Things To Be Discussed• Discount Retailing• Introduction Of Wal- Mart.• Wal-Mart Discount stores.• Wal-Mart Purchase and distribution.• Wal-Mart Stores Operations.• Wal-Mart Marketing.• Wal-Mart Human Resources Management.• Wal-Mart Administration.• Wal-Mart Diversification.

DISCOUNT RETAILING• After World war II, a number of retail establishments in

the U.S. began to pursue a high-volume, low-profit-margin strategy designed to attract price-conscious consumers, which in 1950’s was know as “Discount Stores”

• A discount store is a type of department store, which sells products at prices lower than those asked by department stores and other traditional retail outlets.

• Discount stores are more popular in the united states than other countries.

MAJOR PLAYERS IN DISCOUNT RETAILING

Wal-Mart - Introduction Wal-Mart stores, Incorporation (branded as Wal-Mart) is an American public corporation that runs a chain of large, discount department store. It is world’s largest public corporation by revenue, according to the 2008 Fortune Global 500. It is the largest private employer in the world. The company was founded by Sam Walton in 1962, incorporated on October 31, 1962.

Wal-Mart at a GlanceFounded : Arkansas, USA (1962) by Sam WaltonHeadquarters : Bentonville , Arkansas, USA Products : Discount stores, Super centers, Neighborhood markets, Super markets, Sam’s clubRevenue : US $ 404 million (2009)Net Income : US $ 13,400 (2009)Total Assets : US $ 163,429 million (2009)Total Equity : US $ 65,285 millionEmployees : Approx. 2,100,000 (2008)Slogan : The lowest price. Guaranteed save money, Live better (US). We shall for less every day! (Canada)

Important people Co – founders, Sam James &Bud Walton. Started first Wal-Mart In Rogers, Arkansas, 1962 David Glass was named president 1984, and in 1988 he became chief executive officer

S.Robson Walton named Chairman Of the board in 1992

President and CEO in 2000 H. Lee Scott

President and CEO in 2009 Doug Mc Milon

Wal-Mart Stores

Wal-Mart Discount Stores First Wal-Mart Discount Stores was opened in the year 1962. At present 803 Wal-Mart Discount centers are operating in U.S. Average size of a store, 1,07,000 square feet. Employees, about 225 employees each year.

Wal-Mart Super Center First Wal-Mart super store was started in the year

1988. Slogan – “ Every day new prices”. At present 2747, Supercenters are operating in U.S. Average size of a store - 1,87,000 square feet. Employees - about 350 associates.

Wal-Mart Neighborhood market First Wal-Mart Neighborhood market was inaugurated in the year 1998. There are 152 Neighborhood market in U.S. today. Average size of store – 42,000 square foot. Employees – about 95 associates.

Market side Market side were opened in the year 2008. It is a small pilot grocery store specializing in fresh and delicious meals at great prices. At present, there are 4 Market side store in U.S.

WALMART STORES IN U.S. AND WORLD

Source: www.walmartstores.com ( annual report 2009)

WALMART STORES IN LAST 5 YEARS

STORES 2009 2008 2007 2006 2005

DISCOUNT STORES IN U.S. 891 971 1075 1209 1353

(-8.2%) (9.6%) (11%) (10.6%)

SUPERCENTERS IN U.S. 2612 2447 2256 1980 1713

6.7% 8.4% 13.9% 15.5%

NEIGHBOORHOOD MARKETS IN U.S.

153 132 112 100 85

15.9% 17.8% 12% 17.6%

SAM’S CLUB IN U.S. 3615 3098 2734 2158 1480

16.6% 13.3% 26.6% 45.8%

STORES OUTSIDE U.S. 602 591 579 567 551

1.8% 2% 2.1% 2.9%

TOTAL 7878 7239 6756 6014 5182

8.8% 7.1% 12.3% 16%

Source: www.walmartstores.com ( annual report 2009)

Wal-Mart –Production And Distribution

Strengths Has healthy distribution channel. Is using a system called cross-docking. This system called cross-docking. This system has allowed Wal-Mart to decrease its sales cost by 2% to 3% over the industry. With over 1 million employees worldwide Wal-Mart has the manpower to move goods.

Weaknesses Slowing speed of check out lines.

Wal-Mart Value Chain

Natalie-Rosanna Rebot

Walmart Value Chain

The World of Walmart Map Growth of Walmart

THE WORLD BEST SUPPLY CHAIN MANAGEMENT

o Logistics Wal-Mart it is roughly: • 88000 associated • 112 distribution centers • 51 offices of transport • 7200 trucks • 53000 trailers • 8000 drivers

o The distribution network Wal-Mart started in one garage in the years 1960.

o The 1st distribution center is open in 1970.

THE WORLD BEST SUPPLY CHAIN MANAGEMENTDistribution center

– A distribution center loosens approximately 100 stores, on 320Km with the round.

– A side gathers the loadings, the other side is devoted to un-loadings.

– 800 employees work 24/24 for wages there relatively modest; they are often little qualified employees or students trained by Wal-Mart

– Distribution 1 time/1 day instead of 1 time/5 days (its competitors)

– The cost of distribution at Wal-Mart only represents 2% of its CA, whereas at its competitors this figure reaches more 4%.

THE WORLD BEST SUPPLY CHAIN MANAGEMENTHUB AND SOPOKE:

• It was started in the year 1970’s. First retailing company to go in for centralized distribution center.

• Under the system, goods were centrally ordered, assembled at a massive warehouse, known as ‘distribution center’ (hub), from where they were dispatched to the individual stores (spoke).

• The hub and spoke system enabled Wal-Mart to achieve significant cost advantages by the centralized purchasing of goods in huge quantities and distributing them through its own logistics infrastructure

Inventory Management

• Wal-Mart invested heavily in IT and communication systems to effectively track sales and merchandise inventories in stores across the country.

• Wal-Mart was able to reduce unproductive inventory by allowing stores to manage their own stocks, reducing pack sizes across many product categories, and timely price markdowns.

• “MAGIC WAND” a computer system, helped them to keep track of the inventory in stores, deliveries, and backup merchandise in stock at the distribution centers.

Inventory Management(C0NT)

VOICE BASED ORDER FILLING

• I t was installed in the year 1988.

• Each person responsible for order picking was provided with a microphone/speaker headset, connected to the portable (VOF) system that could be worn on waist belt.

• They were guided by the voice to item locations in the distribution centers.

• By installing the VOF system, Wal-Mart eliminated mis-picks and product labeling costs since the system did not require paper lists and labels to be affixed on the goods.

Inventory Management(cont)Pretty Darn Quick Displays

• The company asked its suppliers to ship goods in store-ready displays called pretty darn quick (PDQ) displays.

• Goods were packed in PDQ displays that arrived at the stores ready to be boarded on the racks.

• Wal-Mart’s employees could directly replace the empty racks at the

stores with fully packed racks, instead of refilling each and every item at the racks.

Inventory Management(cont)

Radio Frequency Identification

• In efforts to implement new technologies to reduce costs and increase the efficiency, in July 2003, Wal-Mart asked its top 100 suppliers to be RFID compliant by January, 2005.

• Wal-Mart planned to replace bar-code technology with RFID technology. • The company believed that this replacement would reduce its supply

chain management costs and enhance efficiency.

• Because of the implementation of RFID, employees were no longer required to physically scan the bar codes of goods entering the stores and distribution centers, saving labor cost and time.

Wal-Mart Stores Operations• Wal-Mart was offering low prices, customer satisfaction

guaranteed, and hours that were realistic for the way people wanted to shop.

• Open all night, for university students.

• Wal-mart deals with the following products: Electronics , toys, jewellery, apparel, hardware, house ware,

vision centre, pharmacy, hair salon, food products, grocery and hot foods.

• Inventory turnover exceeded 4.5 times in 1985.• Inventory turnover exceeded 7.3 times in 2009.

SWOT ANALYSIS

Wal-Mart Overall SWOT Analysis

Wal-Mart -Marketing

Strengths Everyday low price campaign. Wal-Mart is known for customer oriented approach by maintaining best satisfaction guaranteed programs. The single most important market aspect of Wal-Mart is that they create ideal one-stop experience.

Weaknesses Lobbying into expansion of new market. Wal-Mart has damaged reputation by moving into a location freezing business out of business.

BUSINESS STRATEGIES• Selling same good for fewer prices, charging 2-5% lower and still earns profit.• Wal-Mart wants operational efficiency to be very

good.• Logistics management should be effectively

used.• New areas of growth worldwide.• Bargaining power over suppliers.• Utilizing IT in all area of the business.• Predict demand, optimizes stock.

MARKETING STRATEGIES

• Thinking globally, Serving locally

• Saving People Money so they can live better

• Every Day Low Price

Marketing Mix

Wal- Mart-Human resources management

Strengths The company has constantly appeared on Fortune’s 100 best companies to work for in the United States. It employed more than 2.1 million associates worldwide.

Weaknesses Non-Unionization Low wages Discrimination against women

Wal-Mart - Management

Strengths Policies and practices are equitable and inclusive. Wal-Mart provides state-of-the-art training resources and development time to help active career objectives. Wal-Mart is committed to the customers and communities they serve. Wal-Mart attract and retain employees by offering stock ownership and profit sharing process. Wal-Mart also has very strong community based initiatives. Example – Giving scholarships to schools, raising funds for hospitals, being environmental friendly. The corporate structure of Wal-Mart is very well rounded and managed with 3 core values – respect for individual, service to the customer and striving for excellence.

Wal-Mart – Management( continue)

Weaknesses It does not have formal mission statement. Few female in top management and few minorities employed. Wal-Mart does not have union involvement because of the perception of treating employees poorly.

Wal-Mart Diversification

Wal-Mart Sam’s Club Sam’s club was opened in the year 1983. There are 596 Sam’s club operating at present. More than 100 international Sam’s club is operating in other nations. Average size of a store – 1,32,000 square feet. Employees – about 175 associates.

Wal-Mart International Wal-Mart international was created in the year 1991. It is the fast-growing part of Wal-Mart operations. It has its operations in 14 countries outside U.S. There are 3615 stores. Employees – more than 68,000 associates.

FINANCIAL HIGHLIGHTS

NET SALES LAST 5 YEARS

NET SALES 2009 2008 2007 2006 2005

WAL-MART STORES

$255,745 (63.7%)

$239,529(64%)

$226,294 (65.6%)

$209,910(67.9%)

$191,826(68.1%)

% Increase 6.8% 5.8% 7.8% 9.4%

SAM’S CLUB $46,854(11.7%)

$44,357(11.8%)

$41,357(12.1%)

$39,798(12.9%)

$37,119(13.2%)

% Increase 9.1% 6.7% 4.5% 7.2%

International $98,645(24.6%)

$90,640(24.2%)

$77,116(22.3%)

$59,237(19.2%)

$52,543(18.7%)

% Increase 5.6% 17.5% 30.2% 12.7%

NET SALES $401,224(100%)

$374,526(100%)

$344,992(100%)

$308,945(100%)

$281,488(100%)

% Increase 7.2% 8.6% 11.7% 9.8%

Source: Wal- mart Annual report

( Amount in millions)

OPERATING INCOME

YEAR VALUE %CHANGE

2009 $22.8 3.6%

2008 $22.0 7.3%

2007 $20.5 9.6%

2006 $18.7 8.0%

2005 $17.3

NET INCOME

YEAR VALUE % CHANGE

2009 $13.4 5.5%

2008 $12.7 12.5%

2007 $11.28 0.4%

2006 $11.23 9.0%

2005 $10.3

Source: Wal- mart Annual report

( Amount in billions)

YEAR VALUE %CHANGE

2009 $3.35 6.0%

2008 $3.16 8.2

2007 $2.92

YEAR RATIO

2009 8.4%

2008 8.5%

2007 8.8%

YEAR RATIO

2009 19.3%

2008 19.6%

2007 19.9%

YEAR RATIO

2009 21.2%

2008 21.0%

2007 22%

EARNING PER SHARE

RETURN ON ASSETS

RETURN ON INVESTMENT

RETURN ON SHAREHOLDER EQUITY

0PERATING RATIO

YEAR RATIO

2009 95.4%

2008 95.2%

EXPENSES RATIO

YEAR RATIO

2009 19.1%

2008 18.7%

NET PROFIT RATIO

YEAR RATIO

2009 3.3%

2008 3.4%

GROSS PROFIT RATIO

YEAR RATIO

2009 23.6%

2008 23.5%

WORKING CAPITAL

YEAR AMOUNT %CHNAGE

2009 $6441 M -34.8%

2008 $10458 M

CURRENT RATIO

YEAR TIMES

2009 0.9

2008 0.81

FINANCIAL ANALYSIS OF COMPETITORS

COMPANY 2009

TARGET $64,948

COSTCO $72,483

WAL-MART $401,244

BEST BUY $ 45,015

K MART $44,043

HOME DEOPT $71,288

JCPENNY $17,556

KHOL’S $17,178

COMPANY 2009

TARGET $2214

COSTCO $1283

WAL-MART $13400

BEST BUY $1003

K MART $235

HOME DEOPT $2312

JCPENNY $433

KHOL’S $991

NET SALES( IN MILLIONS) NET INCOME( IN MILLIONS)

COMPANY COUNTS

TARGET 3071

COSTCO 2897

WAL-MART 7873

BEST BUY 3942

K MART 3921

HOME DEOPT 2244

JCPENNY 1106

KHOL’S 1058

COMPANY EARNING PER SHARE

TARGET $3.31

COSTCO $2.47

WAL-MART $3.35

BEST BUY $2.42

K MART $1.99

HOME DEOPT $1.37

JCPENNY $1.07

KHOL’S $3.23

COMPANY ROE ROA ROC

TARGET 17% 5.6% 7.4%

COSTCO 11.6% 5.3% 9.2%

WAL-MART 21.2% 8.9% 13.7%

BEST BUY 22.7% 8.2% 17.2%

K MART 2.5% 1.2% 1.8%

HOME DEOPT 14.1% 6.4% 8.7%

JCPENNY 5.6% 2% 2.7%

KHOL’S 13.6% 8.1% 9.8%