Wal-Mart is a general merchandise discount retailer, which was incorporated in 1962. Wal-Mart’s history is based on one man, Sam Walton, who changed the course of retailing forever. Sam Walton first entered retailing when he was a management trainee at J.C. Penny Co.
in 1940 in Des Moines, Iowa. After serving in the Army in World War II, Walton acquired a Ben Franklin variety store franchise with his brother James Walton in Newport Arkansas, until they lost the lease to the store in 1950. By 1962, when the first Wal-Mart Discount City was opened in Rogers Arkansas, both Walton’s were operating fifteen stores under the “Walton 5 & 10” name, and were the largest Ben Franklin franchisee in the country. Limited pricing, low gross margins, and high inventory turnover characterized these stores. Walton phased out the stores in 1976 in order to focus on the emerging Wal-Mart stores. In 1978, the first distribution center was built, followed by the first Wal-Mart Supercenter in 1983 and a Sam’s Club in 1988.Order now
Important to Walton, and ultimately Wal-Mart, are certain philosophies that were amounted over time. Walton held these values tightly, and engrained them in the Wal-Mart cultures. From his experience at J.C. Penny Co. he was impressed with the philosophies they used (e.
g. “The Penny Idea”) and used them to mold Wal-Mart. This included referring to employees as “associates”, serving the public to their complete satisfaction, and receiving a fair profit from services rendered. Walton’s theory on what Wal-Mart should be is “a conveniently located one-stop shopping unit where customers could buy a wide variety of quality merchandise at discount prices.” And as Wal-Mart grew, management sought a firm that was a “discount department store chain offering a wide variety of general merchandise to the customer.” It was on these values and philosophies that Wal-Mart expanded.
Wal-Mart has grown above and beyond the Arkansas store that opened thirty-nine years ago. It serves more than 100 million customers weekly in all of the 50 states, plus Puerto Rico, Canada, China, Mexico, Brazil, Germany, United Kingdom, Argentina, and South Korea. Wal-Mart’s current operating numbers are:
Total Worldwide Associates1,240,000
Wal-Mart’s financial numbers have grown substantially as well. At the end of the fiscal year 2000, total company sales reached $191 billion dollars. This was an increase over the previous year of 15.9%.
Total international sales amounted to $32 billion dollars at the end of the 2000 fiscal year, which was an increase of 41% over the previous year.
Wal-Mart is widely recognized as one of the leading discount variety store chains. It is the nations largest discount department store chain, and also one of the largest discounters in the nation in terms of sales dollars.
Nation’s largest discount department store chain.
A company with a very defined mission set by Sam Walton.
Good distribution concepts with no one store more than 6 hrs.
away from warehouse.
Constant expansion over lifetime of company.
Offers a variety of merchandise for its consumers.
Valued their employees and consumers happiness.
“Everyday Low prices” advertising campaign.
First retailer to embrace “green” marketing.
Inventory Control system is the best in retail industry.
Support of different community activities.
Illustrates low prices and at the same time, not portray a cheap image to consumer.
Viewed by some consumers as Mom and Pop shop killers.
Industry competes on many similar elements.
Over exposure to many close markets.
Expanding the Sam’s Club brand and Superstores
Partnerships with other businesses to house in store.
Inability to enter the Urban Market.
Fierce Competition: Kmart, Sears and Target.
Getting caught in price wars with competition
Economic uncertainty and buying patterns of consumers.
Factory Outlet stores with lower price strategies.
Specialty stores: e.
g. Toys’R’Us and Home Depot.
Wal-Mart targets a wide variety of consumers with many different strategic advertising campaigns. Have you ever heard of that “Everyday low prices” slogan? This is an example of Wal-Mart’s mass marketing approach to the marketplace. Wal-Mart’s specific target market ranges from 25 years old and up. Wal-Mart targets the family oriented consumer who is looking for a good value at a low price.
Wal-Mart has numerous strengths and weaknesses that must be analyzed to better understand their industry. (See Appendix for Porter’s Five Forces analysis of the .