Walmart Case Study

1. IN Germany

2. About Walmart

3. History
 Founed: 1962 in Arkansas, USA
 Founder: Sam Walton
 Headquarter: Bentonville, Arkansas, USA
 Industry: Retail
 Area served: worldwide
 Revenue: US $404.16 Billion
 Employees: 2,100,000

4. What is
Walmart?
• WALMART IS A MULTINATIONAL RETAIL CORPORATION THAT RUNS A LARGE
NUMBER OF STORES GLOBALLY.
• IF WALMART WERE A COUNTRY, IT WOULD BE THE 26TH LARGEST ECONOMY IN THE
WORLD.
• IF WAL-MART WAS AN ARMY, IT WOULD HAVE THE SECOND LARGEST MILITARY IN
THE WORLD, BEHIND CHINA.
• ONE OF EVERY FOUR DOLLARS AMERICANS SPEND ON GROCERIES IS SPENT AT
WALMART.
• CHINA'S EXPORTS TO WALMART ACCOUNTED FOR 11 PERCENT OF THE GROWTH OF
THE TOTAL U.S. TRADE DEFICIT WITH CHINA BETWEEN 2001 AND 2006.

5. Rise of Walmart

6. WALMART COMPETITORS WITH OTHER
RETAIL STORES
Target is the main competitor of Walmart , ranked #36 in the
Fortune 500.
Costco Wholesale
The largest wholesale club operator in the US
Carrefour SA :
The second-largest retailer (behind Wal-Mart)
(3rd quarter sale in 2013)

7. LOW TO HIGH
 The major reason that Wal-Mart has had
such a abnormal rise is that it offers its
products for consistently lower prices than
its competitors. Its motto is "Always Low
Prices. Always." And it has lived up to that
promise.

8. PROFIT
 Wal-Mart has opened more than 3,029 "supercentres'" since 2012
alone.
 The CEO of Wal-Mart makes more in a single hour than a full-time
Wal-Mart associate makes in an entire year.
 The company owns a fleet of more than 6,500 tractors and 55,000
trailers

9. Walmart’s strength
 Wal-Mart is the largest employer and ranked #1 in
fortune 500 .
 Wal-Mart had global net sales of $375 billion, over 2.2
million employees, and 60,000 suppliers located in more
than 55 countries.

10. PRICES
 The average U.S. family now spends more than $4000 a
year at Wal-Mart
 EVEN Two Weeks After Launch, Walmart Drops Price of
the iPhone 5c to $45

11. What made it famous..?

12. A Simple But Powerful Idea:
Minimize the “Bad I” - Inventory
Walton figured out that most of the costs gets
added after the product leaves the factory and
moves through the supply chain:
Mfg.  Wholesaler  Retailer
• 20% - 30% of retail price spent on keeping
inventory in 3 warehouses
• Walton eliminated the wholesaler
• He instituted JIT inventory practices using “real-
time” flow of information from a store’s sales
floors to the supplier’s plants that
dictated:

13. All That Data Is Mined!
- Doing it since 1990
Analysis of its 90 million shopping cart transactions per week
- To see how the purchases of the different items are related.
- Company can then better identify items to market together.
Obvious examples:
- Charcoal and tongs go alongside the barbecue grills
- Tiny baggies next to the pretzel boxes so Mom can pack snacks
for the kids
A not so obvious example!
- Customers who buy Barbie dolls (it sells one every 20 seconds)
have a 60% likelihood of buying one of three types of candy bars

14.  Helps to time merchandise deliveries -
Its shelves stay stocked, but NOT overstocked
“Predict what is going to happen,
instead of waiting for it to happen”
 Example : Analysis of purchases during Hurricane
Charley indicated products to be stocked in Florida’s
Wal-Mart ahead of Hurricane Frances that hit a few
weeks later
“Not just the usual flash-lights, but, for example,
strawberry Pop-Tarts whose sales rates was 7 times the
normal rate. The Pre-Hurricane top-selling item was beer!
”
Value of the Data Warehouse
- Wal-Mart’s Buyers

15. IT is Critical for Wal-Mart’s
“Everyday Low Price” Strategy
Invested in most of the waves of retail IT systems earlier and
more aggressively than its competitors
- Set industry standards in IT
1969 : Used computers to track store inventory
1980 : Adopted bar codes
1985 : Electronic Data Interchange (EDI) with suppliers
Late 80’s : Wireless scanning guns
2003 : Mandated its 100 largest suppliers to place RFID (Radio Frequency
Identification) tags on the boxes and pallets shipped to Wal-mart
stores by January 2005
Focus of IT Investments:
Applications that directly enhanced its core value proposition – EDLP
– and increase sales through micromerchandising

16. Walton recognized early on that timely information is the key to
maximizing sales and minimizing costs. The better your information
about what’s selling and what’s not, store by store, the better you
can avoid the twin perils of retailing
 too little inventory or too much
IT: Only Area Where Wal-Mart Outspent
Competitors
 Very Secretive About Its Information Systems
 Custom-designed systems built by employees kept competitors
off the trail
 Hardware and software vendors bound by non-disclosure
agreements
 In 2001, Wal-Mart summarily announced that it would no longer
share sales data with market research vendors like Information
Resources Inc and AC Nielsen, since the reports of the vendors
are available to all retailers who subscribe to that service.

17. Sharing Sales Data With Suppliers
- Key to Low-Price Leadership
 Treat Suppliers as Partners, NOT Adversaries
 Implemented a Collaborative Planning, Forecasting and
Replenishment (CPFR) Program
 JIT Inventory Program Reduced Carrying Costs
- for Both Wal-Mart AND Its Suppliers
 Wal-Mart’s Cost of Goods : 5% - 10% Less Than Competitors
“CPFR has blurred the lines between Wal-Mart and the Supplier:
You’re both working to the same end: To sell as much product as
possible without either of us having too much inventory”.

18. Locations of Wal-Mart Stores

19. Locations of Wal-Mart Stores

20. Locations of Wal-Mart Stores

21. Locations of Wal-Mart Stores

22. Locations of Wal-Mart Stores

23. Locations of Wal-Mart Stores

24. Locations of Wal-Mart Stores

25. Locations of Wal-Mart Stores

26. Locations of Wal-Mart Stores

27. Walmart Globally…

28. Scenario in Germany

29. Walmart in Germany
 Wal-Mart’s entry into German Market was
encouraged by the facts:-
 Germany, the third largest national economy
 Germany's importance as a basis for
expansion in Europe.
 Wal-Mart entered Germany in December 1997
 It acquired the 21-hypermarket stores of a food
store chain company Wertkauf in 1997.

30. •In 1998, Wal-Mart acquired Interspar's
(an international retail chain) 74
hypermarket stores to raise the total
number of Wal-Mart stores in Germany
to 95.
•With the acquisition of Interspar's
stores, Wal-Mart became the fourth
largest hypermarket retailer in
Germany.
CONTINUED…..

31. Getting into Problem..!!

32. The Death of
Wal-Mart
 Poor locations
 American-style management practices in the workplace
 Poor attention to target market detail
 Cultural differences
 Lack of Experience with acquisitions and mergers
 Merchandising mistakes
 Refused to acknowledge the differences in customer
behavior in Germany
 Legal barriers

33. Solution

34. “Think local, act global”…

35. 1. Give the brand a
foothold in German
market.
2. Cultural Differences

36. 3. Decentralized
operations
4. Management must
keep a healthy relation
with the working staff

37. ..An Overview..

38. STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
• Diversity in products &
services
• Convenient prices &
locations
• Strong market presence
• Strong financial
performance
• Good supply chain• Global Expansion:
new geographic areas
• Increasing online
sales
• Strategic alliances
• Acquiring rival firms
HarmfulHelpful
•Brand image-weak
reputation
•Low global presence
•Behind rivals in e-
commerce
• Intense
Competition
• Cultural barriers
• Current economy
• Slow market
growth