William R. Boulton
Wal-Mart or World Mart
What is Wal-Mart’s business model?
What is its product/market strategy?
What makes it so successful in the US?
35% of food sales
30% of consumer staples
25% of drug store products
15% of magazines, books and apparel
Retail industry in the U. S. generated annual sales of $3.4 trillion in 2004.
Warehouse clubs & superstores ($217 billions)
Discount & department stores ($214 billions)
Food & beverages ($505 billions)
Clothing & accessories stores ($178 billions)
Electronics & appliance stores ($95 billions)
Sporting goods, hobby, book & music stores ($79 billions)
Discount stores challenge department stores (35-45% profit declines).
Industry is restructuring:
Sale of Eckerd and Marshall Field and Mervyn chains.
Merger of Sears and Kmart
Federated acquired Mays Dept. Stores, owns Macy’s and Bloomingdales.
Extreme value chains
Dollar General, Dollar Tree, Family Dollar
4000 new stores (small, limited selections)
Easy to reach, good parking, convenient, low rent, undercut Wal-Mart.
Target $30,000 per year families.
Retail Strategies need
Technology (keep pace with leaders)
Consumer insight (track buying patterns)
Brand strength (link with demands)
Training (execute strategies)
Organizational design & expertise (communication across value chain)