Team Project

By Sally Juhasz Paul Delumpa Henry Tran

Wal-Mart – E-tailing in the World of Superstores

Wal-Mart at a Glance

First opened in 1962 by Sam Walton in Bentonville, Arkansas.

Wal-Mart stores have become the largest retailer in the world, with more than 4,750 stores worldwide. It operates about – 1,477 Wal-Mart discount stores – 538 Sam's Clubs – 1,471 Wal-Mart Super-centers (combines supermarkets and discount stores) in the United States

Wal-Mart at a Glance

Wal-Mart employs 1,400,000 employees.

People who put $1000 into Wal-Mart stock when it went public in 1970 saw that investment grow to nearly $2 million by 1993.

In 2002, Wal-Mart operated the largest private truck fleet in the United States, consisting of 7,767 tractors and 26,117 trailers.

Wal-Mart at a Glance

Features 150,000 different items in its biggest superstores.

Made up of four retail divisions: – Wal-Mart – Wal-Mart Super-centers (Wal-Mart with grocery) – Sam's Club (membership warehouse clubs) – International Division Operates more than 1,300 stores internationally.

Wal-Mart International

United Kingdom Brazil

Wal-Mart International

Mexico China

Wal-Mart International

Germany South Korea

Wal-Mart Philosophies called Culture Stories

The Sundown Rule – Strives to answer requests by sundown on the day it receives them.

The Ten-Foot Attitude – Promises that if a employee comes within ten feet of a customer the employee must look the customer in the eye and ask if the person would like to be helped.

Every Day Low Prices – Believes that by lowering markup, they will earn more because of increased volume, thereby bringing consumers added value for the dollar everyday. Exceeding Customer Expectations – Customers have been known to send letters to individual associates for giving exceptional service.

Subsidiary of Wal-Mart Stores

Wal-Mart.com

– Founded in January 2000. – Headquarters are in the San Francisco Bay Area.

– Combines the best of two great worlds, technology and world-class retailing.

– Objectives are: Guaranteed satisfaction Friendly service Convenient hours (24 hours, 7 days a week) Great online shopping experience

Subsidiary of Wal-Mart Stores

Wal-Mart.com main objectives are: – Providing the customers what they want – When they want it – All at a value – Treating each other as we would hope to be treated – Acknowledging Wal-Mart’s total dependency on their associate-partners to sustain their success

Financial Statements

Financial Statements

Inventories

Accounting Policies

– Uses the retail last-in, first-out (LIFO) inventory accounting method for the Wal-Mart Stores segment.

– Cost LIFO for the SAM’S CLUB segment and other cost methods, including retail first-in, first-out (FIFO) and average cost methods, for the international segments.

– Not recorded in excess of market value.

– Future changes in circumstances, such as changes in customer merchandise preference or unseasonable weather patterns, could cause inventory to be exposed to obsolescence or be slow moving.

Information Systems

Based on a information system that links all stores with the headquarters in Bentonville, Arkansas.

Used to track the company's delivery trucks. Has an online system with its suppliers. Use point-to-point inventory system (RFID – Radio Frequency Identification) – RFID devices help keep up to the minute track of inventory, deliveries, and backup merchandise in stock.

– Wal-Mart has gained a competitive advantage using its satellite communication system.

Information Systems

Wal Mart’s accelerated growth couldn’t have been achieved without the state-of-the-art computer information systems.

One of the finest Information Systems Division(ISD) in the world, at the Home Office Bentonville Arkansas.

Primary competitive edge is the ability to provide speed of delivery while maintaining minimal expenses.

Logistics

 Operates more than 60 distributions centers.

 Orders directly from the manufacturers, in larger quantities at lower prices and passes the savings on to the customers.

Private Fleet

Largest of its kind in America More than 5,600 tractor trailers in 48 states and employ more than 6,900 Driver Associates Provides on-time, dedicated service to Wal-Mart Stores and SAM’S Clubs across the U.S.

Provide safe, reliable, responsive and efficient transportation solutions to the stores, clubs and customers on a daily basis

New Regulations

Trucks drivers hours regulations – Requires drivers to work 8 hour shifts and rest 8 hours.

Affects the company’s distribution system.

Home Land Security – Slows operations down due to Customs Inspections.

Employment Standards

Compensation Hours of Labor Forced/Prison Labor Child Labor Discrimination/Right Workplace Environment

Standards for Suppliers

Address these general rules: Part of a factory certification process before buying merchandise from a supplier’s factory.

Will not buy goods produced by factories that have been denied certification.

Examines its suppliers by participating in on-site visits, reviewing personnel, and conducting interview with workers. Compliance with applicable laws in their jurisdiction.

Standards for Suppliers

Suppliers must comply with the factory certification process.

Wal Mart’s standards is reviewed against a four-level assessment.

– Green – Yellow – Red – Failed

Standards for Suppliers

Green – Factories have no or low risk violations.

Yellow – Factories have medium risk violations.

– Required to submit a Corrective Action Plan (CAP) – Factory/Supplier must be re-audited within 120 days.

– 3 Yellow assessments factories will be disapproved

Standards for Suppliers

Red – Assessed as high-risk violations.

– Must submit a Corrective Action Plan (CAP) If the factory fails to do so, it will be disapproved – Re-audit must be performed in 60 days from initial audit date or the factory will be disapproved.

– If factory receives 2 red assessments, it will disapproved.

Failed

Standards for Suppliers

– Violations related to child labor, forced and prison labor, trans-shipment, discrimination, human rights abuses and/or unsafe working conditions.

– Factories that are disapproved cannot receive new business assessed as failing.

Factory Certification Process

Three Objectives: – To educate factories regarding local legal requirements – To verify management practices – To encourage implementation of necessary changes that will ultimately result in an improved quality of life for the workers who supply the stores with the merchandise that the customers demand

Customers & Competition Projections

Keys to Success

 Quality Service  Customer Loyalty  New Inventive Ideas  Expansion  Competitive Pricing  Fresh Image

Wal-Mart's Competition Battle

How to Handle Competition

 Wal-Mart must set themselves apart from the competition, with new creative ideas and goals.

 Keep Customer Service and Quality a top priority.

 Always meet the customer’s wants – Have what the customer desires every time they come to shop.

 Use new themes and images to give keep the company with a fresh look. “Rolling Back Prices”

Wal-Mart Customers

Wal-Mart serves more than 1.2 Million customers weekly in the U.S. and 330,000 Internationally which include Puerto Rico, Canada, China, Mexico, Brazil, Germany, United Kingdom, Argentina and South Korea.

 Customer’s tend to keep coming back to Wal-Mart because of the great pricing, customer service, quality, availability, and convenience.

 Store layout is another style Wal-Mart draws customers. They conveniently place certain items around the store that are in majority of demand.

 To gain potential new customers, Wal Mart must pursue in the expansions of retail; Fulfill needs of customers that they already haven’t. They may also see a profit in producing there own line of products as in grocery foods and home accessories.

Rewards For Being Great

In 2003, Wal-Mart was named by FORTUNE magazine as the most admired company in the United States. In 2002, Wal-Mart was presented with the Ron Brown Award for Corporate Leadership, a presidential award that recognizes companies for outstanding achievement in employee and community relations. Forbes magazine recognized Wal-Mart in 2002 as being one of the most philanthropic companies in America.

Wal-Mart ranked among the top five corporate foundations by giving in 1999 and 2000, according to the Foundation Center.

Giving Back – To Be Successful

Wal-Mart Stores, Inc. contributed $150 million to support communities and local non-profit organizations. More than 60,000 grants were awarded through the matching grant program in 2002. More than $265 million in 15 years for Children's Miracle Network (CMN). $80 million in scholarships since 1979 $1.7 million in Environmental Grants $3.1 million in Volunteerism Always Pays grants

Conclusion