Brandon Mingo Retail Math Spring 2010
Wal-Mart is the world’s largest retailer. It is the largest corporation and private employer in the United States. Wal-Mart is the biggest employer in 25 states. They set the standard for wages and labor practices. Wal-Mart employs 1.4 million workers worldwide and over 1 million in the United States. More than half of WalMart’s U.S. employees leave the company each year. Wal-Mart has more than 3,000 stores in the US and almost 1,300 International operations. The Walton family is worth about $102 billion. Wal-Mart topped the Fortune 500 list of America's largest corporations ranked by sales for the fourth year in a row.
Wal-Mart is not just the world's largest retailer. It's the world's largest company--bigger than ExxonMobil, General Motors, and General Electric. Wal-Mart sold $244.5 billion worth of goods last year. It sells in three months what number-two retailer Home Depot sells in a year. In its own category of general merchandise and groceries, Wal-Mart no longer has any real rivals. It does more business than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined.
Unlike many other retailers, WalMart does not charge a slotting fee to suppliers for their products to appear in the store. Instead, it focuses on selling more popular products and often pressures store managers to drop unpopular products, as well as asking manufacturers to supply more popular products.
Employees scan in every single item that comes into the store and upon checkout the computer system keeps track of the amount of that certain product left in store. This tells the company which items are selling out or selling poorly.
Modern inventory control systems rely upon barcodes, and potentially RFID tags, to provide automatic identification of inventory objects.
In an academic study performed at WalMart, RFID reduced Out of Stocks by 30 percent for products selling between 0.1 and 15 units a day. Inventory objects could include any kind of physical asset: merchandise, consumables, fixed assets, circulating tools, library books, or capital equipment.
To record an inventory transaction, the system uses a barcode scanner or RFID reader to automatically identify the inventory object, and then collects additional information from the operators via fixed terminals (workstations), or mobile computers.
This system is used by Wal-Mart currently and has attributed to their success of brining in the right inventory and decreased overstock.
Wal-Mart enjoyed a 50 percent market share position in the discount retail industry. Procter & Gamble, Clorox, and Johnson & Johnson were among its nearly 3,000 suppliers. Though Wal-Mart may have been the top customer for consumer product manufacturers, it deliberately ensured it did not become too dependent on any one supplier; no single vendor constituted more than 4 percent of its overall purchase volume. Further, Wal-Mart had persuaded its suppliers to have electronic â€œhook-upsâ€? with its stores.
About 85 percent of all the merchandise sold by Wal-Mart was shipped through its distribution system to its stores. (Competitors supplied to their retail outlets on average less than 50 percent of the merchandise through their own distribution centers.)
Wal-Mart used a “saturation” strategy for store expansion. The standard was to be able to drive from a distribution center to a store within a day. A distribution center was strategically placed so that it could eventually serve 150200 Wal-Mart stores within a day. Stores were built as far away as possible but still within a day’s drive of the distribution center; the area then was filled back (or saturated back) to the distribution center.
Each distribution center operated 24 hours a day using laser-guided conveyer belts and cross-docking techniques that received goods on one side while simultaneously filling orders on the other.
The company owned a fleet of more than 3,000 trucks and 12,000 trailers. (Most competitors outsourced trucking.) Wal-Mart had implemented a satellite network system that allowed information to be shared between the companyâ€™s wide network of stores, distribution centers, and suppliers. The system consolidated orders for goods, enabling the company to buy full truckload quantities without incurring the inventory costs.
In its early years, WalMart’s strategy was to build large discount stores in small rural towns. By contrast, competitors such as Kmart focused on large towns with populations greater than 50,000. Wal-Mart’s marketing strategy was to guarantee “everyday low prices” as a way to pull in customers. Traditional discount retailers relied on advertised “sales.”
The retailer has a clear policy for suppliers: On basic products that don't change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. This causes retailers to have to sell items to Wal-Mart at lower prices since they reach such a large demographic.
Their slogan of “everyday low prices” and “save money, live better” are ideals the company lives by, they strive to be the ultimate lowest price for consumers on all of their goods. This sets the standard for the prices of goods in all other stores as well.
Back in 1980, we started out with one small store in Austin, Texas. Today, we’re the world’s leader in natural and organic foods, with more than 270 stores in North America and the United Kingdom. We now number over 50,000 team members and are glad to report that our idealism and commitment to our core values are as strong as ever.
Selling the highest quality natural and organic products available Satisfying and delighting our customers Supporting team member happiness and excellence Creating wealth through profits & growth Caring about our communities & our environment Creating ongoing win-win partnerships with our suppliers Promoting the health of our stakeholders through healthy eating education
Local produce is by definition seasonal. In spring in California, that means artichokes; summer in Michigan means blueberries and autumn in Washington means apples. We value this natural diversity, and each of our 11 regions has its own firm guidelines for using the term "local" in our stores. While only products that have traveled less than a day (7 or fewer hours by car or truck) can even be considered for "local" designation, most stores have established even shorter maximum distances. Ask a team member for your store's definition of "local."
Our business is to sell the highest quality foods we can find at the most competitive prices possible. We evaluate quality in terms of nutrition, freshness, appearance, and taste. Our search for quality is a never-ending process involving the careful judgment of buyers throughout the company.
Each store manages its own purchasing and stocking and has about 20,000 SKUs. Stores are supplied either directly through third-party suppliers or through WFM’s own warehouses. Third-party suppliers are used mainly to provide fresh produce whereas WFM’s warehouses stock and supply private label and non-perishable items.
WFM has about 10,000 suppliers, the bulk of them being small regional companies or individuals. There are very few large national suppliers that control any sizeable part of the company’s purchases. Buyers, who visually monitor inventory levels on a continuous basis, do purchasing at the store level.
WFM uses a central financial management and accounting system from Peoplesoft. This system is available to all accounting personnel in the stores, warehouses and regional offices. The system consolidates the companyâ€™s financial reporting, and makes all vendor payments. Currently, Peoplesoft is the only enterprise-wide system used at WFM. Stores have a stand-alone Point of Sale system called RBX. This system is used to scan and record product sales and also maintains the item master with the latest product prices. The POS system allows store managers to monitor what has been sold.
Executive explains the 10 ways that Whole Foods has a competitive edge: ď‚ž http://brandautop sy.typepad.com/br andautopsy/2005/ 10/the_winning_w ay.html
Walter Robb discusses new pricing strategy for Whole Foods ď‚ž http://www.sfexami ner.com/economy/a p/whole-foodsexecutive-robbdiscusses-pricingstrategy-for-grocer69243037.html
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