Wal-Mart Case
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Many retail stores are created by an owner that has a very creative idea for marketing products. Not all stores seem to stay in business partly due to the lack of interest shown in later years of the businesss growth. The chains that tend to succeed are of course financially backed but the owner of the stores stays creative and innovative in their ideas to keep promoting the chain. One of the best examples of an entrepreneur succeeding in their idea for success lies in one man: Sam Walton, creator of Wal-Mart.
At the heart of Wal-Marts growth is the unique culture that “Mr. Sam” built. His business philosophy was based on the simple idea of making the customer No. 1. He believed that by serving the customers needs first, his business would also serve its associates, shareholders, communities and other stakeholders. The goal at Walmart.com is to bring Mr. Sams culture and philosophy from Wal-Mart stores to the Internet. Sam Walton had three basic beliefs the company was built on. Sam Walton built Wal-Mart on the revolutionary philosophies of excellence in the workplace, customer service and always having the lowest prices. They have always stayed true to the Three Basic Beliefs Mr. Sam established in 1962:
1. Respect for the Individual
2. Service to Our Customers
3. Strive for Excellence
Sam Walton always knew he wanted to be in the retailing business. He started his career by running a Ben Frankling franchise store and learned about buying, pricing and passing good deals on to customers. He credits a manufacturers agent from New York, Harry Weiner, with his first real lesson about pricing:
“Harry was selling ladies panties for $2 a dozen. Wed been buying similar panties from Ben Franklin for $2.50 a dozen and selling them at three pair for $1. Well, at Harrys price of $2, we could put them out at four for $1 and make a great promotion for our store. Heres the simple lesson we learned say I bought an item for 80 cents. I found that by pricing it at $1.00, I could sell three times more of it than by pricing it at $1.20. I might make only half the profit per item, but because I was selling three times as many, the overall profit was much greater. Simple enough. But this is really the essence of discounting: by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.” Sams adherence to this pricing philosophy was unshakable, as one of Wal-Marts first store manager’s recalls:
“Sam wouldnt let us hedge on a price at all. Say the list price was $1.98, but we had paid only 50 cents. Initially, I would say, Well, its originally $1.98, so why dont we sell it for $1.25? And, hed say, No. We paid 50 cents for it. Mark it up 30 percent, and thats it. No matter what you pay for it, if we get a great deal, pass it on to the customer. And of course thats what we did.” And thats what we continue to do – work diligently to find great deals to pass on to our customers. Thanks to the legacy of Sam Walton, Wal-Mart is a store you can count on every day to bring you value for your dollar. And thats why at Wal-Mart, you never have to wait for a sale to get your moneys worth!
Wal-Mart Stores are an irresistible (or at least unavoidable) retail force that has yet to meet any immovable objects. They follow three pricing philosophies: Every Day Low Prices, Rollback, and Special Buy. Bigger than Carrefour, Royal Ahold, and Kroger combined, it is the worlds #1 retailer, with more than 4,500 stores, including discount stores (Wal-Mart), combination discount and grocery stores (Wal-Mart Supercenters), and membership-only warehouse stores (Sam’s). Most of its stores are in the US, but Wal-Mart is expanding internationally; it is the #1 retailer in Canada and Mexico. Wal-Mart also has operations in South America, Asia, and Europe. Founder Sam Waltons heirs own about 38% of Wal-Mart.
The difference between Wal-Mart and KMart is very telling. In 1991, Joseph Antonini, then Kmarts chief executive officer, spent some $80 million on an advertising campaign to convince consumers that he and the company believed in customer service. Few consumers believed him, however, and Kmarts sales increased by only 3 percent. During the same year, sales at Wal-Mart, which not only brags about its customer service but also actually provides it, increased by 26 percent. In 1993 and 1994, Kmart spent $3 billion on capital renovations, hoping to entice customers back. This was