I, The Absolute

Archive for July 13th, 2005

In Sam We Trust

Posted by itheabsolute on July 13, 2005

• 36 % of the dog food, 32 % of the diapers, 30 % of the photo-films, 26 % of the toothpaste, and 21 % of the painkillers sold in the US are sold at Wal-Mart.
• 39 % of the sales of Tandy, 23 % of the sales of Revlon, 20 % of the RJR Tobacco, and 17 % of the sales of P & G are sold through Wal-Mart.
• Wal-Mart’s daily sales are higher than the GNP of 40 countries
• Wal-Mart’s annual sales are higher than the GDP of 190+ countries
• Wal-Mart’s each year growth is equal to Pepsi’s annual sales.
• Wal-Mart loses US$ 2 Billion because of pilferage.
• USD 285 Billion sales at the year ending Jan 31, 2005 year
• More than 138 million customers per week visit Wal-Mart stores worldwide
• Wal-Mart employs 1.6 million associates
• Wal-Mart grocery prices are 17 to 20 percent lower than other supermarkets
• Wal-Mart potentially saves individual families more than $500 a year
• Wal-Mart employs a Chief Diversity Officer, to take care of diversity initiatives
• Wal-Mart buys merchandise and services from more than 61,000 U.S suppliers and supports over 3 million supplier jobs in the United States
• P&G is working on restructuring its business/organization to develop synergies in working with Wal-Mart. P&G already has linked up with Wal-Mart. P&G gets data on every sale of its products made at Wal-mart. Its production is aligned to meet demand at Wal-Mart. P&G expects that by 2010 about 50 % of its sales is going to be done through Wal-Mart.
• The heartbeat of many a retailer in India stopped for a moment when the President of Wal-Mart visited India sometime in May/June to consider options in India. (India is yet to allow foreign investment in Retail)
• Wal-Mart has one of the highest number of law suits running against any firm

How did Wal-Mart grow so large that corporate giants such as P&G are looking at realigning their businesses to work synergistically with Wal-Mart.

• Vision of its founder, Sam Walton – His untiring spirit and belief in Americana; His utmost contempt for things flashy and almost nauseatingly excess love for frugality;
• Excellent sense of what customers want
• Excellent logistics management
• Excellent operations – in store operations / distribution
• And fantastic use of Technology to excel in inventory management (this is where Wal-Mart makes or can further improve all its profits)

Post Scriptum

• The reference of the title is to a book on Sam Walton and Wal-Mart, called “ In Sam We Trust” by Bob Ortega.

• Tomorrow we have our last Competitive Strategy session. Our case for tomorrow’s discussion is Wal-Mart Stores, Inc.

Flip side of Wal-Mart’s growth
• A survey in Iowa revealed what had happened in that state since Wal-Mart had arrived in 1983:
o 50% of clothing stores had closed
o 30% of hardware stores had closed
o 25% of building materials stores had closed
o 42% of variety stores had closed
o 29% of shoe stores had closed
o 17% of jewellery stores had closed
o 26% of department stores had closed
• On average, about 100 stores go out of business in the area surrounding a town with a new Wal-Mart store

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