2 million. The company began trading stock at this time as a publicly-held company, and was listed on the New York Stock Exchange by 1972.
Sam Walton’s tiny chain of variety stores in Arkansas and Kansas was already facing competition from regional discount chains. Sam traveled the country to study this radical, new retailing concept and was convinced it was the wave of the future.
Today, Sam’s gamble is a global company with more than 1.8 million associates worldwide and nearly 6,500 stores and wholesale clubs across 15 countries.
But it all started with an understanding of what consumers want from a retailer.
"The secret of successful retailing is to give your customers what they want," Sam wrote in his autobiography. "And really, if you think about it from the point of view of the customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience.
"You love it when you visit a store that somehow exceeds your expectations, and you hate it when a store inconveniences you, or gives you a hard time, or pretends you’re invisible."
While other discounters such as Kmart quickly expanded across the country in the 1960s, Sam was able to raise the funds to build only 15 Wal-Mart stores. Wal-Mart got the boost it needed in 1970, when its stock was offered for the first time on the New York Stock Exchange. The public offering created the capital infusion that grew the company to 276 stores by the end of the decade. By focusing on customer expectations, Wal-Mart was growing rapidly in 11 states.
In the 1980s, Wal-Mart became one of the most successful retailers in America. Sales grew to $26 billion by 1989, compared to $1 billion in 1980. Employment increased tenfold. At the end of the decade there were nearly 1,400 stores. Wal-Mart Stores, Inc. branched out into warehouse clubs with the first SAM´S Club in 1983. The first Super center, featuring a complete grocery department along with the 36 departments of general merchandise, opened in 1988. Wal-Mart had become a textbook example of managing rapid growth without losing sight of a company’s basic values. In Wal-Mart’s case, the basic value was, and is, Customer Service.
Ironically, technology plays an important role in helping Wal-Mart stay customer focused. Wal-Mart invented the practice of sharing sales data via computer with major suppliers, such as Proctor & Gamble. Every time a box of Tide is rung up at the cash register, Wal-Mart’s data warehouse takes note and knows when it is time to alert P&G to replenish a particular store. As a result, Wal-Mart stores rarely run out of stock of popular items.
Wal-Mart’s Legacy:-
1960s
1962 Company founded with opening of first Wal-Mart in Rogers, Ark.
1967 Wal-Mart’s 24 stores total $12.6 million in sales.
1968 Wal-Mart moves outside Arkansas with stores in Sikeston, Mo., and Claremore, Okla.
1969 Company incorporated as Wal-Mart Stores, Inc. on Oct. 31.
1969 Wal-Mart Aviation hires its first full-time pilot, giving co-founders Sam and Bud Walton some help.
1970s
1970 Wal-Mart opens first distribution center and home office in Bentonville, Ark.
1970 Wal-Mart stock first traded over the counter as publicly held company.
1970 38 stores now in operation with sales at $44.2 million. Total number of associates is 1,500.
1971 First 100 percent stock-split in May. Market price: $47.
1971 Wal-Mart is now in five states: Arkansas, Kansas, Louisiana, Missouri and Oklahoma.
1972 Wal-Mart approved and listed on the New York Stock Exchange.
1972 Second 100 percent stock split in March. Market price: $47.50.
1973 Wal-Mart enters Tennessee.
1974 Wal-Mart stores now in Kentucky and Mississippi.
1975 125 stores in operation with sales of $340.3 million and 7,500 associates. Wal-Mart enters ninth state: Texas.
1975 Third 100 percent stocks split in August. Market price: $23.
1975 Inspired by workers he saw on a visit to Korea, Sam Walton introduces the famous "Wal-Mart Cheer" to associates.
1977 Wal-Mart makes first acquisition, 16 Mohr-Value stores in Michigan and Illinois.
1977 Wal-Mart enters its 10th state: Illinois.
1978 Hutcheson Shoe Company acquired; Wal-Mart pharmacy, auto service center and jewelry divisions introduced.
1979 Wal-Mart is the first company to reach $1 billion in sales in such a short period of time: $1.248 billion. Wal-Mart now has 276 stores, 21,000 associate and are in its 11th state: Alabama.
1980s
1980 Fourth 100 percent stocks split in November. Market price: $50.
1980 Largest distribution center to date opens in Palestine, Texas.
1981 Wal-Mart enters Georgia and South Carolina.
1981 Wal-Mart makes its second acquisition with 92 Kuhn’s Big K stores.
1982 Fifth 100 percent stocks split in June. Market price: $49.875.
1982 Wal-Mart enters Florida and Nebraska.
1983 First SAM´S CLUB opened in April in Midwest City, Okla.
1983 People Greeter implemented at all stores.
1983 Sixth 100 percent stocks split in June. Market price: $81.625.
1983 Wal-Mart enters Indiana, Iowa, New Mexico and North Carolina.
1983 For eighth year straight Forbes Magazine ranks Wal-Mart No. 1 among general retailers.
1984 Sam Walton does the hula at high noon on Wall Street, making good on promise to associates after company achieves pre-tax profit of 8 percent in 1983.
1984 David Glass named company president.
1984 Wal-Mart enters Virginia.
1985 Seventh 100 percent stocks split in September. Market price: $49.75.
1985 Wal-Mart has 882 stores with sales of $8.4 billion and 104,000 associates. Company adds stores in Wisconsin and Colorado.
1986 Wal-Mart enters Minnesota.
1987 Eighth 100 percent stocks split in June. Market price: $66.625.
1987 Wal-Mart’s 25th anniversary: 1,198 stores with sales of $15.9 billion and 200,000 associates.
1987 Wal-Mart Satellite Network (largest private satellite communication system in the U.S.) completed, linking all operating units of company and General Office with 2-way voice, data and one-way video communication.
1988 David Glass named chief executive officer of Wal-Mart Stores, Inc.
1988 First Super center opened in Washington, Mo.
1988 Ninety percent of Wal-Mart stores have bar-code scanning capabilities.
1988 16 Wal-Mart distribution centers in operation.
1989 Wal-Mart is now in 26 states with the addition of Michigan, West Virginia and Wyoming.
1990s
1990 McLane Company of Temple, Texas acquired.
1990 Wal-Mart enters California, Nevada, North Dakota, Pennsylvania, South Dakota and Utah.
1990 Wal-Mart Visitor’s Center opens on site of Sam Walton´s original Walton’s 5-10 store.
1990 Ninth 100 percent stock split in June. Market price: $62.50.
1991 Western Merchandisers, Inc. of Amarillo, Texas, acquired.
1991 Wal-Mart enters Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey and New York.
1991 "Sam’s American Choice" brand products introduced.
1991 International market entered for first time with the opening of two units in Mexico City.
1992 President George Bush presents Sam Walton with the Medal of Freedom.
1992 Sam Walton passes away April 5.
1992 S. Robson Walton named chairman of the board April 7.
1992 Wal-Mart has entered 45 states with the addition of Idaho, Montana and Oregon.
1992 Wal-Mart enters Puerto Rico.
1993 Wal-Mart International division formed with Bobby Martin as president.
1993 Tenth 100 percent stock split in February. Market price: $63.625.
1993 Wal-Mart enters Alaska, Hawaii, Rhode Island and Washington.
1993 First billion-dollar sales week in December.
1993 99 Pace Warehouse clubs acquired.
1994 122 Wool co stores in Canada acquired.
1994 A prototype store designed to be as environmentally friendly as possible opens in Lawrence, Kansas.
1994 3 value clubs open in Hong Kong. Canada has 123 stores and Mexico has 96.
1994 Code Adam program implemented, named after Adam Walsh, in all stores.
1995 James Lawrence "Bud" Walton,(right, pictured with brother Sam Walton) co-founder, passes away.
1995 Wal-Mart Stores, Inc. has 1,995 Wal-Mart stores, 239 Supercenters, 433 SAM´S CLUBS and 276 International stores with sales at $93.6 billion and 675,000 associates.
1995 Wal-Mart enters its 50th state - Vermont - and builds three units in Argentina and five in Brazil.
1996 Wal-Mart enters China through a joint-venture agreement.
1996 Wal-Mart has first $100 billion sales year, with sales totaling $118.1 billion for 1997 per AR ´98.
1997 Wal-Mart replaces Woolworth on the Dow Jones Industrial Average.
1997 Wal-Mart introduces OneSource nutrition centers.
1997 Wal-Mart acquires 21 Wertkauf units in Germany.
1998 Wal-Mart introduces Neighborhood Market concept with three stores in Arkansas.
1998 Wal-Mart exceeds $100 million in annual charitable contributions, with donations totaling $102 million.
1998 Wal-Mart enters Korea through a joint venture agreement.
1999 Wal-Mart has 1,140,000 associates, making the company the largest private employer in the world.
1999 Eleventh 100 percent stock split in March. Market price: $89.75.
1999 Wal-Mart acquires the ASDA Group plc. in the United Kingdom (229 stores).
1999 Wal-Mart ranked #1 Corporate Citizen in America in the 1999 Cone/Roper Report, an annual national survey on philanthropy and corporate citizenship.
2000s
2000 Wal-Mart ranked 5th by FORTUNE magazine in its Global Most Admired All-Stars list.
2000 H. Lee Scott named president and CEO of Wal-Mart Stores, Inc.
2000 Wal-Mart ranked #1 Corporate Citizen in America in the 2000 Cone/Roper Report, an annual national survey on philanthropy and corporate citizenship.
2001 Wal-Mart named by FORTUNE Magazine as the 3rd most admired company in America.
2001 Wal-Mart ranked by Hispanic Business Magazine as one of the Top 25 Diversity Recruitment Programs in 2001 for its aggressive program to hire and promote Latinos.
2002 Wal-Mart received the 2002 Ron Brown Award, the highest Presidential Award recognizing outstanding achievement in employee relations and community initiatives.
2002 Wal-Mart ranked #1 on the FORTUNE 500 listing.
2002 Wal-Mart has the biggest single day sales in history: $1.43 billion on the day after Thanksgiving.
2003 Wal-Mart named by FORTUNE magazine as the most admired company in America.
2004 FORTUNE magazine placed Wal-Mart in the top spot on its "Most Admired Companies" list for the second year in a row.
2004 Wal-Mart was presented the "Corporate Patriotism Award" which is presented to a company that exhibits exceptional dedication to raising awareness and support of U.S. service members and their families.
2005 Wal-Mart Stores, Inc. closed out the year with $312.4 billion in sales, while expanding to more than 6,200 facilities around the world, including 3,800 stores in the United States, along with 3,800 international units. Around the globe, we now have a strong presence in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea and the United Kingdom. Wal-Mart employs more than 1.6 million associates worldwide. There are more than 138 million customers who visit our Wal-Mart stores each week all over the world.
2005 Wal-Mart Stores, Inc. leads the corporate drive to assist in U.S. hurricane relief efforts with $18 million in cash donations.
2005 In McKinney, Texas, and Aurora, Colorado, Wal-Mart creates experimental stores that save energy, conserve natural resources, and reduce pollution.
2005 Wal-Mart launches the Acres for America program, which will conserve critical wildlife habitats for future generations
New Ventures Subsidiaries
Wal-Mart's operations are comprised primarily in three retailing subsidiaries: Wal-Mart Stores Division U.S., SAM'S CLUB, and Wal-Mart International. Wal-Mart does business under nine different retail formats: super centers, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants.
Wal-Mart Stores Division U.S. is Wal-Mart's largest business subsidiary, accounting for 67.2% of fiscal 2006 net sales. This segment consists of three traditional retail formats: discount stores, super centers, and neighborhood markets, all of which are located in the United States, as well as Wal-Mart's online retailer, walmart.com.
Wal-Mart Stores operates retail department stores selling a range of non-grocery products, though emphasis is now focused on the super centers, which include more grocery items.
Wal-Mart Discount Stores
Wal-Mart Discount Stores are a chain of discount department stores that range in size from 30,000 square ft. (3,000 m²) to 224,000 square ft. (21,000 m²) with an average size of approximately 102,000 sq. feet (9,500 m²). They carry an amount of general merchandise products with a selection of food items. Many Wal-Mart Discount Stores also feature a garden center, a pharmacy, Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, as well as a fast food outlet.
The first Wal-Mart store opened in 1962 in Rogers, Arkansas.
As of August 31, 2006, there were 1,135 Wal-Mart Discount Stores in the United States.
Wal-Mart Super center
Wal-Mart Super center is a chain of hypermarkets that range in size from 99,000 square ft. (9,000 m²) to 261,000 square feet (24,000 m²) with an average size of approximately 187,000 square ft. (17,000 m²).
They carry everything a Wal-Mart Discount Store does in addition to a full-line supermarket (including meat, bakery, deli, frozen foods, dairy, produce and seafood). Many Wal-Mart Supercenters also feature a garden center, a pharmacy, a Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, and numerous alcove shops such as a SunTrust personal finance center, a cellular phone store, hair and nail salons, video rental by either Movie Gallery or Hollywood Video, a family fun center, a branch of a local bank, and possibly a fast food outlet. Some locations also sell gasoline through Murphy USA.
The first Super center opened in 1988 in Washington, Missouri.
As of August 31, 2006, there were 2,121 Wal-Mart Super centers in the United States.
Wal-Mart Neighborhood Market
Wal-Mart Neighborhood Market is a chain of supermarkets that average about 42,000 square feet (3,900 m²). They offer a variety of products including a full-line of groceries, pharmaceuticals, health and beauty aids, photo developing services, and a limited selection of general merchandise.
The first Neighborhood Market opened in 1998 in Bentonville, Arkansas.
As of August 31, 2006, there were 108 Neighborhood Markets in the United States.
SAM'S CLUB List of Wal-Mart Brands
Wal-Mart Stores, Inc., like most large retail and grocery chains, offers store brands, commonly referred to as "generic brands," which are low-cost alternatives to name brand products. Wal-Mart has numerous store brands, each catering to a different consumer need or desire. Almost all products offered under Wal-Mart brands are private label products, meaning Wal-Mart produces them through subsidized contracts awarded to the lowest bidder. Private label goods can be found in almost every category at Wal-Mart. This is a partial list of Wal-Mart brands.
Sam's Choice
Sam's Choice, originally introduced as Sam's American Choice in 1991, is named after Sam Walton, founder of Wal-Mart. It is perhaps the most common and best known of Wal-Mart's various store brands. Items produced under the Sam's Choice label include cookies, soda, chips, dip, frozen foods, and various other grocery items. Along with another Wal-Mart private label, Great Value, Sam's Choice items can be found in almost every grocery category at Wal-Mart.
Other Brands
Apparel
• Athletic Works is a brand for athletic clothing, such as gym shorts. The brand is also used for sports equipment.
• Faded Glory is a brand for classic clothing and shoes.
• George is a brand of clothing originally launched in the UK, aimed at young people who want to look fashionable on a tight budget. The name George, comes from the name of the original designer George Davies, who started the range in the early-1990s. The brand is also used on baby clothing.
• Kid Connection is a brand used for a variety of products targeted for children, including toys and clothing.
• Life is a brand of men's underwear styled by Jockey. The range includes briefs, boxers, boxer-briefs, thongs, and undershirts.
• No Boundaries, abbreviated on its labels as NoBo, is a line of apparel and home furnishings targeted at teenagers and young college students. The line uses trendy colors and designs on products ranging from hats to lamps to beanbag chairs.
• Puritan is a brand for men's underwear and socks.
• Simply Basic features family-oriented clothing products such as pants and socks. In 2006, Wal-Mart released a number of products under the Simply Basic brand in the Health and Beauty department. These products to some extent correspond to products already under the Equate brand, but are priced lower.
Food
• Great Value includes household items such as glass cleaner and lightbulbs, as well as food items such as peanut butter and snack crackers. The primary difference between Great Value and Sam's Choice is that the former consists of items most consumers have on their shopping lists, making price and quality only factors, while items of the latter can become impulse purchases for some consumers. In recent years, some Sam's Choice items have been changed to the Great Value brand.
Homelines
• HomeTrends products include large and small furniture, small appliances, and home office products.
• Mainstays products include curtains, bedding, some small home furnishings, and various other home fashion products.
Hardlines
• Color Works is the brand used for paint.
• Durabrand is the name used for home electronics such as televisions, CD players, surround sound systems, and even blank recordable media (CD-R and DVD-R). The Durabrand name is also used on some small appliances.
• Equate is a brand used for consumable pharmacy and health and beauty items, such as shaving cream, skin lotion, over-the-counter medications, and pregnancy tests.
• EverStart is the brand for automotive batteries. The brand is also used for battery related accessories, such as jumper cables.
• ilo is another brand used for electronics. It is used for LCD TVs, LCD monitors, and MP3 players.
• Ol' Roy is a brand of dog food. Its namesake comes from Sam Walton's bird dog and has become the number one selling brand of dog food in the United States.
• Ozark Trail is a brand used for outdoor equipment.
• ReliOn describes itself as "Wal-Mart's healthcare brand." It consists chiefly of medical equipment in the following categories: blood pressure monitoring, diabetes monitoring, and cough and cold-related products (such as humidifiers and thermometers).
• Spring Valley is the brand for vitamins and other nutritional supplements.
• Special Kitty is a brand of cat food and litter.
• SuperTech is Wal-Mart's brand of motor oil that is found in the automotive departments. The brand is also offered at those locations that have a Tire and Lube Express. The SuperTech name is also used on other consumable automotive products, including oil filters, transmission fluid, power steering fluid, and brake fluid.
ASDA Private Label
In common with most British supermarkets, most of ASDA's own brand products are simply sold under the ASDA brand. Some of these also carry the "Great Value" branding as used by Wal-Mart (but this is being faded out). Asda also sells brands such as Durabrand and George which are designed to complement the ASDA brand, others include:
• Smart Price is ASDA's no-frills line with its simple red, white and black packaging. The brand originated as 'Farm Stores' and the products are considered to be basic. Originally the brand was used on food, but can now be seen on many different items. Rival brands includes, Tesco's Value and Sainsbury's Basic.
• Extra Special is ASDA's premium food brand. Rival brands include Tesco's Finest and Sainsbury's Taste the Difference .
• Pacific is an old electrical brand; which is being replaced by Durabrand and Onn.
• Onn is ASDA's mid-level electrical brand, aimed at women, with its colourful packaging and stylised design.
• Baier is a brand currently used on one product, which is a LCD television.
Wal-Mart operates SAM'S CLUB, a chain of warehouse clubs that sells groceries and general merchandise, often in large quantities or volume, to customers who pay an annual fee for the privilege of shopping there. Some locations also sell gasoline through Murphy US. The first SAM’S Club opened in 1983 in Midwest City, Oklahoma.
According to Wal-Mart's 2006 Annual Report, Sam's Club accounted for approximately 12.7% of fiscal 2006 sales. Competitors of Wal-Mart's Sam's Club division are Costco, and the smaller BJ's Wholesale Club chain operating mainly in the eastern United States.
As of August 31, 2006, there were over 567 Sam's Clubs in the United States.
The operations of Wal-Mart International comprise 2,700 stores in 14 countries outside the United States. According to Wal-Mart's 2006 Annual Report, International accounted for approximately 20.1% of fiscal 2006 sales. Wholly-owned operations are located in Argentina, Brazil, Canada, South Korea, Puerto Rico and the United Kingdom.
Wal-Mart has operated in Canada since their acquisition of the Wool co division of Woolworth Canada, Inc. Today, they operated 278 locations employing 70,000 Canadians, with a local home office in Mississauga, Ontario.
Fiscal 2006 for Wal-Mart's United Kingdom subsidiary, ASDA, was 42.7% of the International segment sales. In contrast to Wal-Mart's U.S. operations ASDA was originally and remains primarily a grocery chain, but it has a stronger focus on non-foods than most UK supermarket chains. At fiscal 2006, there were 236 ASDA stores, 10 George stores, 5 ASDA Living and 43 ASDA small stores.
In addition to its wholly-owned international operations, Wal-Mart has joint ventures in China and several majority owned subsidiaries. Wal-Mart's majority owned subsidiary in Mexico is Walmex. In Japan, Wal-Mart owns 55.3% of The Seiyu Co., Ltd.Additionally, Wal-Mart owns 51% of the Central American Retail Holding Company (CARHCO) formed from more than 360 supermarkets and other store formats, operating in 5 Central American Countries: Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica.
In 2004, Wal-Mart bought the Bompreço supermarket chain, comprised by 116 stores. Bompreço is the major supermarket chain in Northeastern Brazil. In late 2005, Wal-Mart took control of the Brazilian operations of Sonae Distribution Group through its new subsidiary, called WMS Supermercados do Brazil, thus acquiring control of the National, Big and Mercadorama supermarket chains, the leaders in Rio Grande do Sol and Paraná states. None of those operations were rebranded. As of August 2006, Wal-Mart operates 71 Bompreço stores, 27 Hyper-Bompreço stores, 15 Balaio stores and 3 Hyper-Magazines (all were originally part of Bompreço). It also operates 67 National stores, 24 Mercadorama stores, 15 Big stores through WMS. It also runs 19 Wal-Mart Super centers, 13 Sam's Club stores and 2 To-do Dia (small stores) stores. With the acquisition of Bompreço and Sonae, Wal-Mart is currently the third biggest supermarket chain in Brazil, only behind Carrefour and Pão de Açúcar.
In July 2006, Wal-Mart announced its withdrawal of operations from Germany because of sustained losses. Their stores will be sold to the German company METRO AG. he sale is subject to regulatory approval.
Corporate Affairs
Wal-Mart's business model is based on selling a wide variety of general merchandise and marketing, "always low prices." The company refers to its employees as, "associates." All Wal-Mart stores in the United States and Canada also have designated "people greeters," whose general role is to welcome shoppers at the store entrance, as well as playing a role in loss prevention and security.
Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear on the store. Alternatively, they focus on selling more popular products, and often pressure store managers to drop unpopular products in favor of more popular ones, as well as manufacturers to supply more popular products.
Governance Major Mergers & Acquisitions 1990-1999
Acquirer and target, announcement date, deal size, share and cash payment.
United States
• AOL Time Warner; America Online and Time Warner (US$166 billion excluding debt, Stock: 100%, Cash: 0%) (PBS coverage, CNN)
• ExxonMobil; Exxon and Mobil Oil (Dec. 1998, $77 billion, Stock: 100%, Cash: 0%) (Suns Online, CNN)
• Citigroup; Citicorp and Travelers Group (1999, $73 billion, Stock: 100%, Cash: 0%) (Cornell, Citigroup FAQ)
• MCI Communications; with WorldCom; created MCI WorldCom (1997) ($44 billion, Stock: 100%, Cash: 0%) (Department of Justice, MCI.com)
• ChevronTexaco; Chevron and Texaco ($35 billion)
• Walt Disney Company; with Capital Cities/ABC (1995) ($19 billion)
• Monsanto; with Pharmacia & Upjohn
• Pfizer; with Warner-Lambert
• JDS Uniphase; with SDL
• Union Pacific Railroad; with Southern Pacific Railroad
• Verizon; Bell Atlantic, GTE, and AirTouch Cellular.
Europe
• DaimlerChrysler; Daimler Benz and Chrysler (Announced May 1998 - Final 1998) ($35 billion)
• Vodafone; with Mannesmann (completed February 2000) ($183 billion, 100% stock)
• Total; with Petrofina, and Elf Aquitaine
• BP; with Amoco (completed August 1998) ($110bn)
• Novartis; Ciba-Geigy and Sandoz in 1996
Japan
• Mitsubishi Tokyo Financial Group
• Mizuho Financial Group; Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan (1999)
Major Mergers & Acquisitions 2000-2006
United States
• Sprint; with Nextel
• Verizon with MCI
• Kmart; with Sears, Roebuck (Announced 17 November 2004) ($11 billion, 55% stock, 45% cash)(Investorguide)
• Hewlett-Packard; with Compaq (Announced Sept. 2001 - Final May 2002) ($25 billion)
• NBC Universal; NBC and Vivendi Universal Entertainment
• J.P. Morgan Chase, Bank One (announced January 14, 2004) ($59 billion, Stock: 100%, Cash: 0%) (SNL)
• Procter & Gamble buy Gillette (2005, $54 billion)
• Bank of America; with FleetBoston Financial (2003, $47 billion)
• Cingular and AT&T Wireless (Announced February - Final 16 Oct 2004) ($41 billion)
• Symantec and VERITAS (Announced December 16, 2004) their plans for a merger deal valued at $13.5 billion. This is the largest merger in the software industry to date.
• SBC and AT&T Completed November 18, 2005
• Macromedia Inc by Adobe Systems Inc ($3.4 billion; close 05 Dec 2005)
• Paramount; acquiring Dreamworks for $3.1 billion
• The Walt Disney Company; acquiring Pixar, announced January 2006, $7 billion
Europe
• Vivendi Universal; Vivendi SA and Seagram (agreed 19 June 2000) ($32 billion, Stock: 100%, Cash: 0%) (Law firm)
• GlaxoWellcome with SmithKline Beecham (2000) (US$76 billion)
• Alcatel and Lucent Technologies, announced April 2006
• Alcatel acuiring the UMTS radio access business of Nortel Networks, announced September 2006
Japan
• Sumitomo Mitsui Banking Corporation; Sumitomo Bank and Sakura Bank
• Square Enix; Square and Enix
• Konica Minolta; Konica and Minolta
• Mitsubishi UFJ Financial Group (merger of Mitsubishi Tokyo Financial and UFJ, $88 billion in combined market capitalization at the time of announcement)
• SoftBank; acquiring Vodafone Japan
Board Of Directors
Wal-Mart is governed by a thirteen-member Board of Directors, which is elected annually by shareholders.
From the executive offices to associates, a look at the people who make Wal-Mart successful every day.
Aida Alveraz
• Former Administrator of the U.S. Small Business Administration and a member of President Clinton’s Cabinet from 1997 to 2001
• The founding Director of the Office of Federal Housing Enterprise Oversight
• The financial regulator of Fannie Mae and Freddie Mac, from 1993 to 1997
• A director for UnionBanCal Corporation
• A member of the diversity advisory board for Deloitte & Touché LLP
• Aida joined the board June of 2006
James W. Breyer
• The Managing Partner of Accel Partners
• Jim joined the Board in 2001
M. Michele Burns
• Executive Vice President and CFO of Marsh and McLennan Companies, Inc.
• A director for Cisco Systems, Inc.
• Michele joined the Board in 2003
James Cash, Jr., Ph.D.
• Retired James E. Robison Professor of Business Administration at Harvard Business School
• Former Senior Associate Dean and Chairman of HBS Publishing
• A director of The Chubb Corporation, General Electric Company, Phase Forward Inc., and Microsoft Corporation
• James joined the board June of 2006
Douglas N. Daft
• Retired Chairman of the Board and CEO of The Coca-Cola Company
• A director of The McGraw Hill Companies, Inc.
• Doug joined Wal-Mart’s Board in January 2005
David D. Glass
• David is the former President and CEO of Wal-Mart Stores, Inc.
• David has been on the Board since 1977
Roland A. Hernandez
• Retired Chairman and CEO of Telemundo Group, Inc.
• A director of Lehman Brothers Holdings, Inc., MGM Mirage, The Ryland Group, Inc., and Vail Resorts, Inc.
• Roland joined the Board in 1998
H. Lee Scott, Jr.
• President and CEO of Wal-Mart Stores, Inc.
• Lee has been a member of the Board since 1999
Jack C. Shewmaker
• The President of J-COM, Inc. and a rancher in Bentonville
• Jack is a retired Vice Chairman of Wal-Mart Stores, Inc.
• Jack has been a member of the Board since 1977
Jim C. Walton
• Chairman of the board and CEO of Arvest Bank Group, Inc.
• Chairman of the board of Community Publishers, Inc.
• Jim joined the Board in September 2005
S. Robson Walton
• Wal-Mart’s Chairman of the Board
• Rob has been a member of the Board since 1978
Christopher J. Williams
• Chairman and CEO of The Williams Capital Group, L.P.
• Chairman and CEO of Williams Capital Management, LLC
• Chris has been a member of the Board since 2004
Linda S. Wolf
• Former chairman of the board and CEO of Leo Burnett Worldwide, Inc., a division of Publicis Groupe S.A.
• A trustee for investment companies advised by the Janus Capital Group, Inc.
• Linda been a member of the Board since 2005
Competition
In the United States, Wal-Mart's chief competitors in low-end general merchandise include Sears Holdings Corporation's Kmart chain and Target. Many smaller regional chains, such as Meijer in the Midwest, are also competitors. Wal-Mart's move into the grocery business has also positioned it against major grocery chains such as HEB, Kroger, Albertsons, Public, Giant Eagle, Safeway, Winn-Dixie, Ahold and many other regional chains and independents. A niche has been carved out of Wal-Mart's dominance in the United States by several retail corporations. By focusing on a small number of low-cost products, dollar store retailers such as Family Dollar and Dollar General have successfully competed head-to-head with Wal-Mart for home consumer sales. In 2004, Wal-Mart responded by testing their own dollar store concept, a subsection of some stores known as "Pennies-n-Cents."
In Canada, Wal-Mart competes with the Hudson Bay Company's low-cost department store Zellers, which is the second largest chain of discount department stores in Canada after Wal-Mart. Wal-Mart also competes with Canadian department stores Sears Canada, Winners, Giant Tiger, and various other regional chains. For grocery in Canada Wal-Mart competes with Safeway, Sobeys, Loblaw Companies which operates under various names such as Loblaws, No Frills, Zehrs Markets, Real Canadian Superstore, Fortinos, and various other Canadian grocery store chains.
Wal-Mart has struggled in other foreign markets. For example, in Germany, Wal-Mart had captured just 2% of German food sales following its entry into the market in 1997 and had remained "a secondary player" compared to competitor Aldi which boasts 19% share of the German market. In July 2006, Wal-Mart announced its withdrawal of operations from Germany because of sustained losses. Wal-Mart's stores are to be sold to German company METRO AG In China, Wal-Mart is "a small fish" as its strategy of "everyday low prices" has not been successful against "Chinese mom-and-pop shops that are used to cutthroat pricing." On 2006-05-22, Wal-Mart withdrew from South Korea market when it agreed to sell all 16 of its South Korean outlets to Shinsegae, a local retailer, for $882 million. Wal-Mart had originally entered the South Korea market in 1998. In the United Kingdom, Wal-Mart's Asda subsidiary is the second largest chain in the UK after Tesco. Specifically, ASDA is a distant second to Tesco in the UK grocery market, and as of 2006 the gap is widening, based on market share figures published by TNS Super panel.
Customer Base
Wal-Mart is a global company with a diverse customer base. Wal-mart customers place low prices and value as the most important reason for shopping at Wal-Mart. Financial results in 2006 have indicated Wal-Mart customers are sensitive to higher utility costs and gas prices.
In the United States, it has been reported that eighty percent of residents of the United States shop at Wal-Mart at least once a year. And each week, 100 million customers visit Wal-Mart's U.S. stores - "more than one-third of the U.S. population."
Frequent Wal-Mart customers show some demographic trends. In the U.S., Wal-Mart customer's average incomes are below the national average. Analysts have estimated that more than one-fifth of Wal-Mart's U.S. customers have no bank accounts, twice the national rate. Polling Data reported by John Zogby suggests there is a correlation between how often consumers shop at Wal-Mart and how conservative they are. In the 2004 US Presidential election 76% of voters who shopped at Wal-Mart once a week voted for George W. Bush while only 23% voted for John Kerry.
By contrast 80% of voters who never shopped there voted for Kerry with 18% voting for Bush. African American and Hispanic voters who shop there are described as "significantly more conservative" than their non Wal-Mart shopping peers. When measured against other similar retailers in the United States, Wal-Mart frequent shoppers were rated the most politically conservative.
Wal-Mart has recently taken actions to expand its U.S. customer base. On September 7, 2006, the Wall Street Journal reported that Wal-Mart was modifying its U.S. stores from a one-size-fits-all merchandising strategy to a custom-fitting merchandise assortment designed to "reflect each of six demographic groups -- African-Americans, the affluent, empty-nesters, Hispanics, suburbanites and rural residents." An example of the company's efforts to broaden its U.S. customer base include a focus on gay and lesbian customers including a December 2005 internal seminar and the August 2006 joining of the corporate advisory council of the National Gay and Lesbian Chamber of Commerce in what is described as a "pragmatic" effort "to broaden its appeal as it tries to expand into new territories, particularly in the more liberal and union-friendly urban and coastal regions". It's noted that Wal-Mart rejected the American Family Association's recommendations by carrying the movie "Broke back Mountain," a love story about two cowboys in Wyoming.
Business Strategies
Cost Leadership Strategy
For the financial year ending January 31, 2003, retailing giant Wal-Mart reported revenues of $244.5 billion, making it the world's largest company. The company topped Fortune's list of the world's largest companies for the second year in succession (Refer Exhibit I). Considering the modest beginning of this company four decades ago, nobody, including the company officials expected Wal-Mart to emerge such a dominant player in the retailing industry (Refer Exhibit II).
The company was able to foster its growth in the 1980s by making heavy investments in information technology (IT) to manage its supply chain and by expanding business in bigger metropolitan cities. In the late 1980s, when Wal-Mart felt that the discount stores business was maturing, it ventured into food retailing by introducing Super centers. In the late 1990s, Wal-Mart launched exclusive groceries/drug stores known as "neighborhood markets" in the US (Refer Exhibit III for the various types of Wal-Mart stores).
Though Wal-Mart had achieved huge success over the decades, the company drew severe criticism from industry analysts for its strategies that aimed at killing competition. At the speed at which Wal-Mart was growing, analysts feared that the company would soon face an anti-trust suit for its monopolistic practices. Christopher Hoyt, president of Scottsdale, an Arizona-based supermarket store, Hoyt & Company, said, "The only thing that could stop Wal-Mart is if the government gets involved, just as it did with Microsoft."...
It's not a sale; it's a great price you can count on every day to make your dollar go further at Wal-Mart." From the very beginning, Walton made efforts to procure products at the lowest prices possible from manufacturers. He always shared these savings with customers by charging them lower prices, thus giving them the maximum value for their money. Wal-Mart's products were usually priced 20% lower than those of its competitors. Walton's pricing strategy led to increased loyalty from price-conscious rural customers. It helped the company to generate more profits due to larger volumes. Explaining his pricing strategy, Walton said, "By cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.
EDLP was extremely attractive to rural customers and emerged as the key contributor to Wal-Mart's growth over the years. The strategy of setting up large discount stores in small towns worked wonders for Wal-Mart. The stores attracted a sizeable customer base. The customers had a wide variety of branded merchandize to choose from, that were priced attractively. Wal-Mart stores were located at convenient places in big warehouse-type buildings and catered to those customers who bought merchandise in bulk.
The strategy discouraged competitors since it was impractical for them to compete with Wal-Mart in small towns by setting up stores of such size, owing to the lack of volumes. As Wal-Mart continued to build on its store count, it ensured that it recruited and retained service-oriented individuals who were prepared to go the extra mile to serve customers better.
This pricing strategy worked extremely well for Wal-Mart. By 1967, Wal-Mart had 24 stores, generating total revenues of $12.6 million. In October 1969, Wal-Mart was formally incorporated, with its headquarters at Bentonville, Arkansas. By the financial year ending January 1970, the company's revenues had crossed $31 million and its store count was 32.....
Targeting Upscale Shoppers
Wal-Mart Stores Inc. has overcome its rural roots and downscale image to attract affluent shoppers, but executives admit that many of those well-heeled consumers come only for cheap groceries and steer clear of the other merchandise.
In its boldest effort yet to target upscale shoppers, the nation's largest retailer is opening a new store this week with an expanded selection of high-end electronics, more fine jewelry, hundreds of types of wine ranging up to $500 a bottle, and even a sushi bar.
Wal-Mart says it won't duplicate this format anywhere else. But if plasma TVs, microbrewery beer and fancy balsamic vinegar sell in Plano, those items could be added to stores in other affluent communities.
Retail experts say nearly half of American families shop at Wal-Mart at least once a week. They say the retail giant has nearly tapped out its middle-class base and must attract consumers who love Target and Costco but not Wal-Mart.
With about 3,700 U.S. stores, Wal-Mart has nearly saturated the market, and analysts say future growth depends on boosting sales by offering a better shopping experience. The company is renovating 1,800 stores as many of its older outlets have started looking a little tired.
Wal-Mart profits keep rising, but not as fast as Wall Street expects, and same-store sales, those at locations open at least a year, rose faster in 2005 at smaller but trendier Target Corp. Wal-Mart stock has slipped about 20 percent in the past two years while Target shares gained about the same percentage. Wal-Mart shares rose 35 cents Tuesday, to $48.11, in a 52-week range of $42.31 to $51.46.
Analysts say that despite low prices, Wal-Mart suffers from a perception that its merchandise is lower quality, which turns off consumers who can afford better.
"The challenge they face is value, and upper-end consumers define value differently than a moderate-income shopper," said Patricia Edwards, who helps manage retail funds for Wentworth, Hauser and Violich investment counselors. "If it was just price, they would drink the office coffee instead of going to Starbucks."
In recent months, some Wal-Marts began selling upscale bed-and-bath items and its new Metro 7 and no boundaries clothing lines all of which are highlighted in the new store.
Wal-Mart listened to focus groups of "selective shoppers" the company's term for affluent customers in designing the store, said regional general manager John Murphy.
"The upscale customer is shopping our store," Murphy said. "Are they interested in everything we have to offer? No. This is a test store. Can we make that leap to where they are interested in other parts of the store?"
Murphy said Wal-Mart hopes to prove it can reach affluent consumers, which should help persuade vendors who are reluctant to sell their goods there. Target has succeeded in selling designer lines.
Don Gher, an analyst with Cold stream Capital Management, said it took Target years to shift upscale and it won't happen quickly at Wal-Mart either. In the meantime, he said the stores must guard against changing too much, which could alienate its core customers.
Gher predicted that Wal-Mart will succeed at selling high-end electronics to upscale consumers, but selling them apparel will be more difficult. "Fashion can be fickle," he said.
The new store, which opens Wednesday, is 217,000 square feet, about 20,000 square feet bigger than the average Super center. It sits across the street from a Super Target, and you can see Costco from the parking lot. The blue and gray Wal-Mart exterior gave way to two-tone brick. Inside, wood floors and wide aisles abound. Shelves are lower to reduce clutter. Even employees look different in khaki pants and navy polo shirts instead of blue smocks.
The new store is just as notable for what's missing. The store won't sell guns. It has far less space devoted to lawn and garden, fishing, camping and automotive products.
"This customer is telling us they're not doing it themselves," said Ryan Lincks, the store's project manager. "They don't change their own oil."
But the store has rows of high-definition televisions, several of them over $2,000, plus pricier bikes and even an expanded yoga section. It features an expanded baby clothes area, a cards and books section with cherry-finish wood racks and arching halogen gallery lights, and daggers at the checkout lines a first for Wal-Mart.
Hungry shoppers will search in vain for McDonald's. An espresso bar with a sandwich menu and free wireless Internet service has replaced it.
Cosmetics and pharmacy aren't relegated to the far end of the store; they're next to the food and wine because female customers in focus groups said they want it that way for convenience and speed. Apparel areas have their own cash registers and more discrete fitting rooms.
Strategies In China
On March 04, 2004, Wal-Mart Stores Inc. (Wal-Mart) held its Board of Directors' annual meeting in China. It was an indication of the importance the company accorded to its Chinese operation. Although Wal-Mart entered China way back in 1996, it had adopted a slow expansion approach in the country.
In December 2004, the Chinese government eased restrictions on foreign retailers to fulfill its
commitments as a World Trade Organization (WTO) Member.
Experts commented that this would help Wal-Mart's expansion efforts in the country (Refer Exhibit I for regulations in retail industry in China pre and post 2004).
Most analysts said that Wal-Mart's expansion in China would create more jobs and improve supply chain efficiencies in the retail sector of the country. However, a few analysts were critical of Wal-Mart's operations in China. They pointed out that Wal-Mart had reduced wages to below sustenance levels not just at its own stores but at supplier's end as well
Since the time it entered the Chinese market, Wal-Mart had offered the Chinese 'Tian Tian Ping Jia'; its global practice of Every Day Low Prices (EDLP). At the same time, it had also successfully localized its offerings to Chinese consumers with significant innovations.
Initially, the Walton’s concentrated on opening stores in small towns and introduced innovative concepts such as self-service. By 1967, Wal-Mart had 24 stores with sales of $12.6 million. Encouraged by the early success of Wal-Mart, Sam Walton expanded Wal-Mart's operations to Oklahoma and Missouri in 1968. In the following year, Wal-Mart was incorporated as a company under the name Wal-Mart Stores Inc. In 1970, Wal-Mart established its first distribution center in Bentonville, Arkansas.
The same year, it was also traded for the first time as a public limited company in over-the-counter stock trading. In 1972, Wal-Mart was listed on the New York Stock Exchange.
Wal-Mart continued to grow in the 1970s, benefiting from its highly automated distribution system, which reduced shipping costs and time, and its computerized inventory system, which speeded up the checkout and reordering of stocks
International Operations
2005 was a busy year for Wal-Mart International. In December alone, the company acquired 545 new stores and gained more than 50,000 new associates in Japan and South America, capping a year of robust growth.
In December, The Seiyu Ltd., a leading Japanese retail chain with 405 stores, announced that shareholders had taken the steps necessary for Wal-Mart to acquire a majority interest in the company. In addition, three Wal-Mart executives, including two women, were elected to the Board of Directors. This will be the first time that two women have taken positions on the Seiyu board.
Also in December, Wal-Mart announced the acquisition of 140 Sonae stores in Brazil, adding a variety of retail formats to the company’s wide range of existing formats in the country. And Wal-Mart Canada confirmed the company would build expanded stores next year, offering fresh food and a wider selection. When complete, the stores will dedicate additional space to enhanced product offerings in food, fashion, electronics and home products.
These developments follow the September announcement that Wal-Mart had purchased a one-third interest in Central American Retail Holding Co. (CARHCO) with 363 supermarkets and other stores in Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica. In March 2006, Wal-Mart increased its interest to 51% and the name CARHCO was changed to Wal-Mart Central America.
For many companies, any one of these announcements would be major news for the year. We are grateful for the loyalty of customers all over the world who shop with us and allow us to grow. Clearly, our savings matter to working families -- in any currency.
And we will continue to deliver savings to customers in 2006 with plans to open as many as 230 new international stores. Currently, Wal-Mart International operates over 2,670 retail units and employs more than 500,000 associates in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea and the United Kingdom.
Private Label Brands
Wal-Mart's private label store brands include: Great Value, Equate, and Sam's Choice. In a 2006 study, The Hartman Group marketing research firm issued a report that found that, "While clearly other results in this study point to the success of other retailers, we are struck by the magnitude of mind-share Wal-Mart appears to hold in shoppers' minds when it comes to awareness of private label brands and retailers."
In late 2005, Wal-Mart designed two experimental stores, one in McKinnee, e Texas and the other in Aurora, Colorado, which feature wind turbines, photovoltaic solar panels, biofuel-capable boilers, water-cooled refrigerators, and xeriscape gardens. The buildings also include many other energy and cost and energy-saving technologies.
In March 2006, Wal-Mart sought to attempt to appeal to a more affluent demographic, with the opening of a new super center in Plano, Texas, and is intended to compete against stores that some view as more upscale and appealing, such as Target. The new store features wooden floors, wider aisles, a sushi bar, a coffee/sandwich shop (with free Wi-Fi Internet access), and higher-end items such as microbrew beer, expensive wines, and high-end electronics. The exterior sports the less-common hunter green background behind the Wal-Mart letters instead of the trademark blue.
In response to the popularity of organic food supermarkets, such as Whole Foods and Wild Oats, Wal-Mart announced plans in May, 2006, to increase the amount of organic food available in its stores. They announced that both conventionally grown and organic versions of certain products would be available, and the price of organic versions would not be more than 10% over the price of conventionally-grown products. Since Wal-Mart is one of the nation's largest grocery retailers, there was some concern expressed that their push to lower prices would not be sustainable for inexpensive organic food. Furthermore, there were additional concerns raised that the increase in demand for organic food would require that more organic produce be imported.
Employee and Labour Relations
Wal-Mart has been criticized for their aggressive policies against labor unions. In North America, the company has largely thwarted unionization through aggressive anti-union tactics such as managerial surveillance and pre-emptive closures of stores or departments who choose to unionize. Wal-Mart's anti-union policy at home is also used in Canada, as well as several other countries. For example, when workers at a Jonquière, Quebec Wal-Mart voted to unionize, Wal-Mart closed the store five months later, citing weak profits. In countries that require unions or the option to join a union, such as Germany and China, Wal-Mart allows them. In August 2006 Wal-Mart announced that it will allow workers at all of its Chinese stores to become members of trade unions. The US retailer said it would work with the state-sanctioned All-China Federation of Trade Unions (ACFTU) on representation for its 28,000 staff.
In August, 2006, the company announced that it would roll out an average pay increase of 6% for all new hires at 1,200 Wal-Mart and Sam's Club locations nationwide, and at the same time would institute pay caps on veteran workers. While Wal-Mart claims the measures are necessary to stay competitive, critics claim the salary caps are primarily an effort to push higher-paid, veteran workers out of the company.
Wal-Mart's United Kingdom subsidiary, ASDA, was voted a top ten UK employer by the UK newspaper Sunday Times Top 100 Best Employers Survey in 2003, 2004 and 2005.
Bibliography
Sam Walton – Made In America (Book)
The Wal-mart Effect - Charles Fisherman (Book)
What I learned from Sam Walton
-How to compete and thrive in a Wal-mart world- Michael Bergdahl (Book)
www.wal-mart.com (An Official Website Of Wal-Mart)
Penguin.com
www.wal-martstores.com
www.wikepedaia.com
Wal-Street Journal (News Paper)
Sam Walton
Samuel Moore Walton
Born: 1918
USA
Died: 1992
Occupation: Chairman, Wal-Mart
Net worth: $15.2 Billions 1985- 1988 Forbes 400
Samuel Moore Walton (March 29, 1918 – April 6, 1992) was the founder of two American retailers, Wal-Mart and Sam's Club. He was the patriarch of the Walton family, the richest family in the world.
Early Life
Sam Walton was born to Thomas Gibson Walton and Nancy Lee Walton near Kingfisher, Oklahoma on March 29, 1918. There, he lived with his parents on their farm until 1923. Sam's father decided farming did not generate enough income on which to raise a family, so he decided to go back to a previous profession of a mortgage man. So he and his family (now with another son, James, born in 1921) moved from Oklahoma to Missouri. There they moved from one small town to another for several years. While attending 8th grade in Shelbina, Sam became the youngest Eagle Scout in the state's history. In adult life, Walton became a recipient of the Distinguished Eagle Scout Award from the Boy Scouts of America.
Walton excelled physically in high school, playing basketball and football as starting quarterback for Columbia's Hickman High School in 1935, when they won the state title. While at Hickman, he also served as vice president of the student body his junior year and as president his senior year. He performed well enough academically to become an honors student.
Growing up during the Great Depression, Walton had numerous chores to help make financial ends meet for his family. He milked the family cow, bottled the surplus and drove it to customers. Afterwards, he would deliver newspapers on a paper route. Upon graduating, he was voted "Most Versatile Boy."
Upon graduating, Walton decided to attend college, hoping to find a better way to help support his family. He attended the University of Missouri - Columbia and majored in economics and was an ROTC officer. During this time, he worked various odd jobs, including waiting tables in exchange for meals. Also during his time in college, Walton joined the estimable Zeta Phi chapter of Beta Theta Pi fraternity. He was also tapped by QEBH, the well-known secret society on campus honoring the top senior men. Upon graduating, he was voted "permanent president" of the class. He was also a member of the professional business fraternity Alpha Kappa Phi.
Walton joined JCPenney as a management trainee in Des Moines, Iowa three days after graduating from college. This position earned him $75 a month. He resigned in 1942 in anticipation of being inducted into the military for service in World War II. In the meantime, he worked at a DuPont munitions plant near Tulsa, Oklahoma. There he met his future wife, Helen Robson, in April 1942.
Robson was the valedictorian of her high school class and a graduate of the University of Oklahoma at Norman with a degree in business. She was the daughter of L.S. Robson, a prosperous banker and rancher. She and Sam were married February 14, 1943.
Soon afterwards, Walton joined the military in the US Army Intelligence Corps, supervising security at aircraft plants and prisoner of war camps.
In this position he served in the continental United States. He eventually reached the rank of captain.
Quotations
It’s a story about entrepreneurship, and risk and hard-work and knowing where you want to go and being willing to do what it takes to get there. And it’s a story about believing in your idea even when may be some other folks don’t and about sticking to your guns.”
"I guess in all my years, what I heard more often than anything was: a town of less than 50,000 populations cannot support a discount store for very long.
"I'd hate to see any descendants of mine fall into the category of what I call "idle rich"...I hope they'll feel compelled to do something productive and useful and challenging...working on cures for cancer, or figuring out ways to bring culture and education to the underprivileged, or becoming missionaries for free enterprise in the Third World. Or maybe - and this is strictly my idea - there's another Walton merchant lurking in the wings somewhere down the line. "
"There is only one boss: the customer, and he (or she) can fire everyone in the company from the chairman and down, simply by spending their money somewhere else"
Running a successful business, tens rules that worked for me”
– Sam Walton
1) Commit to your business
2) Share your profits with all your associates and treat them as partners.
3) Motivate your partners
4) Communicate everything you possibly can to your partners.
5) Appreciate everything your associates do for the business.
6) Celebrate your successes
7) Listen to everyone in your company.
8) Exceed to your customer’s expectations.
9) Control your expenses better than your competition.
10) Swim upstream: Against the common stream of the world.
Company History
The history of Wal-Mart can be traced back to the 1940s Sam Walton began his career in retailing. After being interviewed by recruiters from both Sears Roebuck and JC Penney just before graduating from the University of Missouri in Columbia, Sam accepted a job offer from JC Penney. He began working at a JC Penney store in Des Moines, Iowa on June 3, 1940, making a salary of $75 a month. During his employment there, Sam was able to meet James Cash Penney, the department store's founder, during a visit to the store. He remained at JC Penney for eighteen months.
In 1945, Sam met with Butler Brothers, a regional retailer that owned two franchise operations: a chain of department stores called Federated Stores, and a chain of variety stores called Ben Franklin. Butler Brothers offered Sam a Ben Franklin store in Newport, Arkansas. Unable to come to agreement on his lease renewal and unable to find a new location in Newport, Walton located a variety store in Bentonville, Arkansas which he would open as another Ben Franklin franchise, but called "Walton's Five and Dime."
As a typical businessman, he was always looking for better deals from his suppliers, and he realized that he could obtain higher sales volume by passing on the savings to his customers, instead of pocketing them. And in 1962, the first Wal-Mart store opened in Rogers, Arkansas. By 1967, the company grew to 24 stores across the state of Arkansas, and had reached $12.6 million in sales, and by 1968, the company opened its first stores outside of Arkansas in Sikeston, Missouri and Claremore, Oklahoma.
The First Store
In 1945, after leaving the military, Walton decided he wanted to own a department store but would settle for a variety store. With some help from his father-in-law with a loan of $20,000, plus $5000 he had saved from his time in the Army, Walton purchased a Ben Franklin variety store in Newport, Arkansas. The store was a franchise of the Butler Brothers chain.
It was here that Walton pioneered many concepts that would prove to be crucial to his success. Walton made sure the shelves were consistently stocked with a wide range of goods at low prices. His store also stayed open later than most other stores, especially during the Easter season. He also pioneered the practice of discount merchandizing by buying wholesale goods from the lowest priced supplier. This allowed him to pass on savings to his customers, which drove up his sales volume. Higher volumes allowed him to negotiate even lower purchase prices with the wholesaler on subsequent purchases. Walton's store led in sales and profits in the Butler Brothers' six-state region. One factor that made this store successful was its central location, making it accessible to a wide range of customers. In an attempt to limit the expansion of his main competitor, the Sterling Store, Walton leased a nearby Kroger store and opened it in 1950 as the "Eagle" department store, but it didn't fare as well.
Due to the variety store's enormous success, the landlord, P. K. Holmes, refused to renew the lease when it expired, desiring to pass the store onto his son. The lack of a renewal option, together with the outrageous rent of 5% of sales, was early business lessons to Walton. Despite the inherent unfairness of forcing Walton out, Holmes bought the store's inventory and fixtures for $50,000, which Walton called "a fair price."
Walton's five to Dime (a.k.a Walton's 5 - 10)
Before moving out in 1951, Walton arranged for another location for a new store. Unable to find a new location in Newport, Walton located a variety store in Bentonville, Arkansas which he would open as another Ben Franklin franchise, but called "Walton's Five and Dime." In Bentonville, the Walton’s became involved in numerous civic activities. Walton served as president of the Rotary Club and the Chamber of Commerce. He was also elected to the city council, served on the hospital board, and launched a Little League baseball program in the city in 1954.
Walton went on to found another variety store in Fayetteville, Arkansas, about 20 miles south of Bentonville in 1952. It would share the same name as the store in Bentonville but was not a Ben Franklin franchise. It went on to become as successful as the original Five and Dime. Of this time, Walton said, "I did something I would do for the rest of my run in the retail business without any shame or embarrassment whatsoever: nose around other people's stores searching for good talent."
His search turned up Willard Walker, a manager of a TG&Y variety store in Tulsa, Oklahoma. With Walker he did something else that is commonplace today, but was unusual for the time when he did it. Walton offered Walker a percentage of the store's profit, what today is known as profit sharing. Walton proceeded to visit the store once a week to handle any problems and reviewed the store's profit and loss statement once a month.
About this time, Walton introduced the concept of check-out counters at one location in the store.
Registers throughout the store were moved to one location near the exits. Customers could be rung up for all their purchases and pay for them at one time, instead of paying for several things at several locations. Walton also insisted that his stores be clean, well-lit, and on sharing profits with employees, increasing their loyalty.
The First Wal-Mart
The first true Wal-Mart opened in 1962 in Rogers, Arkansas. Wal-Mart eventually became the world's largest retailer. In 2004, more than 1.5 million people were employed by the Wal-Mart Corporation.
Walton stated, "Each Wal-Mart store should reflect the values of its customers and support the vision they hold for their community." Wal-Mart has outreach programs led by local associates who grew up in the area and understand its needs. Wal-Mart tries to become involved in local communities by holding bake sales for local charities and by offering scholarships to graduating seniors from local high schools.
Incorporation and Growth
The company was incorporated as Wal-Mart Stores, Inc. on October 31, 1969. and by 1970, opened its home office in Bentonville, Arkansas, as well as its first distribution center. There were now 38 stores operating with 1,500 associates and sales of $44.2 million. The company began trading stock at this time as a publicly-held company, and was listed on the New York Stock Exchange by 1972.
Sam Walton’s tiny chain of variety stores in Arkansas and Kansas was already facing competition from regional discount chains. Sam traveled the country to study this radical, new retailing concept and was convinced it was the wave of the future.
Today, Sam’s gamble is a global company with more than 1.8 million associates worldwide and nearly 6,500 stores and wholesale clubs across 15 countries.
But it all started with an understanding of what consumers want from a retailer.
"The secret of successful retailing is to give your customers what they want," Sam wrote in his autobiography. "And really, if you think about it from the point of view of the customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience.
"You love it when you visit a store that somehow exceeds your expectations, and you hate it when a store inconveniences you, or gives you a hard time, or pretends you’re invisible."
While other discounters such as Kmart quickly expanded across the country in the 1960s, Sam was able to raise the funds to build only 15 Wal-Mart stores. Wal-Mart got the boost it needed in 1970, when its stock was offered for the first time on the New York Stock Exchange. The public offering created the capital infusion that grew the company to 276 stores by the end of the decade. By focusing on customer expectations, Wal-Mart was growing rapidly in 11 states.
In the 1980s, Wal-Mart became one of the most successful retailers in America. Sales grew to $26 billion by 1989, compared to $1 billion in 1980. Employment increased tenfold. At the end of the decade there were nearly 1,400 stores. Wal-Mart Stores, Inc. branched out into warehouse clubs with the first SAM´S Club in 1983. The first Super center, featuring a complete grocery department along with the 36 departments of general merchandise, opened in 1988. Wal-Mart had become a textbook example of managing rapid growth without losing sight of a company’s basic values. In Wal-Mart’s case, the basic value was, and is, Customer Service.
Ironically, technology plays an important role in helping Wal-Mart stay customer focused. Wal-Mart invented the practice of sharing sales data via computer with major suppliers, such as Proctor & Gamble. Every time a box of Tide is rung up at the cash register, Wal-Mart’s data warehouse takes note and knows when it is time to alert P&G to replenish a particular store. As a result, Wal-Mart stores rarely run out of stock of popular items.
Wal-Mart’s Legacy:-
1960s
1962 Company founded with opening of first Wal-Mart in Rogers, Ark.
1967 Wal-Mart’s 24 stores total $12.6 million in sales.
1968 Wal-Mart moves outside Arkansas with stores in Sikeston, Mo., and Claremore, Okla.
1969 Company incorporated as Wal-Mart Stores, Inc. on Oct. 31.
1969 Wal-Mart Aviation hires its first full-time pilot, giving co-founders Sam and Bud Walton some help.
1970s
1970 Wal-Mart opens first distribution center and home office in Bentonville, Ark.
1970 Wal-Mart stock first traded over the counter as publicly held company.
1970 38 stores now in operation with sales at $44.2 million. Total number of associates is 1,500.
1971 First 100 percent stock-split in May. Market price: $47.
1971 Wal-Mart is now in five states: Arkansas, Kansas, Louisiana, Missouri and Oklahoma.
1972 Wal-Mart approved and listed on the New York Stock Exchange.
1972 Second 100 percent stock split in March. Market price: $47.50.
1973 Wal-Mart enters Tennessee.
1974 Wal-Mart stores now in Kentucky and Mississippi.
1975 125 stores in operation with sales of $340.3 million and 7,500 associates. Wal-Mart enters ninth state: Texas.
1975 Third 100 percent stocks split in August. Market price: $23.
1975 Inspired by workers he saw on a visit to Korea, Sam Walton introduces the famous "Wal-Mart Cheer" to associates.
1977 Wal-Mart makes first acquisition, 16 Mohr-Value stores in Michigan and Illinois.
1977 Wal-Mart enters its 10th state: Illinois.
1978 Hutcheson Shoe Company acquired; Wal-Mart pharmacy, auto service center and jewelry divisions introduced.
1979 Wal-Mart is the first company to reach $1 billion in sales in such a short period of time: $1.248 billion. Wal-Mart now has 276 stores, 21,000 associate and are in its 11th state: Alabama.
1980s
1980 Fourth 100 percent stocks split in November. Market price: $50.
1980 Largest distribution center to date opens in Palestine, Texas.
1981 Wal-Mart enters Georgia and South Carolina.
1981 Wal-Mart makes its second acquisition with 92 Kuhn’s Big K stores.
1982 Fifth 100 percent stocks split in June. Market price: $49.875.
1982 Wal-Mart enters Florida and Nebraska.
1983 First SAM´S CLUB opened in April in Midwest City, Okla.
1983 People Greeter implemented at all stores.
1983 Sixth 100 percent stocks split in June. Market price: $81.625.
1983 Wal-Mart enters Indiana, Iowa, New Mexico and North Carolina.
1983 For eighth year straight Forbes Magazine ranks Wal-Mart No. 1 among general retailers.
1984 Sam Walton does the hula at high noon on Wall Street, making good on promise to associates after company achieves pre-tax profit of 8 percent in 1983.
1984 David Glass named company president.
1984 Wal-Mart enters Virginia.
1985 Seventh 100 percent stocks split in September. Market price: $49.75.
1985 Wal-Mart has 882 stores with sales of $8.4 billion and 104,000 associates. Company adds stores in Wisconsin and Colorado.
1986 Wal-Mart enters Minnesota.
1987 Eighth 100 percent stocks split in June. Market price: $66.625.
1987 Wal-Mart’s 25th anniversary: 1,198 stores with sales of $15.9 billion and 200,000 associates.
1987 Wal-Mart Satellite Network (largest private satellite communication system in the U.S.) completed, linking all operating units of company and General Office with 2-way voice, data and one-way video communication.
1988 David Glass named chief executive officer of Wal-Mart Stores, Inc.
1988 First Super center opened in Washington, Mo.
1988 Ninety percent of Wal-Mart stores have bar-code scanning capabilities.
1988 16 Wal-Mart distribution centers in operation.
1989 Wal-Mart is now in 26 states with the addition of Michigan, West Virginia and Wyoming.
1990s
1990 McLane Company of Temple, Texas acquired.
1990 Wal-Mart enters California, Nevada, North Dakota, Pennsylvania, South Dakota and Utah.
1990 Wal-Mart Visitor’s Center opens on site of Sam Walton´s original Walton’s 5-10 store.
1990 Ninth 100 percent stock split in June. Market price: $62.50.
1991 Western Merchandisers, Inc. of Amarillo, Texas, acquired.
1991 Wal-Mart enters Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey and New York.
1991 "Sam’s American Choice" brand products introduced.
1991 International market entered for first time with the opening of two units in Mexico City.
1992 President George Bush presents Sam Walton with the Medal of Freedom.
1992 Sam Walton passes away April 5.
1992 S. Robson Walton named chairman of the board April 7.
1992 Wal-Mart has entered 45 states with the addition of Idaho, Montana and Oregon.
1992 Wal-Mart enters Puerto Rico.
1993 Wal-Mart International division formed with Bobby Martin as president.
1993 Tenth 100 percent stock split in February. Market price: $63.625.
1993 Wal-Mart enters Alaska, Hawaii, Rhode Island and Washington.
1993 First billion-dollar sales week in December.
1993 99 Pace Warehouse clubs acquired.
1994 122 Wool co stores in Canada acquired.
1994 A prototype store designed to be as environmentally friendly as possible opens in Lawrence, Kansas.
1994 3 value clubs open in Hong Kong. Canada has 123 stores and Mexico has 96.
1994 Code Adam program implemented, named after Adam Walsh, in all stores.
1995 James Lawrence "Bud" Walton,(right, pictured with brother Sam Walton) co-founder, passes away.
1995 Wal-Mart Stores, Inc. has 1,995 Wal-Mart stores, 239 Supercenters, 433 SAM´S CLUBS and 276 International stores with sales at $93.6 billion and 675,000 associates.
1995 Wal-Mart enters its 50th state - Vermont - and builds three units in Argentina and five in Brazil.
1996 Wal-Mart enters China through a joint-venture agreement.
1996 Wal-Mart has first $100 billion sales year, with sales totaling $118.1 billion for 1997 per AR ´98.
1997 Wal-Mart replaces Woolworth on the Dow Jones Industrial Average.
1997 Wal-Mart introduces OneSource nutrition centers.
1997 Wal-Mart acquires 21 Wertkauf units in Germany.
1998 Wal-Mart introduces Neighborhood Market concept with three stores in Arkansas.
1998 Wal-Mart exceeds $100 million in annual charitable contributions, with donations totaling $102 million.
1998 Wal-Mart enters Korea through a joint venture agreement.
1999 Wal-Mart has 1,140,000 associates, making the company the largest private employer in the world.
1999 Eleventh 100 percent stock split in March. Market price: $89.75.
1999 Wal-Mart acquires the ASDA Group plc. in the United Kingdom (229 stores).
1999 Wal-Mart ranked #1 Corporate Citizen in America in the 1999 Cone/Roper Report, an annual national survey on philanthropy and corporate citizenship.
2000s
2000 Wal-Mart ranked 5th by FORTUNE magazine in its Global Most Admired All-Stars list.
2000 H. Lee Scott named president and CEO of Wal-Mart Stores, Inc.
2000 Wal-Mart ranked #1 Corporate Citizen in America in the 2000 Cone/Roper Report, an annual national survey on philanthropy and corporate citizenship.
2001 Wal-Mart named by FORTUNE Magazine as the 3rd most admired company in America.
2001 Wal-Mart ranked by Hispanic Business Magazine as one of the Top 25 Diversity Recruitment Programs in 2001 for its aggressive program to hire and promote Latinos.
2002 Wal-Mart received the 2002 Ron Brown Award, the highest Presidential Award recognizing outstanding achievement in employee relations and community initiatives.
2002 Wal-Mart ranked #1 on the FORTUNE 500 listing.
2002 Wal-Mart has the biggest single day sales in history: $1.43 billion on the day after Thanksgiving.
2003 Wal-Mart named by FORTUNE magazine as the most admired company in America.
2004 FORTUNE magazine placed Wal-Mart in the top spot on its "Most Admired Companies" list for the second year in a row.
2004 Wal-Mart was presented the "Corporate Patriotism Award" which is presented to a company that exhibits exceptional dedication to raising awareness and support of U.S. service members and their families.
2005 Wal-Mart Stores, Inc. closed out the year with $312.4 billion in sales, while expanding to more than 6,200 facilities around the world, including 3,800 stores in the United States, along with 3,800 international units. Around the globe, we now have a strong presence in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea and the United Kingdom. Wal-Mart employs more than 1.6 million associates worldwide. There are more than 138 million customers who visit our Wal-Mart stores each week all over the world.
2005 Wal-Mart Stores, Inc. leads the corporate drive to assist in U.S. hurricane relief efforts with $18 million in cash donations.
2005 In McKinney, Texas, and Aurora, Colorado, Wal-Mart creates experimental stores that save energy, conserve natural resources, and reduce pollution.
2005 Wal-Mart launches the Acres for America program, which will conserve critical wildlife habitats for future generations
New Ventures Subsidiaries
Wal-Mart's operations are comprised primarily in three retailing subsidiaries: Wal-Mart Stores Division U.S., SAM'S CLUB, and Wal-Mart International. Wal-Mart does business under nine different retail formats: super centers, food and drugs, general merchandise stores, bodegas (small markets), cash and carry stores, membership warehouse clubs, apparel stores, soft discount stores and restaurants.
Wal-Mart Stores Division U.S. is Wal-Mart's largest business subsidiary, accounting for 67.2% of fiscal 2006 net sales. This segment consists of three traditional retail formats: discount stores, super centers, and neighborhood markets, all of which are located in the United States, as well as Wal-Mart's online retailer, walmart.com.
Wal-Mart Stores operates retail department stores selling a range of non-grocery products, though emphasis is now focused on the super centers, which include more grocery items.
Wal-Mart Discount Stores
Wal-Mart Discount Stores are a chain of discount department stores that range in size from 30,000 square ft. (3,000 m²) to 224,000 square ft. (21,000 m²) with an average size of approximately 102,000 sq. feet (9,500 m²). They carry an amount of general merchandise products with a selection of food items. Many Wal-Mart Discount Stores also feature a garden center, a pharmacy, Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, as well as a fast food outlet.
The first Wal-Mart store opened in 1962 in Rogers, Arkansas.
As of August 31, 2006, there were 1,135 Wal-Mart Discount Stores in the United States.
Wal-Mart Super center
Wal-Mart Super center is a chain of hypermarkets that range in size from 99,000 square ft. (9,000 m²) to 261,000 square feet (24,000 m²) with an average size of approximately 187,000 square ft. (17,000 m²).
They carry everything a Wal-Mart Discount Store does in addition to a full-line supermarket (including meat, bakery, deli, frozen foods, dairy, produce and seafood). Many Wal-Mart Supercenters also feature a garden center, a pharmacy, a Tire & Lube Express, optical center, one-hour photo processing lab, portrait studio, and numerous alcove shops such as a SunTrust personal finance center, a cellular phone store, hair and nail salons, video rental by either Movie Gallery or Hollywood Video, a family fun center, a branch of a local bank, and possibly a fast food outlet. Some locations also sell gasoline through Murphy USA.
The first Super center opened in 1988 in Washington, Missouri.
As of August 31, 2006, there were 2,121 Wal-Mart Super centers in the United States.
Wal-Mart Neighborhood Market
Wal-Mart Neighborhood Market is a chain of supermarkets that average about 42,000 square feet (3,900 m²). They offer a variety of products including a full-line of groceries, pharmaceuticals, health and beauty aids, photo developing services, and a limited selection of general merchandise.
The first Neighborhood Market opened in 1998 in Bentonville, Arkansas.
As of August 31, 2006, there were 108 Neighborhood Markets in the United States.
SAM'S CLUB List of Wal-Mart Brands
Wal-Mart Stores, Inc., like most large retail and grocery chains, offers store brands, commonly referred to as "generic brands," which are low-cost alternatives to name brand products. Wal-Mart has numerous store brands, each catering to a different consumer need or desire. Almost all products offered under Wal-Mart brands are private label products, meaning Wal-Mart produces them through subsidized contracts awarded to the lowest bidder. Private label goods can be found in almost every category at Wal-Mart. This is a partial list of Wal-Mart brands.
Sam's Choice
Sam's Choice, originally introduced as Sam's American Choice in 1991, is named after Sam Walton, founder of Wal-Mart. It is perhaps the most common and best known of Wal-Mart's various store brands. Items produced under the Sam's Choice label include cookies, soda, chips, dip, frozen foods, and various other grocery items. Along with another Wal-Mart private label, Great Value, Sam's Choice items can be found in almost every grocery category at Wal-Mart.
Other Brands
Apparel
• Athletic Works is a brand for athletic clothing, such as gym shorts. The brand is also used for sports equipment.
• Faded Glory is a brand for classic clothing and shoes.
• George is a brand of clothing originally launched in the UK, aimed at young people who want to look fashionable on a tight budget. The name George, comes from the name of the original designer George Davies, who started the range in the early-1990s. The brand is also used on baby clothing.
• Kid Connection is a brand used for a variety of products targeted for children, including toys and clothing.
• Life is a brand of men's underwear styled by Jockey. The range includes briefs, boxers, boxer-briefs, thongs, and undershirts.
• No Boundaries, abbreviated on its labels as NoBo, is a line of apparel and home furnishings targeted at teenagers and young college students. The line uses trendy colors and designs on products ranging from hats to lamps to beanbag chairs.
• Puritan is a brand for men's underwear and socks.
• Simply Basic features family-oriented clothing products such as pants and socks. In 2006, Wal-Mart released a number of products under the Simply Basic brand in the Health and Beauty department. These products to some extent correspond to products already under the Equate brand, but are priced lower.
Food
• Great Value includes household items such as glass cleaner and lightbulbs, as well as food items such as peanut butter and snack crackers. The primary difference between Great Value and Sam's Choice is that the former consists of items most consumers have on their shopping lists, making price and quality only factors, while items of the latter can become impulse purchases for some consumers. In recent years, some Sam's Choice items have been changed to the Great Value brand.
Homelines
• HomeTrends products include large and small furniture, small appliances, and home office products.
• Mainstays products include curtains, bedding, some small home furnishings, and various other home fashion products.
Hardlines
• Color Works is the brand used for paint.
• Durabrand is the name used for home electronics such as televisions, CD players, surround sound systems, and even blank recordable media (CD-R and DVD-R). The Durabrand name is also used on some small appliances.
• Equate is a brand used for consumable pharmacy and health and beauty items, such as shaving cream, skin lotion, over-the-counter medications, and pregnancy tests.
• EverStart is the brand for automotive batteries. The brand is also used for battery related accessories, such as jumper cables.
• ilo is another brand used for electronics. It is used for LCD TVs, LCD monitors, and MP3 players.
• Ol' Roy is a brand of dog food. Its namesake comes from Sam Walton's bird dog and has become the number one selling brand of dog food in the United States.
• Ozark Trail is a brand used for outdoor equipment.
• ReliOn describes itself as "Wal-Mart's healthcare brand." It consists chiefly of medical equipment in the following categories: blood pressure monitoring, diabetes monitoring, and cough and cold-related products (such as humidifiers and thermometers).
• Spring Valley is the brand for vitamins and other nutritional supplements.
• Special Kitty is a brand of cat food and litter.
• SuperTech is Wal-Mart's brand of motor oil that is found in the automotive departments. The brand is also offered at those locations that have a Tire and Lube Express. The SuperTech name is also used on other consumable automotive products, including oil filters, transmission fluid, power steering fluid, and brake fluid.
ASDA Private Label
In common with most British supermarkets, most of ASDA's own brand products are simply sold under the ASDA brand. Some of these also carry the "Great Value" branding as used by Wal-Mart (but this is being faded out). Asda also sells brands such as Durabrand and George which are designed to complement the ASDA brand, others include:
• Smart Price is ASDA's no-frills line with its simple red, white and black packaging. The brand originated as 'Farm Stores' and the products are considered to be basic. Originally the brand was used on food, but can now be seen on many different items. Rival brands includes, Tesco's Value and Sainsbury's Basic.
• Extra Special is ASDA's premium food brand. Rival brands include Tesco's Finest and Sainsbury's Taste the Difference .
• Pacific is an old electrical brand; which is being replaced by Durabrand and Onn.
• Onn is ASDA's mid-level electrical brand, aimed at women, with its colourful packaging and stylised design.
• Baier is a brand currently used on one product, which is a LCD television.
Wal-Mart operates SAM'S CLUB, a chain of warehouse clubs that sells groceries and general merchandise, often in large quantities or volume, to customers who pay an annual fee for the privilege of shopping there. Some locations also sell gasoline through Murphy US. The first SAM’S Club opened in 1983 in Midwest City, Oklahoma.
According to Wal-Mart's 2006 Annual Report, Sam's Club accounted for approximately 12.7% of fiscal 2006 sales. Competitors of Wal-Mart's Sam's Club division are Costco, and the smaller BJ's Wholesale Club chain operating mainly in the eastern United States.
As of August 31, 2006, there were over 567 Sam's Clubs in the United States.
The operations of Wal-Mart International comprise 2,700 stores in 14 countries outside the United States. According to Wal-Mart's 2006 Annual Report, International accounted for approximately 20.1% of fiscal 2006 sales. Wholly-owned operations are located in Argentina, Brazil, Canada, South Korea, Puerto Rico and the United Kingdom.
Wal-Mart has operated in Canada since their acquisition of the Wool co division of Woolworth Canada, Inc. Today, they operated 278 locations employing 70,000 Canadians, with a local home office in Mississauga, Ontario.
Fiscal 2006 for Wal-Mart's United Kingdom subsidiary, ASDA, was 42.7% of the International segment sales. In contrast to Wal-Mart's U.S. operations ASDA was originally and remains primarily a grocery chain, but it has a stronger focus on non-foods than most UK supermarket chains. At fiscal 2006, there were 236 ASDA stores, 10 George stores, 5 ASDA Living and 43 ASDA small stores.
In addition to its wholly-owned international operations, Wal-Mart has joint ventures in China and several majority owned subsidiaries. Wal-Mart's majority owned subsidiary in Mexico is Walmex. In Japan, Wal-Mart owns 55.3% of The Seiyu Co., Ltd.Additionally, Wal-Mart owns 51% of the Central American Retail Holding Company (CARHCO) formed from more than 360 supermarkets and other store formats, operating in 5 Central American Countries: Guatemala, El Salvador, Honduras, Nicaragua and Costa Rica.
In 2004, Wal-Mart bought the Bompreço supermarket chain, comprised by 116 stores. Bompreço is the major supermarket chain in Northeastern Brazil. In late 2005, Wal-Mart took control of the Brazilian operations of Sonae Distribution Group through its new subsidiary, called WMS Supermercados do Brazil, thus acquiring control of the National, Big and Mercadorama supermarket chains, the leaders in Rio Grande do Sol and Paraná states. None of those operations were rebranded. As of August 2006, Wal-Mart operates 71 Bompreço stores, 27 Hyper-Bompreço stores, 15 Balaio stores and 3 Hyper-Magazines (all were originally part of Bompreço). It also operates 67 National stores, 24 Mercadorama stores, 15 Big stores through WMS. It also runs 19 Wal-Mart Super centers, 13 Sam's Club stores and 2 To-do Dia (small stores) stores. With the acquisition of Bompreço and Sonae, Wal-Mart is currently the third biggest supermarket chain in Brazil, only behind Carrefour and Pão de Açúcar.
In July 2006, Wal-Mart announced its withdrawal of operations from Germany because of sustained losses. Their stores will be sold to the German company METRO AG. he sale is subject to regulatory approval.
Corporate Affairs
Wal-Mart's business model is based on selling a wide variety of general merchandise and marketing, "always low prices." The company refers to its employees as, "associates." All Wal-Mart stores in the United States and Canada also have designated "people greeters," whose general role is to welcome shoppers at the store entrance, as well as playing a role in loss prevention and security.
Unlike many other retailers, Wal-Mart does not charge a slotting fee to suppliers for their products to appear on the store. Alternatively, they focus on selling more popular products, and often pressure store managers to drop unpopular products in favor of more popular ones, as well as manufacturers to supply more popular products.
Governance Major Mergers & Acquisitions 1990-1999
Acquirer and target, announcement date, deal size, share and cash payment.
United States
• AOL Time Warner; America Online and Time Warner (US$166 billion excluding debt, Stock: 100%, Cash: 0%) (PBS coverage, CNN)
• ExxonMobil; Exxon and Mobil Oil (Dec. 1998, $77 billion, Stock: 100%, Cash: 0%) (Suns Online, CNN)
• Citigroup; Citicorp and Travelers Group (1999, $73 billion, Stock: 100%, Cash: 0%) (Cornell, Citigroup FAQ)
• MCI Communications; with WorldCom; created MCI WorldCom (1997) ($44 billion, Stock: 100%, Cash: 0%) (Department of Justice, MCI.com)
• ChevronTexaco; Chevron and Texaco ($35 billion)
• Walt Disney Company; with Capital Cities/ABC (1995) ($19 billion)
• Monsanto; with Pharmacia & Upjohn
• Pfizer; with Warner-Lambert
• JDS Uniphase; with SDL
• Union Pacific Railroad; with Southern Pacific Railroad
• Verizon; Bell Atlantic, GTE, and AirTouch Cellular.
Europe
• DaimlerChrysler; Daimler Benz and Chrysler (Announced May 1998 - Final 1998) ($35 billion)
• Vodafone; with Mannesmann (completed February 2000) ($183 billion, 100% stock)
• Total; with Petrofina, and Elf Aquitaine
• BP; with Amoco (completed August 1998) ($110bn)
• Novartis; Ciba-Geigy and Sandoz in 1996
Japan
• Mitsubishi Tokyo Financial Group
• Mizuho Financial Group; Dai-Ichi Kangyo Bank, Fuji Bank and Industrial Bank of Japan (1999)
Major Mergers & Acquisitions 2000-2006
United States
• Sprint; with Nextel
• Verizon with MCI
• Kmart; with Sears, Roebuck (Announced 17 November 2004) ($11 billion, 55% stock, 45% cash)(Investorguide)
• Hewlett-Packard; with Compaq (Announced Sept. 2001 - Final May 2002) ($25 billion)
• NBC Universal; NBC and Vivendi Universal Entertainment
• J.P. Morgan Chase, Bank One (announced January 14, 2004) ($59 billion, Stock: 100%, Cash: 0%) (SNL)
• Procter & Gamble buy Gillette (2005, $54 billion)
• Bank of America; with FleetBoston Financial (2003, $47 billion)
• Cingular and AT&T Wireless (Announced February - Final 16 Oct 2004) ($41 billion)
• Symantec and VERITAS (Announced December 16, 2004) their plans for a merger deal valued at $13.5 billion. This is the largest merger in the software industry to date.
• SBC and AT&T Completed November 18, 2005
• Macromedia Inc by Adobe Systems Inc ($3.4 billion; close 05 Dec 2005)
• Paramount; acquiring Dreamworks for $3.1 billion
• The Walt Disney Company; acquiring Pixar, announced January 2006, $7 billion
Europe
• Vivendi Universal; Vivendi SA and Seagram (agreed 19 June 2000) ($32 billion, Stock: 100%, Cash: 0%) (Law firm)
• GlaxoWellcome with SmithKline Beecham (2000) (US$76 billion)
• Alcatel and Lucent Technologies, announced April 2006
• Alcatel acuiring the UMTS radio access business of Nortel Networks, announced September 2006
Japan
• Sumitomo Mitsui Banking Corporation; Sumitomo Bank and Sakura Bank
• Square Enix; Square and Enix
• Konica Minolta; Konica and Minolta
• Mitsubishi UFJ Financial Group (merger of Mitsubishi Tokyo Financial and UFJ, $88 billion in combined market capitalization at the time of announcement)
• SoftBank; acquiring Vodafone Japan
Board Of Directors
Wal-Mart is governed by a thirteen-member Board of Directors, which is elected annually by shareholders.
From the executive offices to associates, a look at the people who make Wal-Mart successful every day.
Aida Alveraz
• Former Administrator of the U.S. Small Business Administration and a member of President Clinton’s Cabinet from 1997 to 2001
• The founding Director of the Office of Federal Housing Enterprise Oversight
• The financial regulator of Fannie Mae and Freddie Mac, from 1993 to 1997
• A director for UnionBanCal Corporation
• A member of the diversity advisory board for Deloitte & Touché LLP
• Aida joined the board June of 2006
James W. Breyer
• The Managing Partner of Accel Partners
• Jim joined the Board in 2001
M. Michele Burns
• Executive Vice President and CFO of Marsh and McLennan Companies, Inc.
• A director for Cisco Systems, Inc.
• Michele joined the Board in 2003
James Cash, Jr., Ph.D.
• Retired James E. Robison Professor of Business Administration at Harvard Business School
• Former Senior Associate Dean and Chairman of HBS Publishing
• A director of The Chubb Corporation, General Electric Company, Phase Forward Inc., and Microsoft Corporation
• James joined the board June of 2006
Douglas N. Daft
• Retired Chairman of the Board and CEO of The Coca-Cola Company
• A director of The McGraw Hill Companies, Inc.
• Doug joined Wal-Mart’s Board in January 2005
David D. Glass
• David is the former President and CEO of Wal-Mart Stores, Inc.
• David has been on the Board since 1977
Roland A. Hernandez
• Retired Chairman and CEO of Telemundo Group, Inc.
• A director of Lehman Brothers Holdings, Inc., MGM Mirage, The Ryland Group, Inc., and Vail Resorts, Inc.
• Roland joined the Board in 1998
H. Lee Scott, Jr.
• President and CEO of Wal-Mart Stores, Inc.
• Lee has been a member of the Board since 1999
Jack C. Shewmaker
• The President of J-COM, Inc. and a rancher in Bentonville
• Jack is a retired Vice Chairman of Wal-Mart Stores, Inc.
• Jack has been a member of the Board since 1977
Jim C. Walton
• Chairman of the board and CEO of Arvest Bank Group, Inc.
• Chairman of the board of Community Publishers, Inc.
• Jim joined the Board in September 2005
S. Robson Walton
• Wal-Mart’s Chairman of the Board
• Rob has been a member of the Board since 1978
Christopher J. Williams
• Chairman and CEO of The Williams Capital Group, L.P.
• Chairman and CEO of Williams Capital Management, LLC
• Chris has been a member of the Board since 2004
Linda S. Wolf
• Former chairman of the board and CEO of Leo Burnett Worldwide, Inc., a division of Publicis Groupe S.A.
• A trustee for investment companies advised by the Janus Capital Group, Inc.
• Linda been a member of the Board since 2005
Competition
In the United States, Wal-Mart's chief competitors in low-end general merchandise include Sears Holdings Corporation's Kmart chain and Target. Many smaller regional chains, such as Meijer in the Midwest, are also competitors. Wal-Mart's move into the grocery business has also positioned it against major grocery chains such as HEB, Kroger, Albertsons, Public, Giant Eagle, Safeway, Winn-Dixie, Ahold and many other regional chains and independents. A niche has been carved out of Wal-Mart's dominance in the United States by several retail corporations. By focusing on a small number of low-cost products, dollar store retailers such as Family Dollar and Dollar General have successfully competed head-to-head with Wal-Mart for home consumer sales. In 2004, Wal-Mart responded by testing their own dollar store concept, a subsection of some stores known as "Pennies-n-Cents."
In Canada, Wal-Mart competes with the Hudson Bay Company's low-cost department store Zellers, which is the second largest chain of discount department stores in Canada after Wal-Mart. Wal-Mart also competes with Canadian department stores Sears Canada, Winners, Giant Tiger, and various other regional chains. For grocery in Canada Wal-Mart competes with Safeway, Sobeys, Loblaw Companies which operates under various names such as Loblaws, No Frills, Zehrs Markets, Real Canadian Superstore, Fortinos, and various other Canadian grocery store chains.
Wal-Mart has struggled in other foreign markets. For example, in Germany, Wal-Mart had captured just 2% of German food sales following its entry into the market in 1997 and had remained "a secondary player" compared to competitor Aldi which boasts 19% share of the German market. In July 2006, Wal-Mart announced its withdrawal of operations from Germany because of sustained losses. Wal-Mart's stores are to be sold to German company METRO AG In China, Wal-Mart is "a small fish" as its strategy of "everyday low prices" has not been successful against "Chinese mom-and-pop shops that are used to cutthroat pricing." On 2006-05-22, Wal-Mart withdrew from South Korea market when it agreed to sell all 16 of its South Korean outlets to Shinsegae, a local retailer, for $882 million. Wal-Mart had originally entered the South Korea market in 1998. In the United Kingdom, Wal-Mart's Asda subsidiary is the second largest chain in the UK after Tesco. Specifically, ASDA is a distant second to Tesco in the UK grocery market, and as of 2006 the gap is widening, based on market share figures published by TNS Super panel.
Customer Base
Wal-Mart is a global company with a diverse customer base. Wal-mart customers place low prices and value as the most important reason for shopping at Wal-Mart. Financial results in 2006 have indicated Wal-Mart customers are sensitive to higher utility costs and gas prices.
In the United States, it has been reported that eighty percent of residents of the United States shop at Wal-Mart at least once a year. And each week, 100 million customers visit Wal-Mart's U.S. stores - "more than one-third of the U.S. population."
Frequent Wal-Mart customers show some demographic trends. In the U.S., Wal-Mart customer's average incomes are below the national average. Analysts have estimated that more than one-fifth of Wal-Mart's U.S. customers have no bank accounts, twice the national rate. Polling Data reported by John Zogby suggests there is a correlation between how often consumers shop at Wal-Mart and how conservative they are. In the 2004 US Presidential election 76% of voters who shopped at Wal-Mart once a week voted for George W. Bush while only 23% voted for John Kerry.
By contrast 80% of voters who never shopped there voted for Kerry with 18% voting for Bush. African American and Hispanic voters who shop there are described as "significantly more conservative" than their non Wal-Mart shopping peers. When measured against other similar retailers in the United States, Wal-Mart frequent shoppers were rated the most politically conservative.
Wal-Mart has recently taken actions to expand its U.S. customer base. On September 7, 2006, the Wall Street Journal reported that Wal-Mart was modifying its U.S. stores from a one-size-fits-all merchandising strategy to a custom-fitting merchandise assortment designed to "reflect each of six demographic groups -- African-Americans, the affluent, empty-nesters, Hispanics, suburbanites and rural residents." An example of the company's efforts to broaden its U.S. customer base include a focus on gay and lesbian customers including a December 2005 internal seminar and the August 2006 joining of the corporate advisory council of the National Gay and Lesbian Chamber of Commerce in what is described as a "pragmatic" effort "to broaden its appeal as it tries to expand into new territories, particularly in the more liberal and union-friendly urban and coastal regions". It's noted that Wal-Mart rejected the American Family Association's recommendations by carrying the movie "Broke back Mountain," a love story about two cowboys in Wyoming.
Business Strategies
Cost Leadership Strategy
For the financial year ending January 31, 2003, retailing giant Wal-Mart reported revenues of $244.5 billion, making it the world's largest company. The company topped Fortune's list of the world's largest companies for the second year in succession (Refer Exhibit I). Considering the modest beginning of this company four decades ago, nobody, including the company officials expected Wal-Mart to emerge such a dominant player in the retailing industry (Refer Exhibit II).
The company was able to foster its growth in the 1980s by making heavy investments in information technology (IT) to manage its supply chain and by expanding business in bigger metropolitan cities. In the late 1980s, when Wal-Mart felt that the discount stores business was maturing, it ventured into food retailing by introducing Super centers. In the late 1990s, Wal-Mart launched exclusive groceries/drug stores known as "neighborhood markets" in the US (Refer Exhibit III for the various types of Wal-Mart stores).
Though Wal-Mart had achieved huge success over the decades, the company drew severe criticism from industry analysts for its strategies that aimed at killing competition. At the speed at which Wal-Mart was growing, analysts feared that the company would soon face an anti-trust suit for its monopolistic practices. Christopher Hoyt, president of Scottsdale, an Arizona-based supermarket store, Hoyt & Company, said, "The only thing that could stop Wal-Mart is if the government gets involved, just as it did with Microsoft."...
It's not a sale; it's a great price you can count on every day to make your dollar go further at Wal-Mart." From the very beginning, Walton made efforts to procure products at the lowest prices possible from manufacturers. He always shared these savings with customers by charging them lower prices, thus giving them the maximum value for their money. Wal-Mart's products were usually priced 20% lower than those of its competitors. Walton's pricing strategy led to increased loyalty from price-conscious rural customers. It helped the company to generate more profits due to larger volumes. Explaining his pricing strategy, Walton said, "By cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.
EDLP was extremely attractive to rural customers and emerged as the key contributor to Wal-Mart's growth over the years. The strategy of setting up large discount stores in small towns worked wonders for Wal-Mart. The stores attracted a sizeable customer base. The customers had a wide variety of branded merchandize to choose from, that were priced attractively. Wal-Mart stores were located at convenient places in big warehouse-type buildings and catered to those customers who bought merchandise in bulk.
The strategy discouraged competitors since it was impractical for them to compete with Wal-Mart in small towns by setting up stores of such size, owing to the lack of volumes. As Wal-Mart continued to build on its store count, it ensured that it recruited and retained service-oriented individuals who were prepared to go the extra mile to serve customers better.
This pricing strategy worked extremely well for Wal-Mart. By 1967, Wal-Mart had 24 stores, generating total revenues of $12.6 million. In October 1969, Wal-Mart was formally incorporated, with its headquarters at Bentonville, Arkansas. By the financial year ending January 1970, the company's revenues had crossed $31 million and its store count was 32.....
Targeting Upscale Shoppers
Wal-Mart Stores Inc. has overcome its rural roots and downscale image to attract affluent shoppers, but executives admit that many of those well-heeled consumers come only for cheap groceries and steer clear of the other merchandise.
In its boldest effort yet to target upscale shoppers, the nation's largest retailer is opening a new store this week with an expanded selection of high-end electronics, more fine jewelry, hundreds of types of wine ranging up to $500 a bottle, and even a sushi bar.
Wal-Mart says it won't duplicate this format anywhere else. But if plasma TVs, microbrewery beer and fancy balsamic vinegar sell in Plano, those items could be added to stores in other affluent communities.
Retail experts say nearly half of American families shop at Wal-Mart at least once a week. They say the retail giant has nearly tapped out its middle-class base and must attract consumers who love Target and Costco but not Wal-Mart.
With about 3,700 U.S. stores, Wal-Mart has nearly saturated the market, and analysts say future growth depends on boosting sales by offering a better shopping experience. The company is renovating 1,800 stores as many of its older outlets have started looking a little tired.
Wal-Mart profits keep rising, but not as fast as Wall Street expects, and same-store sales, those at locations open at least a year, rose faster in 2005 at smaller but trendier Target Corp. Wal-Mart stock has slipped about 20 percent in the past two years while Target shares gained about the same percentage. Wal-Mart shares rose 35 cents Tuesday, to $48.11, in a 52-week range of $42.31 to $51.46.
Analysts say that despite low prices, Wal-Mart suffers from a perception that its merchandise is lower quality, which turns off consumers who can afford better.
"The challenge they face is value, and upper-end consumers define value differently than a moderate-income shopper," said Patricia Edwards, who helps manage retail funds for Wentworth, Hauser and Violich investment counselors. "If it was just price, they would drink the office coffee instead of going to Starbucks."
In recent months, some Wal-Marts began selling upscale bed-and-bath items and its new Metro 7 and no boundaries clothing lines all of which are highlighted in the new store.
Wal-Mart listened to focus groups of "selective shoppers" the company's term for affluent customers in designing the store, said regional general manager John Murphy.
"The upscale customer is shopping our store," Murphy said. "Are they interested in everything we have to offer? No. This is a test store. Can we make that leap to where they are interested in other parts of the store?"
Murphy said Wal-Mart hopes to prove it can reach affluent consumers, which should help persuade vendors who are reluctant to sell their goods there. Target has succeeded in selling designer lines.
Don Gher, an analyst with Cold stream Capital Management, said it took Target years to shift upscale and it won't happen quickly at Wal-Mart either. In the meantime, he said the stores must guard against changing too much, which could alienate its core customers.
Gher predicted that Wal-Mart will succeed at selling high-end electronics to upscale consumers, but selling them apparel will be more difficult. "Fashion can be fickle," he said.
The new store, which opens Wednesday, is 217,000 square feet, about 20,000 square feet bigger than the average Super center. It sits across the street from a Super Target, and you can see Costco from the parking lot. The blue and gray Wal-Mart exterior gave way to two-tone brick. Inside, wood floors and wide aisles abound. Shelves are lower to reduce clutter. Even employees look different in khaki pants and navy polo shirts instead of blue smocks.
The new store is just as notable for what's missing. The store won't sell guns. It has far less space devoted to lawn and garden, fishing, camping and automotive products.
"This customer is telling us they're not doing it themselves," said Ryan Lincks, the store's project manager. "They don't change their own oil."
But the store has rows of high-definition televisions, several of them over $2,000, plus pricier bikes and even an expanded yoga section. It features an expanded baby clothes area, a cards and books section with cherry-finish wood racks and arching halogen gallery lights, and daggers at the checkout lines a first for Wal-Mart.
Hungry shoppers will search in vain for McDonald's. An espresso bar with a sandwich menu and free wireless Internet service has replaced it.
Cosmetics and pharmacy aren't relegated to the far end of the store; they're next to the food and wine because female customers in focus groups said they want it that way for convenience and speed. Apparel areas have their own cash registers and more discrete fitting rooms.
Strategies In China
On March 04, 2004, Wal-Mart Stores Inc. (Wal-Mart) held its Board of Directors' annual meeting in China. It was an indication of the importance the company accorded to its Chinese operation. Although Wal-Mart entered China way back in 1996, it had adopted a slow expansion approach in the country.
In December 2004, the Chinese government eased restrictions on foreign retailers to fulfill its
commitments as a World Trade Organization (WTO) Member.
Experts commented that this would help Wal-Mart's expansion efforts in the country (Refer Exhibit I for regulations in retail industry in China pre and post 2004).
Most analysts said that Wal-Mart's expansion in China would create more jobs and improve supply chain efficiencies in the retail sector of the country. However, a few analysts were critical of Wal-Mart's operations in China. They pointed out that Wal-Mart had reduced wages to below sustenance levels not just at its own stores but at supplier's end as well
Since the time it entered the Chinese market, Wal-Mart had offered the Chinese 'Tian Tian Ping Jia'; its global practice of Every Day Low Prices (EDLP). At the same time, it had also successfully localized its offerings to Chinese consumers with significant innovations.
Initially, the Walton’s concentrated on opening stores in small towns and introduced innovative concepts such as self-service. By 1967, Wal-Mart had 24 stores with sales of $12.6 million. Encouraged by the early success of Wal-Mart, Sam Walton expanded Wal-Mart's operations to Oklahoma and Missouri in 1968. In the following year, Wal-Mart was incorporated as a company under the name Wal-Mart Stores Inc. In 1970, Wal-Mart established its first distribution center in Bentonville, Arkansas.
The same year, it was also traded for the first time as a public limited company in over-the-counter stock trading. In 1972, Wal-Mart was listed on the New York Stock Exchange.
Wal-Mart continued to grow in the 1970s, benefiting from its highly automated distribution system, which reduced shipping costs and time, and its computerized inventory system, which speeded up the checkout and reordering of stocks
International Operations
2005 was a busy year for Wal-Mart International. In December alone, the company acquired 545 new stores and gained more than 50,000 new associates in Japan and South America, capping a year of robust growth.
In December, The Seiyu Ltd., a leading Japanese retail chain with 405 stores, announced that shareholders had taken the steps necessary for Wal-Mart to acquire a majority interest in the company. In addition, three Wal-Mart executives, including two women, were elected to the Board of Directors. This will be the first time that two women have taken positions on the Seiyu board.
Also in December, Wal-Mart announced the acquisition of 140 Sonae stores in Brazil, adding a variety of retail formats to the company’s wide range of existing formats in the country. And Wal-Mart Canada confirmed the company would build expanded stores next year, offering fresh food and a wider selection. When complete, the stores will dedicate additional space to enhanced product offerings in food, fashion, electronics and home products.
These developments follow the September announcement that Wal-Mart had purchased a one-third interest in Central American Retail Holding Co. (CARHCO) with 363 supermarkets and other stores in Guatemala, Honduras, El Salvador, Nicaragua and Costa Rica. In March 2006, Wal-Mart increased its interest to 51% and the name CARHCO was changed to Wal-Mart Central America.
For many companies, any one of these announcements would be major news for the year. We are grateful for the loyalty of customers all over the world who shop with us and allow us to grow. Clearly, our savings matter to working families -- in any currency.
And we will continue to deliver savings to customers in 2006 with plans to open as many as 230 new international stores. Currently, Wal-Mart International operates over 2,670 retail units and employs more than 500,000 associates in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Germany, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico, South Korea and the United Kingdom.
Private Label Brands
Wal-Mart's private label store brands include: Great Value, Equate, and Sam's Choice. In a 2006 study, The Hartman Group marketing research firm issued a report that found that, "While clearly other results in this study point to the success of other retailers, we are struck by the magnitude of mind-share Wal-Mart appears to hold in shoppers' minds when it comes to awareness of private label brands and retailers."
In late 2005, Wal-Mart designed two experimental stores, one in McKinnee, e Texas and the other in Aurora, Colorado, which feature wind turbines, photovoltaic solar panels, biofuel-capable boilers, water-cooled refrigerators, and xeriscape gardens. The buildings also include many other energy and cost and energy-saving technologies.
In March 2006, Wal-Mart sought to attempt to appeal to a more affluent demographic, with the opening of a new super center in Plano, Texas, and is intended to compete against stores that some view as more upscale and appealing, such as Target. The new store features wooden floors, wider aisles, a sushi bar, a coffee/sandwich shop (with free Wi-Fi Internet access), and higher-end items such as microbrew beer, expensive wines, and high-end electronics. The exterior sports the less-common hunter green background behind the Wal-Mart letters instead of the trademark blue.
In response to the popularity of organic food supermarkets, such as Whole Foods and Wild Oats, Wal-Mart announced plans in May, 2006, to increase the amount of organic food available in its stores. They announced that both conventionally grown and organic versions of certain products would be available, and the price of organic versions would not be more than 10% over the price of conventionally-grown products. Since Wal-Mart is one of the nation's largest grocery retailers, there was some concern expressed that their push to lower prices would not be sustainable for inexpensive organic food. Furthermore, there were additional concerns raised that the increase in demand for organic food would require that more organic produce be imported.
Employee and Labour Relations
Wal-Mart has been criticized for their aggressive policies against labor unions. In North America, the company has largely thwarted unionization through aggressive anti-union tactics such as managerial surveillance and pre-emptive closures of stores or departments who choose to unionize. Wal-Mart's anti-union policy at home is also used in Canada, as well as several other countries. For example, when workers at a Jonquière, Quebec Wal-Mart voted to unionize, Wal-Mart closed the store five months later, citing weak profits. In countries that require unions or the option to join a union, such as Germany and China, Wal-Mart allows them. In August 2006 Wal-Mart announced that it will allow workers at all of its Chinese stores to become members of trade unions. The US retailer said it would work with the state-sanctioned All-China Federation of Trade Unions (ACFTU) on representation for its 28,000 staff.
In August, 2006, the company announced that it would roll out an average pay increase of 6% for all new hires at 1,200 Wal-Mart and Sam's Club locations nationwide, and at the same time would institute pay caps on veteran workers. While Wal-Mart claims the measures are necessary to stay competitive, critics claim the salary caps are primarily an effort to push higher-paid, veteran workers out of the company.
Wal-Mart's United Kingdom subsidiary, ASDA, was voted a top ten UK employer by the UK newspaper Sunday Times Top 100 Best Employers Survey in 2003, 2004 and 2005.
Bibliography
Sam Walton – Made In America (Book)
The Wal-mart Effect - Charles Fisherman (Book)
What I learned from Sam Walton
-How to compete and thrive in a Wal-mart world- Michael Bergdahl (Book)
www.wal-mart.com (An Official Website Of Wal-Mart)
Penguin.com
www.wal-martstores.com
www.wikepedaia.com
Wal-Street Journal (News Paper)
