History of Wal-Mart
Wal-Mart is the first and largest distribution stores in the United States. Founded by an Ex-military soldier known as Sam Walton, the retailer started as a single distribution store in 1950 as Walton 5&10. Inspired by the success of this retail store, The first store under the Wal-Mart name was opened in 1962 and it became a public corporation in 1970 (Chatterjee, 2017). Walton was popularly known for his belief in leadership through service, and this led to the evolution of Wal-mart as a retailer offering great value products and excellent customer service. Since its establishment, Wal-mart has efficiently met the needs of its customers in terms of providing high quality and low-cost products, thus helping them save money and improve their living standards (Kinsella, 2014). At present, Wal-Mart has 11, 695 stores across 28 countries all over the world and employs over 1.2 million people in all the states.
Wal-Mart belongs to the retail and wholesale industry. It performs its operations through the Wal-Mart US, Sam’s Club, and Wal-Mart International. The Wal-Mart US operates as a merchandiser; the Wal-Mart International manages supermarkets, supercenters, warehouses, hypermarkets, and cash (Chatterjee, 2017). Sam’s Club entails membership-only clubs.
Wal-Mart has a vision of offering its customers and communities low price products to enable them to save and live a better life. Through this vision, the retailer has devised several marketing strategies to gain competitive advantage. First, it uses the segmentation strategy to understand the different customer segments and their ever-changing needs (Spicer and Hyatt, 2016). The company uses demographic and psychographic segmentation to understand the customers’ psyche and provide goods at meager prices possible. The company through this strategy has introduced the Every day Low Prices (EDLP).
Wal-mart also uses the differentiation strategy to capture global markets. It has positioned itself as an organization that offers products at the lowest possible prices and uses the low price advantage to sustain the firm’s business model (Spicer and Hyatt, 2016). Due to this differentiation strategy, Wal-Mart has managed to gain a competitive advantage over many big retailers.
Furthermore, Wal-Mart uses the positioning strategy to achieve success. The retailer has positioned itself as a low-price offering company, and this has stabilized its position in the global market. The company also specializes in a comprehensive brand of goods, and this differentiates its place in the market.
Wal-Mart has exhibited high growth rates in sales ration and operating profit as a result of its advanced supply chain that helps to cut down operating costs. Wal-Mart sustains the lowest distribution costs or sales at 1.7% as compared to that of its major competitors such as Kmart and Sears standing at 3.5% and 5% respectively (Mottner and Smith, 2016). The company has a high ration of turnover of inventory of 11.5 significantly higher than those of its major competitors like Amazon, Sears, and Target Co. whose inventory turnover is 6.2, 4.7, and 8.7 respectively. Wal-Mart has a 24.74% gross margin compared to its competitors’ average of 17%. Similarly has an asset utilization of 2.4 which is higher than the industry’s average of 1.7 (Mottner and Smith, 2016). These figures are an indication that Wal-Mart can achieve significant scales of economics and pass on many of its benefits to its customers.
From the data above, it is clear that Wal-Mart has utilized effective marketing strategies and operations to enable it to grow from a single regular store to the largest retailer in the world. It shows that a valid business model and effective marketing strategies are the keys to the success and growth of any company. If Wal-mart can continue with this trend, it stands the potential of being a one-in-a-million retailer of the modern world.
Chatterjee, S. (2017). Two efficiency-driven networks on a collision course: ALDI’s innovative grocery business model vs. Walmart. Strategy & Leadership, 45(5), 18-25.
Kinsella, B. (2014). The Wal-mart factor.Industrial Engineer, 35(11), 32-37.
Mottner, S., & Smith, S. (2016). Wal-Mart: Supplier performance and market power. Journal of Business Research, 62(5), 535-541.
Spicer, A., & Hyatt, D. G. (2016). Emergent Strategies for the Nascent Sustainable Product Market: Lessons from Walmart’s Experience. In Academy of Management Proceedings (Vol. 2016, No. 1, p. 17335). Briarcliff Manor, NY 10510: Academy of Management.