WALMART the next big thing

7/29/2019 WALMART the next big thing

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Wal-Mart Competing in the GlobalMarket

Anjana Singh (07EP-010)

Raj Kumar Kesarwani(07EP-035)Anshul Agarwal (07EP-011)

Ravinder Singh(07EP-037)

Kanishk Chhabra(07EP-022)


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What is Wal-Mart

Worlds biggest retailer

Sells Grocery & General Merchandise

One Hour Photo Studio

Pharmacy & Optical Centre

Tire & Lube Express Gasoline station

Fast Food Outlet

Garden Centre

Pet Shop Also feature hair and nail salons, a video rental store, afamily fun center, a branch of a local bank


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Wal-Mart Subsidiaries

Wal-Mart Stores Division US

Wal-Mart Discount Store

Wal-Mart Supercenter

Wal-Mart Neighborhood Market

Sams Club

Wal-Mart International

Private Labels (Sams Choice , Great Value ,Equate ,Smart Price)


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Key Statistics on Wal-Mart

Founder Sam Walson & Family owns 40% of Wal-Mart

Headquartered at Bentonville , Arkansas , US

Total No. of Stores 6775 Stores Stores in US 4065 Stores in US

Outside US 2701 Stores in 14 Countries

Total Employees 1.9 Million

Total Sales 348.6 billion in 2006 Net Income 11 billion in 2006


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Wal-Marts growth in last 25 yrs

Click the Video

Diversified into Food & Grocery , Private Labels

and online store. Wal-Mart online is the e-commerce website.

Has started selling online Music and Movies.


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Some interesting figures

First Store opened at Rogers , AR in 1962

Worlds largest Private Employer , fourth only to

Chinas Army ,NHS of UK, and Indian Railways Wal-Mart sells 20% of retail grocery in US and 45%of total Toys sold in US.

Its bigger than Europes Carrefour , Tesco & Metro

AG combined.


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Wal-Mart International

Present in 14 countries

Walmax in Mexico

ASDA in UK The Seiyu Co. Ltd in Japan

Wholly owned subsidiaries inArgentina , Brazil , Canada ,Puerto

Rico


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Wal-Mart Market Share / Competitors

Wal-Mart is three times big thanits nearest competitor CarrefourSA

z


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Wal-Mart Marketing Strategy


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Wal-Mart Corporate Values

Constant Improvement

Shared Passion, Vision & Organization Culture

Customer Focus Speed

Execution

Improvements In Basic Operations

Community Involvement


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What Wal-Mart does to achieve thosevalues

Competitively Reduced Cost (Puts All Gains &Savings Into Reducing Prices)

Consumer-centric Sales Localization

Co-operated Suppliers

Retail-tainment & Shop-ability: Aisles, Lighting &

Signs Store-manager Autonomy

Cont.


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What Wal-Mart does to achieve thosevalues (Cont.)

One- Stop Shopping

Keep Customer Shopping: Added Food & Services

Full Stock Register Full Product Line

Merchandising Ladder

Private Branding


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Wal-Mart

Mission/

Vision

To give ordinary folk the chance to buy the same thing as rich people.

Product Strategy1. Lowest prices across-board the product lines2. Product USP: core competency

Low prices, In-stock positions, Customer service

Service Strategy

1. Respect for the individual

2. High standards of service

3. Constant strive for excellence

Segmentationmiddle-class, lower middle

PositioningConsistent positioning- Always low prices

Activities

1. Food retail

2. Non-Food retail

3. On-line food retailer

Intangibles Personalized customer service

Co-branding Co-branding with McDonalds


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Diversified into Wal-Mart

1. Non-food

Tire & Lube Express, Wal-Mart Optical, Wal-Mart Pharmacy, Wal-Mart Vacations, Wal-Mart's Used Fixture Auctions

2. Discount format Wal-Mart Stores,

3. E-commerce

WalMart.com

4. Wholesale Sams Club

5. Expansion abroad 12 international locations

Sector Strategy: Diversification


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Penetration/ Strategy

Advertising Expenditure : 0.3% Of Sales Rev. Only

- By Word-of-mouth, In-store Promos

Folksy Facade -Friendly Image

Brick & Click Retailing Model Competitive Strategy:

- Pre-emptive Expansion

- Local Retailing Monopoly

- Mkt Penetration By SelectingMost Convenient Locations

Acquired Or Constructed

Global Buying For Relentless Pressure On Prices

Logistic Efficiency: Speed To Market


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Potential Development strategy

Re-positioning: Complete Shopping Experience & Value-for-money Deptt Store Way Beyond Just Low Prices

Enhancing Product Range: Full-line Deptt Store

Differentiation: Price-based - Best Quality At TheCharged Price

Merchandising: Max. In-store Merchandise Display

Market-broadening: Store-type Adaptations To LocalCulture

Self-branding: Brand-name Is Extended To Popular Items

Ancillary Business: Hair-cuts, Optics, Hearing aids


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Consumer Global Brand Opportunities: Wal-Mart


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SITUATIONAL ANALYSISGOING GLOBAL

WHY GLOBAL - To survive

Why was growth so important?

Capital market expectations-continuous sales and profits.

Expectations of its own employees-ESOPS. Saturated domestic market.

U.S. just 4% of world's population-(rest 96% -already dented)

Emerging markets-tremendous opportunities.

What were its strengths?

Tremendousbuying power-P&G,Kelloggs,Nestl,Coke,Pfizer,etc Domestic knowledge bases & competencies.


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STEP 1-DECIDING COUNTRY-specifics of the business,competitive and economic environments

Acquiringan existing player

(GM,CN,UK,SK,PR,JP)

Starting new storeson own

Joint Ventures(MX,BZ)

STEP 2-DECIDING STRATEGY

Start greenfield*operations .(AG,CH)


*A new operation that is built from the ground up. `


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Country Mode of

Entry

Strategy Fate of the deal

Canada

Acquiring aweakplayer

VERY SUCCESSFULWiped out T.Eaton Company, a major player

Operated in areas that have highbrand recognition

Operated in areas requiringminimum cultural adaptation

Emphasised on customer service &store design

UK(**337) Acquiring Acquired ASDAs operations(232stores)1999

SUCCESSFUL.Competitors-Tescos and Sainsburys

Cashing on the M&A synergies

Mexico(**919)

JointVenture

Entered in 1997 JV with Cifra

Local market knowledge

Overcame cultural barriers

SUCCESSFUL.(50% of the market)

Competition by Carrefour


** no.of stores operating as on Jul2007

Three successes out of ten.Successes 3/10


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Country Mode ofEntry

Strategy What was the fate of the deal

Germany

Acquiring Acquired largest players Wertkauf andInterspar

FAILED.

Entered in 1997(21+74 stores);

Exited in 2007

-American Style Working practices

-High Labor Costs.

-Management-- Staff Rifts

-Competitors: ALDI and LIDI (cheap) .

Similar business and HR models

Met EU guidelines for business

Brazil

60-40 JV Leveraged experience of Mexican mkts When entered in 1995

Already Carrefour,P de A, and Sendas

So very tough competition(Pi was eaten)Emphasised on Customer service

Developed economies of Scale

Utilised Discount tactics

Argentina

GreenfieldOperation

Gained experience from Mexico & Brazil -Wrong anticipation of the Argentine

-Competition by CarrefourEconomies of Scale


Three successes out of ten..


3/10


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Country Mode ofEntry

Strategy What was the fate of the deal

S.Korea(**0-16)

Acquiringmajorityshares

Entered in 1998 .

Acquiring majority shares in KOREA MAKRO

FAILED. no personalization, quality first)

-Exited in 2006,like NOKIA,NESTLEGOOGLE and CARREFOUR. (unfair laborstandards, wages)

PuertoRico

(**54)

Acquiring amajor

player

Entered in 2003 by acquiringSupermercados Amigo(31 stores).

-Faced a strong revolt from local smallplayers.

Japan-(**392)

Acquiring -Entered in 2002 - stake in Seiyu Ltd-Competitors were Daiei,Sogo,Mycal

-Continuing losses every year ( USmarketing model)

China

GreenfieldOperations

Merchandising & store designs suiting theconsumers

-Took much time-Biggest Walmart Supplier.

-Forced to allow unionization of workers.-Gender Discrimination-Immigration law-suit

Sourced stocks from international suppliers

who manufacture in China

Sourced from local manufacturers whounderstand local tastes

Met government trade & business laws



Three successes out of ten . 3/10


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LATEST GLOBAL ENTRIES(5nos)

CountryRetailUnits as on Jul2007

Firmpartner/acquired

Date ofEntry

Costa Rica140 CSU(CARHCO) September 2005

El Salvador 63 CARHCO September 2005

Guatemala137 La Fragua(CARHCO) September 2005

Honduras44 CARHCO September 2005

Nicaragua40 CARHCO September 2005

India*****


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Supply chain integration in developingcountries


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Strength in supply chain

Efficient consumer response

Vendor-Managed Inventory

Enterprise resource planning Customer relationship management

Sales force automation

SWOT ANALYSIS (GLOBAL)


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SWOT ANALYSIS (GLOBAL)Strength

Efficient supply chain management

Targeted marketing

Service innovation and technology

Growth through adaptability.

E-tails continued development

Least cost of packaging

strong penetration strategies

Infrastructure (financial strength)

Weakness

Poor public image

Late entrant in international market.

Unable to adapt to different countries

Ununionised & Strict labor laws

Were unable to handle media

High law suits against the company.

Low penetration in European union

OpportunityMany countries are still leftUnorganized retail

Globalization (diminishing tradebarriers)Cold Storage marketIncrease in consumer purchasingpowerE-business

Unemployment

ThreatsTerrorism

CompetitorsNegative publicityInternational laws against antidumpingCampaign against anti competitivepractices


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Wal-Mart in India


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What brings Wal-Mart to India?

A tremendous market

Emergence of middle class 300 million

Consumer class of 105 million growing at rate of

10% & with an annual avg household income of$3000

Demographics 60% of Indian population is in agegroup of 20-30 & is more inclined towards modern

shopping. Consumer spending growing rapidly credit card

Sales on per sq. ft. basis lowest in world

GDP growing about 6-8%


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Opportunities in India

Indias retail trade is estimated at $206billion & growing at 5% annually

Only 3% of market organized shopping

malls India as fastest growing sourcing market

Indias vast market for food retailing

Cold chain - Refrigerated distribution of

fruits n vegetables Can add value to customers by means of

low price and wide range of merchandise


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Challenges in India

Protests from small businesses (kirana )

FDI restrictions.

Indias poor infrastructure

Poor public image predatory pricing ,unemployment

Indias diversity and heterogeneity

Competition from Indian RetailorsincludingPantaloon,Shoppers Stop ,Piramals

Regional governments are very strong politically


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Present Scenario

Wal-Mart joint venture with Bharti

15 large wholesale outlets over the next seven

years

Entering as a wholesaler, because Indian law does

not allow multi-brand foreign retailers to sell directly

to consumers

Govt. of U.P forced several top retailers to shut

shop after local kirana stores triggered unrest.

Other foreign retailers : Carrefour - Wadias

,Debenhams - Future group

ICRIER study 12 million stores


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Recommendation

Understand Consumer behavior

Market Segmentation

Format of stores super centers or hypermarkets Wal-Mart to adopt a blended model of its

traditional format tweaked to fit the reality of Indian

real estate


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Q & A Session


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Web References

www.walmartfacts.com

www.gartner.com

www.forrester.com

www.hoovers.com

www.wikipedia.com

www.tsmg.com (Tata Strategic ManagementGroup)

www.finance.yahoo.com

www.ficci.com
http://www.gartner.com/http://www.forrester.com/http://www.hoovers.com/http://www.wikipedia.com/http://www.tsmg.com/http://www.finance.yahoo.com/http://www.ficci.com/http://www.ficci.com/http://www.finance.yahoo.com/http://www.tsmg.com/http://www.wikipedia.com/http://www.hoovers.com/http://www.forrester.com/http://www.gartner.com/


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Thank You

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WALMART the next big thing