Wal-Mart Case Study Part 1

* Is Wal-Mart Good for America? * First company to report 256$ billion in sales * World’s largest company * Global retailors have become the most powerful in the global economy * Each week 100 million shoppers visit Wal-Mart * Try to keep costs as less possible * Large volumes, fast turnover * Buy less, sell for cheaper than the “other guy” * 120,000 items in stock, managed through barcode reader * Track sales of specific items, on specific days, spikes in sales, colors, sizes, flavors, etc. * Shift from push to pull production * Push: manufacturers deciding what to produce, and telling retailors to sell it * Pull: retailors deciding what is being sold, and telling manufacturers what to produce and when to produce it * Have satellite sales offices for manufacturers, focused on prices * Not much negotiations with manufacturers and Wal-Mart * Manufacturer and retailor power shift * Rubbermaid sales and profits fueled by Wal-Mart affiliation * When costs of Rubbermaid products increased, price needed to increase, but Wal-Mart refused to take a price increase * Wal-Mart dropped a number of Rubbermaid products, signaled decline of Rubbermaid * Rubbermaid bought out by Newell, a competitor * Rubbermaid auctioned off remaining items * Wal-Mart represents a cost-driven low-priced model * Opening price point is what is at the heart of the pricing strategy, and attracts all the customers * Consumers formed false perception of everything near that opening price point is being sold at the lowest price * Low-cost supplies from Asia became integral to Wal-Mart’s low prices * 1500 stores in 1990 * After Sam Walton’s death, Wal-Mart stock