1

WAL-MART RETAIL MANAGEMENT

A PROJECT REPORT

Submitted in partial fulfillment of the requirement for the

award of the degree in

MASTER OF BUISNESS ADMINISTRATION

BY

Mahtab Ali Roll No: 520945075

UNDER THE GUIDANCE OF

Amit Sinha
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TABLE CONTENT-

Contents Page No.

Acknowledgements

Introduction to Retail Management 7

Introduction of Wal Mart 15

Walmart cooperation gallery 18

Walmart strategy 21

 Walmart Point of Sale 24

 Supply Chain Management of Walmart 26

 Retail supply chain network of the future 28

 Inventory Optimazation 33

Merchandising of Walmart 35

 Walmart marketing strategies 38

 Walmart online shopping 40

 Walmart partnerships with Indian manufactures 42

 Inventory Management Review of walmart 44

Walmart is ordinary fewer case more frequently 46

 Walmart Representation without taxation 47

 Loyalty program of Walmart 50

 Walmart is Cost Leadership 63

 Walmart Global Sourcing 68

 Walmart Stores 71

 Investors of Walmart 72

 Recent Financial News 73

 Suppliers 77

 Health &Wellness Programs of Walmart 79

 Walmart Customers 80
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 Departments of Walmart 82

CERTIFICATE
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This is to certify that the project entitled “WAL-MART RETAIL

MANAGEMENT” has been developed by Mahtab Ali under my
supervision in partial fulfillment for the award of degree in Master of
Business Administration (MBA) for the session 20010-11.

Submitted By:

Mahtab Ali

MBA IV-Semester

SMU

Acknowledgement
It gives me immense pleasure in submitting this project on “WAL-MART RETAIL
MANAGEMENT”. I have developed this project in fulfillment of “MBA Course”.

I am highly thankful to Mr. Rajeev Dixit for their encouragement, guidance and
valuable suggestions, which I incorporated in my project.
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I am thankful to all staff members of Department of Computer Science of SIKKIMM

MANIPAL UNIVERSITY.

I am also thankful, to my parents, friends for the constant follow up and boost provided
by them through their encouragement during the course of carrying out the project. I am
grateful to the faculty members of MbB from whom I got the constant encouragement
and support throughout all years of M.B.A. Program.

(MAHTAB ALI)

M.B.A. IVth Semester

Project Report on

“RETAIL MANAGEMENT OF
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WAL-MART”

Introduction of Retail Management System-

A Retail Strategy can be defined as a specific plan or framework of action

that direct a retailer to achieve its goals.

A Strategic Retail Planning is the total planning of company's overall

resources for the achievement of objective.

It describes how retailers select target market segment, determine the

appropriate retail format, and build a sustainable competitive advantage
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Benefit or Features of Strategic Retail Planning-

1. Strategic Retail Planning Provides thorough analysis of the requirements

for doing business for different types of retailers
2. Strategic Retail Planning Outlines retailer goals
3. Strategic Retail Planning determine how to differentiate itself from
competitors
4. Strategic Retail Planning Allows an analysis of the legal, economic, and
competitive environment
5. Strategic Retail Planning Encourages anticipation and avoidance of
crises

Planning and forcasting in Retailing-

Retail Planning and Forecasting allows retailer to create, modify and track
their financial, assortment and promotional plans for each channel and
communicate changes to marketplace.

Planning and Forecasting includes everything a retailer need to predict and

respond to changes:

Demand Forecasting—Keep it simple and accurate. Predict demand at

any combination of product and location nodes.

Multi-Channel Planning—Integrate planning for your web, catalog and

store channels to reduce redundancy and increase efficiency.
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Financial Planning—Plan top-down or bottom-up with an easy to use, but

powerful solution that manages multiple versions of plans across
categories, channels and time periods.

Assortment Planning— Planning of assortments by customer. See

buyers' changes immediately so you can reach your financial goals with the
right mix of products.

Promotion Planning—Coordinate all aspects of your promotions from one

solution. Create, forecast and track events and feed anticipated lift to
replenishment to avoid stock-outs on featured products.

Visual Merchandise Planning-Visual Merchandising is largely associated

with creating the look of the store. Visual Merchandising involve the total
merchandise or service presentation, the over all business image, and also
for the building and placement of design elements

Store Operations Planning - Integration of Front end and back end

operation is important efficient store operation and profit.

Key Reasons for slow growth in Retail in India

Reasons for slow growth in retail:

1. Retail not being recognized as an industry in India

- Hampering the availability of finance to existing and new players
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- Hence affecting growth and expansion plans

2. High costs of real estate

- Lease or rent of property is major area of expenditure
- This eats into the profitability of a project

Lack of adequate infrastructure

- Poor roads, lack of cold chain infrastructure
- Existing supermarkets and food retailers have to invest substantially in
building cold chain infrastructure

4. Multiple and complex taxation system

- Sales tax rates vary from State to State
- Organized players have to face multiple point control and tax system
- Tax evasion by small stores
- Hence it becomes expensive to transfer goods from one store to another

5. Foreign direct investment

- FDI in pure retailing is not permitted
- One of the prime reason for slow growth of retail in India
- Global retailer can enter only by way of a franchise with Indian partner or
through technological alliances

Key Reasons for Retail Change in India

There are some fundamental factors that has brought the major change in
retailing industry today:
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Changing Income Profiles: Steady economic growth fuelled the increase

in disposable income in India.

Changes in Consumption patterns: Occupational changes and

expansion of media have caused a significant change in the way the
consumer lives and spends his money.The changes in income brought
about changes in the aspirations and the spending patterns of the
consumers.

The emergence of a young Earning India : Nearly 70% of the Indian

population is below the age of 34. taking advantages of employment
opportunity in the booming service sector these young Indians are
redefining service and consumption patterns

Emerging Rural Market: The Rural market is beginning to emerge as an

important consumption area, it has increased the demand.

Introduction of the private label : Retailers now decide on products and

brands they want to stock. Some have even developed their own in store
brands/products that cater to the needs of target customers.

Technology : Increasing use of technology, use of bar code provides

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wealth of information to retailer. Consumer profile, products purchased,

price ranges, promotional offers, customer cards, internet etc.

Roles of Retailer or Utility provided by Retailer-

From an economic viewpoint, the role of a retailer is to provide value or

utility to the customer. This comes 5 different perspectives:

Form: First is utility regarding the form of a product that is acceptable to the
customer. The retailer does not supply raw material, but rather offers
finished goods and services in a form that the customers want.

Task: The retailer accomplishes the task of storing the goods, and provide
an assortment of products in various categories

Time: He cerates Time utility by keeping the store open when the
consumers prefer to shop by providing preferable shopping hours.

Place: Retailer ensures to create place utility being available at a

convenient location.

Ownership: Eventually, when the product is sold, ownership utility is

created

Important Functions of Retailer-

From the customer point of view, the retailer serves him by providing the
goods that he needs in the required assortment, at the required place and
time.
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1. Arranging Assortment: manufacturers usually make one or a variety of

products and would like to sell their entire inventory to few buyers to reduce
costs. Final consumers, in contrast prefer a large variety of goods and
services to choose from and usually buy them in small units.

2. Breaking Bulk: to reduce transportation costs, manufacturer and

wholesalers typically ship large cartons of the products, which are then
tailored by the retailers into smaller quantities to meet individual
consumption needs

3. Holding stock: Retailers maintain an inventory that allows for instant

availability of the product to the consumers. It helps to keep prices stable
and enables the manufacture to regulate production.

4. Promotional support: small manufacturers can use retailers to provide

assistance with transport, storage, advertising, and pre- payment of
merchandise.

The Retailer also serves the manufacturers by

1. Accomplishing the function of distributing the goods to the end users

2. Creating and Managing a channel of information from manufacturer to

the consumer

3. Act as a final link in the distribution chain

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4. Recommending products where brand loyalty is not strong or for

unbranded products.

Introduction of Retail Management-

Introduction of Retailing

The word ‘retail is derived from the French word ‘retailer’, meaning cut a
piece off or ‘to break bulk’. In simple terms, it implies a first-hand transition
with the customer.

“Retailing is the sale of goods and services to the ultimate consumer for
personal, family or household use.”

According to Kotler:
“Retailing includes all the activities involved in selling goods or services to
the final consumers for personal, non business use”
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INTRODUCTION OF WAL MART

About Wal Mart-

Walmart serves customers and members more than 200 million times per
week at more than 8,692 retail units under 55 different banners in 15
countries. With fiscal year 2010 sales of $405 billion, Walmart employs 2.1
million associates worldwide.

A leader in sustainability, corporate philanthropy and employment

opportunity, Walmart ranked first among retailers in Fortune Magazine’s
2010 Most Admired Companies survey.

Wal-Mart History --
Walmart was founded in 1962, with the opening of the first Walmart
discount store in Rogers, Ark. The company incorporated as Wal-Mart
Stores, Inc., on Oct. 31, 1969. The company's shares began trading on
OTC markets in 1970 and were listed on the New York Stock Exchange two
years later.
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The company grew to 276 stores in 11 states by the end of the decade. In
1983, the company opened its first Sam’s Club membership warehouse and
in 1988 opened the first supercenter -- now the company’s dominant format
-- featuring a complete grocery in addition to general merchandise. Walmart
became an international company in 1991 when it opened its first Sam's
Club near Mexico City. Learn more about our history.

Walmart Purpose -
Saving people money to help them live better was the goal that Sam Walton
envisioned when he opened the doors to the first Walmart more than 40
years ago. Today, this mission is more important than ever to our
customers and members around the world. We work hard every day in all
our markets to deliver on this promise. We operate with the same level of
integrity and respect that Mr. Sam put in place. It is because of these values
and culture that Walmart continues to make a difference in the lives of our
customers, members and associates. Learn more about our purpose.

Ed. Note: Wal-Mart Stores, Inc. (NYSE: WMT) is the legal name of the
corporation. The name "Walmart," expressed as one word and without
punctuation, is a trademark of the company and is used analogously to
describe the company and its stores. Use the legal name when it is
necessary to identify the legal entity, such as when reporting financial
results, SEC filings, litigation or governance matters.

Wal-Mart in India--
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‘In most countries, supermarket chains create and manage well-oiled

supply chains to offer consumers lower prices and dampen inflationary
trends. Inflation in India is touching decade-highs. But then it’s a fallacy that
in India it is always about low price’. Companies like Tata, Birla and
Reliance have all attempted to enter food-and-grocery retailing in India with
mixed success. Will Wal-Mart’s supply chain work in India?

Wal-Mart’s first store in India -

In December 2006, Wal-Mart Inc. believed that by the year 2015, 35% of
India’s retail sales could be from chain stores . This was a radical increase
from the prevailing 2%. In May 2009, Wal-Mart was ready to open its first
store in India. The reason for Wal-Mart’s entry in India was clear – The
Indian middle class . The world’s biggest retailer had been silently working
on its strategy for India for around two years. Mom-and-pop stores and
traditional distribution networks dominated the $375 billion Indian retail
market. Wal-Mart’s first outlet was set to launch in the city of Amritsar,
Punjab in North India. The first store air-conditioned and built over 50,000
sq. ft. was on the outskirts of the city, Amritsar. The store employed 200
locals and was likely create 500 indirect jobs. In the first few weeks itself,
the company had managed to sign on close to 35,000 members. However,
the debut outlet was not to carry the familiar Wal-Mart brand. Did this mean
Indian consumers could not benefit from Wal-Mart’s everyday low prices?

How Wal-Mart Works

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Wal-Mart is more than just the world's largest retailer. It is an economic

force, a cultural phenomenon and a lightning rod for controversy. It all
started with a simple philosophy from founder Sam Walton: Offer shoppers
lower prices than they get anywhere else. That basic strategy has shaped
Wal-Mart's culture and driven the company's growth.

Corporation Image Gallery

Now that Wal-Mart is so huge, it has unprecedented power to shape labor

markets globally and change the way entire industries operate. In this
article, you will learn the key reasons that Wal-Mart has been able to keep
its prices low -- cutting-edge technology, a frugal corporate culture and a
push to make suppliers sell merchandise at cheaper and cheaper prices.
We'll also take a look at the scope of Wal-Mart's impact on the economy
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and the controversies surrounding Wal-Mart, as

well as the future of the company.

First, let's start with a little history. Sam Walton

opened his first five-and-dime in 1950. His vision
was to keep prices as low as possible. Even if his
margins weren't as fat as competitors, he figured Image courtesy
he could make up for that in volume. He was right. Amazon
Sam Walton
In the early 1960s, Walton opened his first Wal-
described Wal-Mart's
Mart in Rogers, Arkansas. The company
beginnings in his
continued to grow, going public in 1970 and
autobiography.
adding more stores every year. In 1990, Wal-Mart
surpassed key rival Kmart in size. Two years later, it surpassed Sears.

Walton continued to drive an old pickup truck and share budget-hotel rooms
with colleagues on business trips, even after Wal-Mart made him very rich.
He demanded that his employees also keep expenses to a bare minimum --
a mentality that is still at the heart of Wal-Mart culture more than a decade
after Walton's death. The company has continued to grow rapidly after his
death in 1992 and now operates four retail divisions -- Wal-Mart
Supercenters, Wal-Mart discount stores, Neighborhood Market stores and
Sam's Club warehouses.
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Image © 2006 Walmartfacts.com

A Wal-Mart Neighborhood Market

To get a sense of just how big Wal-Mart is today, consider these facts:

• Wal-Mart employs 1.6 million people. To give you an idea of just how
many people that is, Idaho, the 39th most populous state, is home to
1.4 million people.
• Wal-Mart had sales of $312.43 billion in its most recent fiscal year,
which ended January 31, 2006. By comparison, the second-largest
retailer in the country, Home Depot, posted sales of $81.5 billion.
• Wal-Mart has 6,200 retail outlets. In contrast, Home Depot has 2,040.

What made Wal-Mart so big, powerful and successful? Let's look at some
of its strategies, including its sophisticated use of technology, its corporate
culture of watching every expense, and above all else, its mission to keep
prices low.

Wal-Mart Strategy--
Let's start with technology. Wal-Mart pushed the retail industry to establish
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the universal bar code, which forced manufacturers to adopt common

labeling. The bar allowed retailers to generate all kinds of information --
creating a subtle shift of power from manufacturers to retailers. Wal-Mart
became especially good at exploiting the information behind the bar code
and is considered a pioneer in developing sophisticated technology to track
its inventory and cut the fat out of its supply chain.

Recently, Wal-Mart became the first major retailer to demand

manufacturers use radio frequency identification technology (RFID).
The technology uses radio frequencies to transmit data stored on small tags
attached to pallets or individual products. RFID tags hold significantly more
data than bar codes. During the first eight months of 2005, Wal-Mart
experienced a 16 percent drop in out-of-stock
merchandise at its RFID-equipped stores,
according to a University of Arkansas study (as
reported in Fortune Small Business magazine).

The frugal culture, established by Walton, also

plays into Wal-Mart's success. The company has
been criticized for the relatively meager wages
and health care plans that it offers to rank-and-file
employees. It has also been accused of
demanding that hourly workers put in overtime
Image © 2006
without pay. Store managers often work more
Walmartfacts.com
than 70 hours per week. They are are expected to
Wal-Mart's
pinch pennies wherever they can, even on things
headquarters in
like the heating and cooling of the stores. In the
Bentonville, AR
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winter, stores are kept at 70 degrees Fahrenheit, and in the summer, they
stay at 73.

This culture is also present at the company's headquarters. Wal-Mart is

headquartered in Bentonville, Arkansas, instead of an expensive city like
New York. The building is drab and dull. You won't catch executives in
limousines and you won't see them dragging into work at 9:30 a.m.
Executives fly coach and often share hotel rooms with colleagues. They
work long hours, typically arriving at work before 6:30 a.m. and working
half-days on Saturdays.

The central goal of Wal-Mart is to keep retail prices low -- and the company
has been very successful at this. Experts estimate that Wal-Mart saves
shoppers at least 15 percent on a typical cart of groceries. Everything --
including the technology and corporate culture -- feeds into that ultimate
goal of delivering the lowest prices possible. Wal-Mart also pushes its
suppliers, some say relentlessly, to cut prices. In "The Wal-Mart Effect,"
author Charles Fishman discusses how the price of a four-pack of GE light
bulbs decreased from $2.19 to 88 cents during a five-year period.

In a 2003 Los Angeles Times article (part of a Pulitzer Prize-winning series

about Wal-Mart, tells of a Wal-Mart buyer named Celia Clancy, who was in
charge of clothing and demanded that each supplier either lower the price
or increase the quality every year on every item. This philosophy is known
as "plus one."
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Point of sale--

Point of sale (POS) or checkout is the location where a transaction

occurs. A "checkout" refers to a POS terminal or more generally to the
hardware and software used for checkouts, the equivalent of an electronic
cash register.

A POS terminal manages the selling process by a salesperson accessible

interface. The same system allows the creation and printing of the receipt

Web based POS (post 2000s)

Web based POS software can be run on any computer with an Internet
connection and supported browser, without additional software. The POS
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software is hosted on secure servers in multiple data centers with real-time

backups

The retailing industry is one of the predominant users of POS terminals.

A Retail Point of Sales system typically includes a computer, monitor, cash

drawer, receipt printer, customer display and a barcode scanner. It can also
include a weight scale, integrated credit card processing system, a
signature capture device and a customer pin pad device. More and more
POS monitors use touch-screen technology for ease of use and a computer
is built in to the monitor chassis for what is referred to as an all-in-one unit.
All-in-one POS units save valuable counter space for the retailer. The POS
system software can typically handle a myriad of customer based functions
such as sales, returns, exchanges, layaways, gift cards, gift registries,
customer loyalty programs, BOGO (buy one get one), quantity discounts
and much more. POS software can also allow for functions such as pre-
planned promotional sales, manufacturer coupon validation, foreign
currency handling and multiple payment types.

The POS unit handles the sales to the consumer but it is only one part of
the entire POS system used in a retail business. “Back-office” computers
typically handle other functions of the POS system such as inventory
control, purchasing, receiving and transferring of products to and from other
locations. Other typical functions of a POS system are to store sales
information for reporting purposes, sales trends and cost/price/profit
analysis. Customer information may be stored for receivables management,
marketing purposes and specific buying analysis. Many retail POS systems
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include an accounting interface that “feeds” sales and cost of goods

information to independent accounting applications.

Supply chain management of Wal-Mart-

Supply Chain Management (SCM) is the management of a network of

interconnected businesses involved in the ultimate provision of product and
service packages required by end customers (Harland, 1996).[1] Supply
Chain Management spans all movement and storage of raw materials,
work-in-process inventory, and finished goods from point of origin to point of
consumption (supply chain).

Another definition is provided by the APICS Dictionary when it defines SCM

as the "design, planning, execution, control, and monitoring of supply chain
activities with the objective of creating net value, building a competitive
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infrastructure, leveraging worldwide logistics, synchronizing supply with

demand and measuring performance globally."
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The case examines the supply chain management practices at Wal-Mart,

the leading retailer in the world. The case explains in detail how Wal-Mart
managed various components of the supply chain including procurement,
distribution, logistics and inventory management. It covers how the use of
innovative IT tools has helped the company in improving the efficiency of
supply chain. The case concludes with a discussion on the benefits reaped
by Wal-Mart due to its efficient and effective supply chain management
system.

The Retail Supply Chain Network of the Future-

Multi-Channel World Means Retail Supply Chains Must Rapidly Evolve
to Optimize Inventories and Support Complex Logistics Flows

In the first part of this series, we looked at how high-performance retailers

are unifying operations and collaborating internally across functional silos to
speed trend-right merchandise to market. (See Accelerating Integrated
Supply Chain Performance.).
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In part 2 of this four-part series, we expand on that concept by examining

the Supply Chain Network of the future.

The life of a Supply Chain professional was so much easier a generation

ago when everyone shopped at the mall. You knew where you had to go to
get what you wanted, and there was only one place to go to get it.

Al Gore hadn’t invented the Internet and Wal-Mart wasn’t WAL-MART, so

your competition was generally well-known and predictable. No surprise
then that the supply chains of the past were constructed to service the
predictability of one-channel operations.

But…the shopper of the 21st Century demands more. If her local retailer
doesn’t have the item she wants, she'll drive to a nearby competitor, or call
one of the dozens of catalog retailers. Even easier, she’ll go online while
sitting by the fire in the comfort of her home. If it doesn’t fit, no worries. The
online retailer offers free shipping and no hassle returns.

In response, retailers became “multi-channel,” creating work-arounds to

handle the new demands. While this was workable initially, problems
ensued as volumes grew.

Retailers began to feel like George Jetson on his automatic dog walker
screaming, “Stop this crazy thing!” With networks out of balance, shipments
were often late, orders were missed, customer complaints grew and costs
steadily rose.

Lead With Inventory Strategy

Retailers face a daunting challenge in retooling their supply chains to
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successfully service complex, multi-channel operations featuring

increasingly localized store assortments.

Tackling this challenge requires a bit of “backwards thinking.” Retailers must

first determine the optimal inventory strategy for each item in their
assortment and only then configure network infrastructure to support these
complex flows.

If not well orchestrated, independent actions taken by people in different

departments can combine to create a “perfect storm” - where inventory
spirals out of control, choking the network and impacting service and bottom
line performance. In many cases, it’s very hard to see the incremental
inventory creep until it’s too late to react - forcing business unit managers to
ask, "How did we get this bad?"

The supply chain of the future is designed on the foundation of a

comprehensive, enterprise-wide inventory strategy in which representatives
of key functional areas come together to critically evaluate all factors
impacting inventory performance. In developing this inventory strategy, a
number of questions are answered related to how the intersection of
demand variability and volume relate to optimal flow path. For example, in
the diagram below, companies will probably want a different inventory
strategy for an item in the upper left quadrant as opposed to those in the
lower right quadrant.
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The answers to these questions will require a great deal of interaction

across departments. Issues related to source of supply, transportation
pipeline, product packaging, service strategy and other factors are
evaluated by a team including Merchandising, Product Development and
Sourcing, Distribution and Transportation, Store Operations and IT. Using
the diagram above as the basis for discussion, for example, an inventory
strategy might be for items in the upper left to be replenished as full cases
directly from the vendor due to the high volumes and consistent demand,
while a better option for an item in the lower right may be an assortment
picked specifically for that store based on sales.
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The resulting inventory strategy paves the way for the tactical development
and execution of an inventory optimization plan incorporating a number of
key elements, as shown in the chart below.

6 Areas Impacting Executing Inventory Optimization-

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Implementing the Right Supply Chain Network

As recently as the early 90’s, most retail DCs received bulk merchandise
from vendors and did all the store break-down and processing in cavernous,
labor-filled facilities that delayed store shipment and added significant cost.

Those days are over, with retailers driving vendors to ship “floor ready”
merchandise that is predominantly cross-docked through more mechanized
and efficient retail DCs. But even as the retailer’s DC has become more
efficient, it has stayed focused predominantly on optimizing the single flow
from vendor through DC to store.

The next horizon in supply chain network design will require retailers to
rethink infrastructure that is capable of supporting a combination of flows
required to best support a comprehensive, enterprise-wide inventory
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strategy. These flows include:

• DC Bypass – Vendor shipment directly to customer (store or

individual)
• Cross Dock - Dock-to-dock handling of pre-allocated “floor ready”
receipts
• DC Hold & Flow – Initial store set is cross docked with replenishment
held at DC
• Replenishment – All merchandise is received and held in the DC for
pull-based store replenishment.

These are just the most obvious flows. Including the decisions a retailer
must make about in-house vs. outsourced operations for each channel, you
begin to see the complexity of designing a supply chain network in today’s
environment.

To illustrate the impact of re-evaluating inventory strategy, KSA's work with

one retailer resulted in replacing a traditional DC process with DC Bypass
for a critical category of merchandise. This retailer cut its source-to-store
time by more than 50% by implementing a new flow allowing merchandise
to travel from a vendor’s overseas plant, directly to the retailer’s store. This
pipeline reduction drove significant inventory savings while allowing the
merchant additional time to ensure that product being designed and
manufactured represents the best fit with current customer demands.

Merchandising of Wal-Mart-
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Merchandising is the methods, practices, and operations used to promote

and sustain certain categories of commercial activity.[1] In the broadest
sense, merchandising is any practice which contributes to the sale of
products to a retail consumer. At a retail in-store level, merchandising refers
to the variety of products available for sale and the display of those
products in such a way that it stimulates interest and entices customers to
make a purchase.

Promotional merchandising

In retail commerce, visual display merchandising means maximizing

merchandise sales using product design, selection, packaging, pricing, and
display that stimulates consumers to spend more. This includes disciplines
in pricing and discounting, physical presentation of products and displays,
and the decisions about which products should be presented to which
customers at what time.This annual cycle of merchandising differs between
countries and even within them, particularly relating to cultural customs like
holidays, and seasonal issues like climate and local sporting and recreation.
In the United States for example, the basic retail cycle begins in early
January with merchandise for Valentine's Day, which is not until mid-
February. Following this, Easter is the major holiday, while springtime
clothing and garden-related merchandise is already arriving at stores, often
as early as mid-winter (toward the beginning of this section, St. Patrick's
Day merchandise, including green items and products pertaining to Irish
culture, is also promoted). Mothers Day and Fathers Day are next, with
graduation gifts (typically small consumer electronics like digital cameras)
often being marketed as "dads and grads" in June (though most college
semesters end in May; the grads portion usually refers to high school
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graduation, which ends one to two weeks after Father's Day in many U.S.
states). Summer merchandise is next, including patriotic-themed products
with the American flag, out by Memorial Day in preparation for
Independence Day (with Flag Day in between). By July, back-to-school is
on the shelves and autumn merchandise is already arriving, and at some
arts and crafts stores, Christmas decorations. (Often, a Christmas in July
celebration is held around this time.) The back-to-school market is
promoted heavily in August, a time when there are no holidays to promote.
By September, particularly after Labor Day, the summer merchandise is on
final closeout and overstock of school supplies is marked-down some as
well, and Halloween (and often even more of the Christmas) merchandise is
appearing. As the Halloween decorations and costumes dwindle in October,
Christmas is already being pushed on consumers, and by the day after
Halloween retailers are going full-force with advertising, even though the
"official" season doesn't start until the day after Thanksgiving. Christmas
clearance sales now begin even before Christmas at most retailers, though
they usually begin on the day after Christmas and continue on at least until
New Year's Day but sometimes as far out as February.

Merchandising also varies within retail chains, where stores in places like
Buffalo might carry snowblowers, while stores in Florida and southern
California might instead carry beach clothing and barbecue grills all year.
Coastal-area stores might carry water skiing equipment, while ones near
mountain ranges would likely have snow skiing and snowboarding gear if
there are ski areas nearby.

Does keeping your finger on the pulse of a global operation sound enticing?
Do you like to keep up on the newest products and trends? Do you want a
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career in which you make recommendations that may have a ripple effect
across the globe? Then Walmart’s merchandising department is the place
to make it happen.

Our customers expect the best value for their money, and our
merchandising group delivers. Walmart buyers attend merchandise shows,
research markets and shop the competition to find out what customers want
and need from their local Walmart stores, while always keeping in mind our
Every Day Low Pricing philosophy.

In a career with Walmart merchandising, you will work with a variety of

departments and develop a true understanding of the Walmart business.
You will also partner with suppliers, drawing on your own negotiation skills
while learning about the ever-changing retail market.

Walmart Marketing Strategies---

Wal-Mart’s marketing strategies are based upon a set of two main
objectives that have guided the firm through their growth years. The
customer is featured in the first objective; “Customers would be provided
what they want, when they want it, all at a value”. Team spirit was
 36

emphasized in the second objective, “Treating each other as we would

hope to be treated acknowledging our total dependency on our associate –
partners to sustain our success”. I agree with Wal-Mart’s two main
objectives. The customer objective includes giving the customer what they
want at a reasonable value. The second objective covers the foundation of
the company; its employees. Employees are the basis for success of the
company and drive the day-to-day operations. Wal-Mart’s employees,
feeling like associate partners, gives them a feeling of empowerment and
pride that drives the company’s culture. Wal-Mart has launched successful
marketing strategies that considered factors like social and environmental
causes.

American companies were soon to follow suit with superstores opening on

every corner. By the early 1990"tms, the discount department store industry
had changed a number of times and was thought to have reached its
maturity. In 1995, Wal-Mart management felt the high consumer debt
caused shoppers to reduce or defer their spending. By 1998, the country
had returned to prosperity, unemployment was low, total income was
relatively high and interest rates were stable. There were many changes to
the external environment of Wal-Mart in the 1980"tms and 1990"tms. Wal-
Mart was faced with many of its competitors restructuring. Sears was going
to focus on 5 areas; appliances, home fashions, tools, kids and electronics.
When you look at the continuous increasing financial summary of Wal-Mart,
I can only see continuous profits for the firm. Wal-Mart seemed to make all
the right moves in the decade of economic uncertainty. If Wal-Mart
continues to be aware of its internal and external environments, the
financial success of the company will continue to grow. By 2000, the United
 37

States had experienced one of the longest periods of economic expansion.

After a review of Wal-Mart"tms financial performance in the 1990"tms, I can
only say "Wow". Other firms began carrying more fashionable merchandise
and more attractive facilities. The products were better in 3 respects; use,
manufacturing and disposal.

Walmart Online Shopping -

Use our Best Online Shopping Websites to do your Wal Mart online
shopping. Here you can do your shopping at our Online Shopping
 38

Directory. Visit Amazon. com.html, find online shops and enjoy shopping
without ever leaving home. Our discount shopping sites give you easy
access to the most popular online shopping websites, and make APO and
FPO military web shopping (and shipping) easy.

Our Online Shopping Website site has become one of the fastest growing
websites on the internet today. Millions of people now use an online
shopping directory regularly, and most retailers from Wal-mart to Ace
Hardware have websites where you can do your online shopping and
purchase their products. While there are a lot of sites to choose from,
Amazon.com.html and Walmart.com.html have become two of the most
popular internet shopping sites.

Why has online shopping become so popular? The most important reason
is that internet security has improved tremendously. You can do your
shopping online today and feel secure enough to use your credit card
without fear of having your personal information stolen. Security may be the
main reason that computer shopping is popular today, but there are many
other reasons to shop online. You can purchase clothes, tonight’s dinner,
household appliances, the family car, or a trip to Europe, all from the
convenience of your home or office. You can easily do your comparison
shopping at our best online shopping websites without ever leaving home,
and you can save money at online shopping sites because they offer many
online only specials.

Once you begin shopping online you will wonder how you ever managed
before. You can do comparison pricing to find the best buys online, place
your order, and usually have it shipped overnight, all in a matter of minutes.
 39

Not only have you saved a trip to the store, but you will have saved money
on your purchases.

Most sites are nothing more than online catalogs. You browse for your
merchandise, or you can use the search feature to find specific items. Once
you find your item, simply add it to your shopping cart and continue on.
When you’re done, you check out just as if you were in your favorite store.
While every site is a little bit different, you will find most are similar. They
will email you a confirmation of your order, approximate delivery time, and a
tracking number instantly. Since online shopping has become so popular,
you will find that most online stores place a great deal of emphasis on
customer service. They want you to enjoy your experience, and come back
again.

Walmart Forges Partnerships With Indian Manufacturers --

It’s been an eventful year for Raj Jain, president of Walmart India.
When the American retail giant Walmart decided to enter India, some
 40

feared that farmers and small businesses would be hit hard.

Over the past year, Jain has worked to change that perception and is now
looking forward to expanding India operations.

In an exclusive interview with Desi Talk, Jain, who was in New York
recently, speaks about a year of transformation and future plans for
Walmart India.

Excerpts:

Q: How did you address Indian concerns about Walmart’s impact on small
stores and farmers?

My own view is all the apprehensions were based on lack of information

and understanding of what Walmart does and what modern wholesaling
and retailing can do for India. So, the first year we spent a lot of time
explaining to people what is our business model, what we intend to do and,
contrary to hurt, actually benefit the three constituents: the small farmer, the
small and medium manufacturers and the small “kirana” stores.

We would procure directly from small farmers fruits, vegetables, food

grains, etc., at a price equal to or better than the mandi price. So we give a
quality incentive to our farmers, which gives them a remuneration which is
better, we pick up the produce from their farm gate, we wait in front of them
and we pay them the same day. So if you put all that together, they are
getting a much better deal than they were getting in the marketplace. And
 41

we are working with more than 600 farmers in Punjab.

We work with almost 500 small and medium manufacturers. They make
private label products for us and also they make their own branded
products and supply to us. We helped some of these people to get
distribution within Punjab where we have stores. We are now going outside
Punjab, we are going to open a store in Kota in Rajasthan and we have
taken some of their products to those places.

We helped them in the area of technology in improving food hygiene and so

on so that the products come up to international standards. And very
recently we showcased 30-odd suppliers to Walmart buyers across the
world of Indian ethnic food. You know, the chutneys, pickles, and so on and
so forth to enable them to get access to the global markets.

You know, we have almost 1 lakh (100,000) members now, “kirana” stores,
listed with us in our four stores, and they are buying everyday from us and
from the feedback we get from them, they are seeing our prices are lower,
our availability is better, our quality is better and they get very fair
transparent treatment. So our initial feedback from our customers has been
very positive.

Inventory Management Review-

 42

Wal-Mart Increases its Supplier's Inventory Levels

With all the Just-In-Time talk and knowledge regarding better management
and understanding of inventory, you'd think that average levels would be
decreasing. Well, I still think that at a well-managed company, they should
be, but Susan K. Lacefield, accociate editor of Logistics Management,
wrote a pretty interesting article that found otherwise.

In a poll of her magazine's internet readers, she found that over 60% of
companies expect to see inventory levels rising over the next year. The
specifics regarding why are some pretty interesting reasons.

Most notably, Wal-Mart's JIT efforts are leaving their suppliers with more
inventory. If you think about this, it makes a lot of sense. Wal-Mart does
not want to hold inventory. At the same time, they do not want backorders.
The only way to do this is to be able to replenish their stock at a moment's
notice. So what does this do to their suppliers? According to Logistics
Management, it shoots supplier's inventories straight up.

The demands that Wal-Mart places on its suppliers are incredible because
of the power Wal-Mart places on its suppliers. Personally, I'm waiting for
the day when Wal-Mart's suppliers form a massive supplier's union (sounds
like collusion to me), but until then, good for Wal-Mart for leveraging what it
can out of its suppliers. Also in the mean time, suppliers are forced to hold
incredible safety stocks to make sure they can satisfy Wal- Mart's demands.

Basically, the suppliers don't have a choice in the matter. Wal-Mart's

business, even with the demands on service, is too good to pass up. But,
Wal-Mart is not about to have a stockout due to some supplier's inability to
 43

provide a 99% service level. Wal-Mart, like many huge companies, will not
wait. Many companies are:

requiring shorter lead times even as more companies implement 'zero

tolerance' policies for late shipments.

Zero tolerance is a hell of a statement from a company that knows service

level. To provide even a 97% service level compared to a 95% service can
result in a huge increase in inventory. Zero-tolerance is wild. In fact it is
actually impossible. No matter what a company holds in inventory, there is
always the possibility that Wal-Mart could order one more than that. Couple
this with a shorter lead time to Wal-Mart and inventories are stagerring.

Not only does Wal-Mart demand what they want when they want it, but
also, as one Logtistics Management survey respondant said regarding why
he has to hold more inventory:

Wal-Mart is ordering fewer cases more frequently-

For a company, this means that they can either produce smaller batches, or
hold onto more inventory. Because if a company cannot produce less and
faster, than they have to produce a large amount and then, instead of
 44

producing a large amount and getting rid of it all at once, they have to get
rid of it slowly over time, which increases average inventory.

While Wal-Mart may be getting the good end of the deal, one thing is for
sure, there's a reason suppiers put up with these demands, and it's not
because the business with Wal-Mart is bad.

If you would like more informatin regarding this article, Shippers are seeing
inventory rising, it can found in the October 2005 Logistics Management
Vol. 44, No. 10 issue. Additionally, feel free to leave comments with a
question and your email address.

Wal-Mart's Representation Without Taxation -

The Wall Street Journal reports that Wal-Mart had asked the Ernst and
Young consulting firm to help organize their real estate holdings to
minimize property taxes where they do business. This approach has
 45

worked pretty well for some years, but Googling "wal-mart real estate tax"
brings up a number of lawsuits and lesser disputes between Wal-Mart and
state authorities.

It probably costs less initially for Wal-Mart to hire a consulting firm to take
advantage of existing law than to bribe--, oops, make campaign
contributions, to persuade politicians to change the law in its favor. Now
that a number of states have noticed that a number of noisy voters don't like
Wal-Mart, their political leaders are filing suit to get Wal-Mart to pay more
taxes.

Wal-Mart doesn't like paying taxes any more than you or I do, but, unlike
us, Wal-Mart has the money to do something about it. Will making
generous campaign contributions to state politicians work for Wal-Mart? Do
politicians want to get reelected? To ask the question is to answer it. The
original definition of an "honest politician" is a politician who stays bribed.

Wal-Mart's money will work to Wal-Mart's advantage, just as rich people's

contributions to the Ways and Means Committee of the US Congress have
worked to their advantage since the committee was formed. Paying
politicians to cut their taxes gives Wal-Mart representation without
taxation. Government never takes a pay cut; they'll get more money from
you and me by raising our taxes. Wal-Mart pays for representation without
taxation; the rest of us -- who can't pay -- get taxation without
representation.

Many articles make it sound like Wal-Mart conspires against us taxpayers,

but don't forget that Wal-Mart doesn't pay real estate taxes, we customers
 46

pay Wal-Mart's real estate taxes. Wal-Mart is profitable, it takes in more

money than it pays out. The money Wal-Mart gets from we the people who
buy from them pays not only the cost of the goods we buy; it pays their
electric bill, their wage bill, their property tax bill, their health-care bill and
every other bill they pay, including campaign contributions and lawyer's
fees. If taxes, legal fees, consulting fees, or campaign contributions go up,
they'll raise prices to match. It's we who pay Wal-Mart's taxes, not Wal-
Mart.

While we're thinking about who really pays Wal-Mart's bills, think about
Wal-bangers who say that the government subsidizes Wal-Mart because a
lot of Wal-Mart employees get government health benefits. Most low-level
Wal-Mart employees have limited skills, skilled, smart ones move up as
Wal-Mart grows. If they didn't work at Wal-Mart, a lot of Wal-Mart
employees would get welfare and food stamps in addition to health care.

The truth is, Wal-Mart subsidizes the government because their employees
don't collect welfare or unemployment, which is what they would otherwise
be doing. Nobody takes an entry-level job at Wal-Mart if they can find
anything else; the only other recourse for most of them is not to work at all.

Wal-bangers who want Wal-Mart to pay their employees more in either

higher wages or more expensive health care benefits are really saying that
you and I should pay more when we shop at Wal-Mart. Wal-bangers know
that won't sell so they lie to us and say that better health benefits won't cost
us anything. Have we forgotten that the cost of health care would have
sunk GM, Ford, and Chrysler if they hadn't shifted the costs to the union?
 47

Wal-Mart's low prices save us a lot of money, do we really want Wal-Mart

going the way of Detroit?

Loyalty program of Wal-Mart –

Loyalty programs are structured marketing efforts that reward, and

therefore encourage, loyal buying behavior — behavior which is potentially
of benefit to the firm.
 48

Various loyalty cards

In marketing generally and in retailing more specifically, a loyalty card,

rewards card, points card, advantage card, or club card is a plastic or
paper card, visually similar to a credit card or debit card, that identifies the
card holder as a member in a loyalty program. Loyalty cards are a system
of the loyalty business model. In the United Kingdom it is typically called a
loyalty card, in Canada a rewards card or a points card, and in the United
States either a discount card, a club card or a rewards card. Cards typically
have a barcode or magstripe that can be easily scanned, and some are
even chip cards. Small keyring cards (also known as keytags) which serve
as key fobs are often used for convenience in carrying and ease of access.

A retail establishment or a retail group may issue a loyalty card to a

consumer who can then use it as a form of identification when dealing with
that retailer. By presenting the card, the purchaser is typically entitled to
either a discount on the current purchase, or an allotment of points that can
 49

be used for future purchases. Hence, the card is the visible means of
implementing a type of what economists call a two-part tariff.

The card issuer requests or requires customers seeking the issuance of a

loyalty card to provide a usually minimal amount of identifying or
demographic data, such as name and address. Application forms usually
entail agreements by the store concerning customer privacy, typically non-
disclosure (by the store) of non-aggregate data about customers. The store
— one might expect — uses aggregate data internally (and sometimes
externally) as part of its marketing research. These cards can be used to
determine, for example, a given customer's favorite brand of beer, or
whether she is a vegetarian.

Where a customer has provided sufficient identifying information, the loyalty

card may also be used to access such information to expedite verification
during receipt of cheques or dispensing of medical prescription
preparations, or for other membership privileges (e.g., access to a club
lounge in airports, using a frequent flyer card).

What Wal-Mart Knows About Customers' Habits-

Plenty of retailers collect data about their stores and their shoppers, and
many use the information to try to improve sales. Target Stores, for
example, introduced a branded Visa card in 2001 and has used it, along
with an arsenal of gadgetry, to gather data ever since. But Wal-Mart
 50

amasses more data about the products it sells and its shoppers' buying
habits than anyone else, so much so that some privacy advocates worry
about potential for abuse.

With 3,600 stores in the United States and roughly 100 million customers
walking through the doors each week, Wal-Mart has access to information
about a broad slice of America - from individual Social Security and driver's
license numbers to geographic proclivities for Mallomars, or lipsticks, or
jugs of antifreeze. The data are gathered item by item at the checkout aisle,
then recorded, mapped and updated by store, by state, by region.

By its own count, Wal-Mart has 460 terabytes of data stored on Teradata
mainframes, made by NCR, at its Bentonville headquarters. To put that in
perspective, the Internet has less than half as much data, according to
experts.

Information about products, and often about customers, is most often

obtained at checkout scanners. Wireless hand-held units, operated by
clerks and managers, gather more inventory data. In most cases, such
detail is stored for indefinite lengths of time. Sometimes it is divided into
categories or mapped across computer models, and it is increasingly being
used to answer discount retailing's rabbinical questions, like how many
cashiers are needed during certain hours at a particular store.

All of the data are precious to Wal-Mart. The information forms the basis of
the sales meetings the company holds every Saturday, and it is shot across
desktops throughout its headquarters and into the places where it does
 51

business around the world. Wal-Mart shares some information with its
suppliers - a company like Kraft, for example, can tap into a private
extranet, called Retail Link, to see how well its products are selling. But for
the most part, Wal-Mart hoards its information obsessively.

It also takes pains to keep the information secret. Some of the systems it
uses are custom-built and designed by its own employees, the better to
keep competitors off the trail. Companies that sell equipment and software
to Wal-Mart are bound by nondisclosure agreements. Three years ago,
Wal-Mart summarily announced that it would no longer share its sales data
with outside companies, like Information Resources Inc. and ACNielsen,
which had paid Wal-Mart for the information and then sold it to other
retailers.

"When you look at their behavior, you can tell that Wal-Mart considers data
to be a top priority," said Christine Overby, a senior analyst for consumer
markets at Forrester Research. Over the years, she said, Wal-Mart
executives have spent handsomely for their systems, paying $4 billion in
1991 to create Retail Link and signing onto innovations like bar codes and
electronic data interchange, a forerunner of the Internet, well ahead of the
pack. Wal-Mart is also driving manufacturers to invest in radio frequency
identification. By next October, the company will require its biggest
suppliers to tag shipments to some of its distribution centers with tiny
transmitters that would eventually let Wal-Mart track every item that it sells.

With so much data at Wal-Mart's corporate fingertips, what are the risks to
consumers? Most have no clue that their habits are monitored to such an
 52

extent. There are no signs - like the ones for Wal-Mart's anti-shoplifting
cameras - advising customers that information is being collected and
stored. And there is no giveback: Wal-Mart doesn't use loyalty cards and
rarely offers promotions based on past purchases.

It is aware, however, that shoppers are concerned about privacy. On its

Web site, Wal-Mart posts a privacy policy that states, in part: "We take
reasonable steps to protect your personal information. We maintain
reasonable physical, technical and procedural measures to limit access to
personal information to authorized individuals with appropriate purposes."

NOT everyone agrees. "People don't know that Wal-Mart is capturing

information about who they are and what they bought, but they are also
capable of capturing a huge amount of outside information about them that
has nothing to do with their grocery purchases," said Katherine Albright, the
founder and director of Caspian, a consumer advocacy group concerned
with privacy issues. "They can find out your mortgage amounts,
your court dates, your driving record, your creditworthiness."

One source of information can be a credit card or a debit card, Ms. Albright
said. Wal-Mart shoppers increasingly use the cards to pay for purchases,
particularly in the better-heeled neighborhoods where the company has
been building stores recently.

Some companies specialize in what is known as data enhancement, in

which a customer's name and address, or a telephone number, can open
the door to additional information. "If Wal-Mart had a customer database
 53

and wanted to start e-mailing their customers, we could append their e-mail
addresses," said Sarah Stansberry, director of marketing for AccuData
America, a company based in Fort Myers, Fla., that specializes in such
services but does not use credit card records. With e-mail addresses,
AccuData can track names and home addresses, she added. Other
information follows: "We can access what they paid for their house, and
their mortgage," though not driving records. The company has not done any
work for Wal-Mart, she said.

Ms. Dillman said that she did not think Wal-Mart had ever tried to squeeze
data from credit cards to learn more about customers' buying habits.
Indeed, she said, it wouldn't be necessary. "We can do that without the
credit card information," she said. "We can look at what's happening in the
market, and look at what's happening in other markets that are similar."

WAL-MART uses its mountain of data to push for greater efficiency at all
levels of its operations, from the front of the store, where products are
stocked based on expected demand, to the back, where details about a
manufacturer's punctuality, for example, are recorded for future use. The
purpose is to protect Wal-Mart from a retailer's twin nightmares: too much
inventory, or not enough.

"They recognize that technology is a critical tool for them to have an

efficient supply chain," said Kathryn Cullen, a principal at Kurt Salmon
Associates, a consulting firm, who said that she has not advised Wal-Mart.
"They track the purchases and very quickly route that back to their suppliers
so they can be replenished. They are very strict with their suppliers, but
 54

they give them the data that they need."

Armed with sales results from past weeks and months, Wal-Mart meets with
each of its suppliers to establish sales goals for the coming year. Suppliers
are actively encouraged, so to speak, not to miss those goals. A
manufacturer that fails to meet its sales target - or has data-documented
problems with orders, delivery, restocking or returns - can expect even
tougher negotiations in the future from Wal-Mart, which is renowned for its
steeliness in such situations.

Still, achieving sleeker operations is not the whole story. In many ways,
data are used to forecast and drive Wal-Mart's business. "We use it in real
estate decisions, understanding what the draw is like and what the
customers will be like," Ms. Dillman said, referring to the company's
planning for new stores, including the number of shoppers it expects to
attract to each.

When it comes to Sam's Club, Wal-Mart's membership warehouse chain,

"we know who every customer is," she added. So Wal-Mart does a kind of
outreach, contacting nearby convenience store owners, for example, to let
them know that "the items they buy, they could save money on by buying at
Sam's."

AT Wal-Mart, problems are referred to as "exceptions," and technology is

essential for what Ms. Dillman calls "exception management." Within the
company's empire, "we keep watching everything that just happened," she
said. "We are pretty near real time. We can tell people that they need to go
 55

do something, and we are within hours, depending on the event."

The "event" may be a truck's failure to drop off or pick up something, or the
delivery of a load of shoes missing their mates. It could be the absence of
an important product in a store's backroom, or in the distribution center that
serves that store. Or it could be an act of nature like the hurricanes that
descended, one after another, on Florida and other parts of the Southeast
this year.
Eventually, some experts say, Wal-Mart will use its technology to institute
what is called scan-based trading, in which manufacturers own each
product until it is sold.
"Wal-Mart will never take those products onto its books," said Bruce
Hudson, a retail analyst at the Meta Group, an information technology
consulting firm in Stamford, Conn. "If you think of the impact of shedding
$50 billion of inventory, that is huge."

The impact will probably be felt by suppliers, he added, but none are likely
to complain.

"You can see the pattern of Wal-Mart's mandates, and as Wal-Mart grows
in power, it is getting more dictatorial," he said. "The suppliers shake their
heads and say, 'I don't want to go this way, but they are so big.' Wal-Mart
lives in a world of supply and command, instead of a world of supply and
demand."

Consumers willingly turn over plenty of information. For example, cashing a

payroll check at Wal-Mart requires a two-step process, said an assistant
 56

manager in a Wal-Mart in Saddle Brook, N.J., who asked to be identified

only by her first name, Mary. "First you enter your Social Security number
into the system, twice," she said, pointing to the number pad hooked up to a
register in the checkout lane. "The cashier can enter it, but some people
don't like to share that information." Next a customer must enter his or her
driver's license number, the assistant manager said. If payroll checks are
cashed regularly at Wal-Mart, there is no need to keep punching in the
Social Security number, only the driver's license number: "The system will
recognize you the next time."

All of that information winds up at the company's office in Bentonville, the

assistant manager added.

Ms. Dillman said it was "separated out, along with any personal
identifiable information," and warehoused in a way that requires
special permission to gain access. For check approval - when a customer
writes a personal check to pay for something at a Wal-Mart, for example -
"we don't keep it any longer than we need it for that transaction," she said.
"All it's linked to is the checking account number, when we scan your
check," she added. "We don't mine that data. We don't use it for anything
other than the transaction."

Historically, Wal-Mart's focus has been on the products it sells, not to whom
it sells them. One of the most difficult pieces of information to harvest is
which customer bought what. Such information is expensive, too.

"When you are in the everyday-low-price market, you tend not to gather a
 57

lot of information about customers directly because you don't spend a lot of
time with them gathering name, address, telephone numbers through a
loyalty card," said Gene Alvarez, a vice president at the Meta Group. "That
is the proper focus, because when you want to get customer-intimate, you
have to offer a loyalty program, and there's the cost of that loyalty program."

Wal-Mart has discovered the potential of its own Web site in learning more
about customers. Ms. Dillman said the site was beginning to allow users to
buy a product online and have it delivered to a store near them, an option
that Sears, Roebuck and other retailers have had for years. Naturally, some
personal information would have to be submitted as part of the transaction.
"You can do some association there, what products are of what interest,"
Mr. Alvarez said.

But Wal-Mart executives tend to care more about how products

sell as part of a larger basket. "Me knowing what you specifically
buy is not necessarily going to help me get the right merchandise
into the store," Ms. Dillman said. "Knowing collectively what goes
into one shopping cart together tells us a lot more."

Analyzing what ends up together in that cart drives Wal-Mart's

pricing, other experts said. Shoppers might buy cold medicine
along with chicken soup and orange juice during flu season, but
not all of those products need to be priced at rock-bottom, said
Ms. Overby, the Forrester analyst. "They might say, 'If we get
really good at pricing the cold medicine and promoting it and
 58

letting people know that, hey, we have that product in stock and
also at the best prices,' then they get people into the store," she
said. "The other items in the basket might not be the lowest price
in town, but the entire basket will be 10 to 20 percent less."

STILL, as Wal-Mart recently discovered, there can be such a thing

as too much information. Six women brought a sex-discrimination
lawsuit against the company in 2001 that was broadened this
year to a class of about 1.6 million current and former female
employees. Lawyers for the women have said that Wal-Mart has
the ability to use its human-resources database to calculate back
pay for the plaintiffs as well as to determine whether women were
fairly promoted and paid. The judge hearing the case, which is
pending in a federal court in San Francisco, has agreed.

The database is unusually detail-rich, said Joseph Sellers, a

lawyer for the plaintiffs. "They've put into their work force
database the information that bears on virtually every facet of
compensation," he said. "They have performance reviews, along
with seniority, the time spent with the company, which store they
worked in. So you can compare people working in the same store,
to measure whether men and women are paid differently."

If that comes to pass, it will be a rare moment indeed, with Wal-

 59

Mart's carefully assembled data being channeled for a purpose

Wal-Mart did not desire.

Wal-Mart's Cost Leadership Strategy –

Introduction

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). Wal-
Mart's success story is a classic example of a company, which became
 60

successful by rigorously pursuing its core philosophy of cost leadership,

right from the day it began operations in 1962. Wal-Mart was founded by
an ambitious entrepreneur, Sam Walton (Walton), who figured out early
that retailing was a volume-driven business, and his company could
achieve success by offering consumers better value for their money.
Wal-Mart's growth during the first two decades was propelled primarily
by following the strategy of establishing discount stores in smaller towns
and capturing significant market share.

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 Supercenters.

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.

Case Details: Price:

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Length For delivery through courier

Period : 1962 - 2004 (within India): Rs. 500 + Rs. 25

Organizati : Wal - Mart for Shipping & Handling Charges

on Themes
Pub Date : 2004
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Teaching : Available (3 pages)

Note
Cost Leadership
Countries : USA
Industry : Retailing

Wal-Mart's Cost Leadership Strategy

Wal-Mart's Aggressive Pricing--

On July 2, 1962, Samuel Moore Walton (Walton), a merchant with over 15

years of experience in retailing, set up his first discount store in Rogers, a
small town in the state of Arkansas, US. The store offered a wide variety of
branded merchandise at a competitive price.

During the initial years, Walton focused on establishing new stores in small
towns, with an average population of 5,000.

These towns were largely neglected by leading retailers like Sears Roebuck
& Company, K-Mart and Woolco, which concentrated more on larger towns
and big cities. In his efforts to attract people from the rural areas to his
stores, Walton introduced the concept of every day low prices (EDLP).

EDLP promised Wal-Mart's customers a wide variety of high quality,

branded and unbranded products at the lowest possible price, offering
better value for their money. Wal-Mart's advertisement describing EDLP
said, "Because you work hard for every dollar, you deserve the lowest price
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we can offer every time you make a purchase. You deserve our Every Day
Low Price.

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."4 From the very beginning, Walton made
efforts to procure products at the lowest prices possible from
manufacturers.

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."4 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...

Achieving Cost Leadership-

Offering products at EDLP, especially during its early years, when Wal-Mart
was not an established retail player, was quite difficult. The company
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aggressively followed a cost leadership strategy that involved developing

economies of scale and making consistent efforts to reduce costs.

The surplus generated was reinvested in building facilities of an

efficient scale, purchasing modern business-related equipment and
employing the latest technology. The reinvestments made by the company
helped it to maintain its cost leadership position.

From the start, Wal-Mart imposed a strict control on its overhead costs. The
stores were set up in large buildings, while ensuring that the rent paid was
minimal. The company imposed an upper limit for its rent payment at $1.00
per square foot during the late 1960s. Not much emphasis was laid on the
interiors of the stores. The company did not invest on standardized ordering
programs and on basic facilities to sort and replenish the stock...

Wal-Mart in the 1990s--

In the early 1990s, Wal-Mart started focusing on its Supercenters and

Sam's Clubs to fuel growth. Wal-Mart expanded its operations into the
Northeast and West of the US by placing a lot of emphasis on the groceries
business through its Supercenters.

The modus operandi was to first establish discount stores, after which the
best performing stores were to be converted into Supercenters.

By 1991, Wal-Mart's mammoth retail network comprised of 1,355 discount

stores, 120 Sam's Clubs and three Supercenters being served by 16
distribution centers.
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However, at this time, Wal-Mart had yet to enter as many as 23 states in

the US.

In the early 1990s, it was estimated that the size of the groceries business
in the US was three times that of the discount store business. So, Wal-Mart
decided to focus on Super centers to propel its growth. Following Walton's
death in 1992, David Glass (Glass) succeeded him as the CEO of Wal-
Mart. Glass viewed food retailing as a key driver to increase revenue
growth in the 1990s...

Global Supply Chain: Walmart to Centralize Global Sourcing,

Reduce Use of Middlemen

Company Buys Less than 20% Direct Currently; Sees Savings

Potential of 5-15%

SCDigest Editorial Staff-

Walmart this week announced a sweeping plan to consolidate its global

procurement functions and reduce the use of intermediaries in its global
sourcing processes, leading to savings of billions of dollars per year.

It turns out that Walmart, the world's largest importer, still relies on the use
of sourcing intermediaries for the bulk of its global sourcing initiatives,
buying less than 20% of its goods directly from offshore suppliers.
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In addition, it often operates in a very decentralized mode, with each of

the 15 countries where it operates buying goods from the same suppliers,
esp. for its growing private label brands.

Now, Eduardo Castro-Wright, Vice Chairman at Walmart, says the

company's goal is to switch that ratio, so that within a few years it is
buying direct from the manufacturer for 80% of its purchases.

If it can do that and gain additional benefits from centralized purchasing,

Castro-Wright estimates the potential cost reduction from taking out the
middleman mark-up of 5-15%, depending on the category, leading to
billions in savings. (Walmart's global sales are about $400 billion.)

The move to more direct procurement will be facilitated by greater

centralization of its sourcing operations.

Castro-Wright says Walmart has established four global merchandising

centers for general goods and clothing, including an office in Mexico City
focused on emerging markets. It is also planning to shift to direct
purchasing of its fresh fruit and vegetables on a global basis, rather than
working through import companies and agents.

Walmart Leverages Global Scale to Lower Costs of Goods,

Accelerate Speed to Market, Improve Quality of Products--

Today's announcements, according to Walmart vice chairman Eduardo

Castro-Wright, are "important elements in the company's strategy to deliver
even greater value to its customers and shareholders."
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Walmart first announced a consolidated global sourcing structure centered

around new Global Merchandising Centers (GMCs) at its annual meeting
for the investment community in October. This new structure is expected to
leverage the company's global scale in both general merchandise
categories and global food sourcing.

"The newly-established Global Merchandising Centers represent the largest

and most important element of our new sourcing strategy," Castro-Wright
said. "These centers will create alignment between sourcing and
merchandising and drive efficiencies across various merchandise
categories."

The core of the company's overall global sourcing strategy will be to

continue increasing direct sourcing for the company's private brands.
Today, private brand merchandise represents more than $100 billion in
purchasing annually. "Our new strategy and structure should drive
significant savings across the supply chain," Castro-Wright said.

Ed Kolodzieski, currently president and CEO of Walmart Japan Holdings

G.K. and Seiyu, has been promoted to executive vice president and will
lead Walmart's Global Sourcing. Kolodzieski will report to Castro-Wright.

As part of this new strategy, Walmart also finalized a series of agreements

with Li & Fung. The agreements are non-exclusive and do not include
volume or shipment commitments. The strategic alliance between the two
companies will allow Walmart to realize the benefits of consolidating a
portion of its sourcing portfolio. Li & Fung, which is forming a new company
to manage the Walmart account, is expected to build capacity that would
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enable it to act as a buying agent for goods valued around US$2 billion
within the first year.

"In sum, we are redefining how we source products that are imported into
Walmart retail markets around the globe," Castro-Wright said. "By
realigning our resources, leveraging our scale, and restructuring our
relationship with suppliers, we will enable our businesses around the world
to offer even more competitive pricing on merchandise and to provide our
customers a clear and compelling assortment of better quality products at
lower prices."

About Wal-Mart Stores, Inc.--

Wal-Mart Stores, Inc. (NYSE: WMT), or "Walmart," serves customers and

members more than 200 million times per week at more than 8,000 retail
units under 53 different banners in 15 countries. With fiscal year 2009 sales
of $401 billion, Walmart employs more than 2.1 million associates
worldwide. A leader in sustainability, corporate philanthropy and
employment opportunity, Walmart ranked first among retailers in Fortune
Magazine's 2009 Most Admired Companies survey. Additional information
about Walmart can be found by visiting www.walmartstores.com. Online
merchandise sales are available at www.walmart.com and
www.samsclub.com.
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Investors of Wal-Mart--
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Recent Financial News -

Nov 16, Walmart reports third quarter EPS of $0.95; Company raises
2010 full-year EPS guidance

Nov 10, Walmart Appoints Jeff Davis to Senior Vice President and
2010 Treasurer
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Oct 13, Walmart Announces Capital Strategy to Drive Global Growth;

2010 Next Year's Capital Spending to Increase Slower Than Sales

Oct 11, Wal-Mart Stores, Inc. Webcast Agenda for the 17th Annual
2010 Meeting for the Investment Community

Oct 01, Humana and Walmart Announce Innovative Medicare Part D

2010 Prescription Drug Plan

Company Statements

Aug 25, U.S. Supreme Court Petition

2010

May 21, Corporate Statement Regarding the Settlement of Two

2010 Additional Wage-And- Hour Class Action Lawsuits

May 12, Corporate Statement Regarding Recent Settlements of the

2010 Ballard Wage-
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And-Hour Class Action Lawsuit

May 03, Walmart Settles Civil Case with State of California

2010

Mar 01, Corporate Statement Regarding the Recent Settlement of an

2010 Employment Discrimination Lawsuit

Community & Giving -

At Walmart, we believe in a philosophy of operating globally and giving

back locally. We know we can make the greatest impact on our
communities by supporting causes that are important to our customers right
in their own neighborhoods. We’re proud to be a "store of the community"
for all of the communities we serve by helping to provide financial and
volunteer support to more than 100,000 charitable and community-focused
organizations, and by using our locations to provide opportunities for our
customers and associates to give back.
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Hunger Relief

Walmart and the Walmart Foundation have committed $2 billion cash and
in-kind, stepping up efforts to help end hunger in America.

Every Day is Veterans Day

At Walmart, we are thankful for the service and sacrifices of our nation’s
military men and women, veterans, and their families – and we believe that
every day is Veterans Day.

Chile Earthquake and Tsunami Relief

We're very concerned about conditions in Chile after the earthquake, and
our thoughts are with everyone who has been impacted by the devastation.

Haiti Earthquake Relief

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In response to the tragic earthquake in Haiti, our operations around the

world, along with the Walmart Foundation, are responding.

Recent Community & Giving News

From the Press Room Section

Nov. 15, - Walmart Announces Holiday Campaign
2010 Focused on Fighting Hunger

Nov. 08, - Walmart Commits $10 Million to the Veteran

2010 Community

Aug. 31, - Educators Awarded $4.5 Million through

2010 Walmart and Sam's Club Teacher Rewards
Program

Aug. 30, - Ensure Your Kids Are Eating Nutritious Meals -

2010 Cook Together, According to Boys & Girls
Clubs of America Survey

Jul. 22, - Walmart Donates $1.5 Million To Help Share

2010 Our Strength® Expand Family Nutrition
Education Programs In The U.S.
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Suppliers-

At Walmart, we work hard to ensure that the

products on our shelves meet the unique needs
and wants of every community we serve. That
means that we partner with thousands of
suppliers in every merchandise category that
range from one person shops, to multi-national corporations. Some sell
products in just a few stores, others supply nationwide. Maintaining a
diverse mix is the key to our success.

Walmart Standards For Suppliers

Supplier Diversity

In 1994, we created a formal supplier diversity program designed to expand

our base of minority- and women-owned suppliers. Currently, we do
business with more than 2,500 Minority- and Women-Owned Business
Enterprises (MWBE). The program has grown from an initial $2 million in
1994 to nearly $9.2 billion spent in 2009. Learn more about our program
and find out how you can become a Walmart or Sam’s Club supplier.

Past Events
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5th Annual Sustainable Packaging Expo

This expo provided resources and information to learn about making
product packaging more sustainable, as well as understanding the ins and
outs of Walmart's packaging scorecard.

Supplier Sustainability Assessment Webinar

Learn how best to complete the Supplier Sustainability Assessment and
discover sustainability opportunities.

Recent Suppliers News

From the Press Room Section

Jul. 23, 2010 - Made In Oklahoma Coalition: Walmart boosts

Oklahoma food manufacturers

Apr. 23, 2009 - Walmart Reports Record Increase in Business

with Minority- and Women-Owned Suppliers

Dec. 02, 2008 - Walmart Launches Green Jobs Council

Oct. 23, 2008 - Walmart sets new rules for suppliers, starting in
China

Oct. 21, 2008 - Walmart Announces Global Responsible

Sourcing Initiative at China Summit
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Health & Wellness Program of Wal Mart-

At Walmart, we have the opportunity to positively impact the lives of millions
of people every day. That’s particularly true when it comes to helping our
customers, our associates and the people in our surrounding communities
live healthier lives.

Wal Mart Customers

Millions of people around the world are struggling with the costs of health
care. To help ease the strain, we are using the strengths of our business to
drive costs out of health care and bring our customers the lowest prices on
the products and services they need to stay healthy. We also work with
several charitable organizations to ensure that communities in need receive
critical health information and treatment.

Wal Mart Associates

As an employer, providing our associates and their families with health care
coverage is a priority for Walmart. We are continually working to expand
affordable access to care for our Walmart and Sam’s Club associates and
their families.

Wal Mart Neighbors

Finally, we see an opportunity to impact not only our customers
and our associates but also to advocate for broader change.
That’s why we’ve joined together with leaders in government,
business and labor to call for reform in the American health care
system, and why we are working closely with other business
leaders and academics to advance health information technology.
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By combining the strengths of many, we can improve the quality

of care available to all Americans.

Recent Health & Wellness News

Nov. 15, - New Humana Walmart-Preferred Rx Plan (PDP) Has First
2010 In-Store Enrollee

Oct. 01, - Humana and Walmart Announce Innovative Medicare Part

2010 D Prescription Drug Plan with Lowest National Monthly
Premium Offered in all 50 States and D.C. 1

Sep. 01, - Walmart and Sam's Club to Offer Flu Shots in More Than
2010 4,100 Stores and Clubs Across U.S.

Feb. 09, - Walmart Supports "Let's Move" Initiative

2010

Oct. 09, - Walmart Pharmacists Prepare and Offer Tamiflu® for Oral
2009 Suspension

Departments of Walmart-

1. Apparel, Shoes & Accessories

2. Craft & Party Supply
3. Jewelry
4. Health & Beauty
5. Photo Center
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6. Electronics
7. Movies
8. Roll Back
9. Sports & Fitness
10. Auto & Tires
11. Furniture
12. Toys
13. Grocery
14. Pharmacy
15. Books

Diversity -
At Walmart, we believe that business wins when
everyone matters, and that the true strength of
diversity is unleashed when each associate is
encouraged to reach their full potential. Diversity
then becomes the foundation for an inclusive,
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sustainable business that embraces and respects differences, develops our

associates, serves our customers, partners with our communities, and
builds upon an inclusive supplier base. We make diversity part of our
business plan, ensuring we can continue to be a global leader in all aspects
of Diversity and Inclusion.

Dedication to Diversity and Inclusion touches every part of our business.

Diversity and Inclusion are enduring values embedded into our culture.
From our board of directors to our associates and customers, these values
are fundamental to both our business and mission of saving people money
so they can live better.

Diversity and Inclusion — It’s part of our success.

Our commitment to Diversity and Inclusion helps us serve our customers

better. And, it helps us provide a positive work environment for our
associates – 2.1 million worldwide.

Recent Events -
A Year of Accomplishments

The 2008 Diversity and Inclusion Year of Accomplishments Report

highlights Walmart’s commitment to associates, customers, communities
and suppliers in the area of Diversity and Inclusion. With programs that
touch recruiting, associate engagement, leadership training, supplier
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development, community outreach and community giving, Walmart received

37 separate awards and recognition in 2008 for its commitment to
advancing Diversity and Inclusion at all levels of the company.