The primary cost advantage is Wal-Mart’s superior distribution capability (location of stores, inside-out growth patterns, cross-docking, superior information management). Wal-Mart’s prices are low by the industry standard, which, combined with its lower costs, indicates a strategy that aims at growth in volume through grabbing increased market share. Low prices, advanced data management and extremely motivated employees (“10 ft rule”, “sundown rule”) means a better customer experience than at other discount retailers, even though Wal-Mart remains a self-service retailer. In addition, the large size of the traditional Wal-Mart stores adds convenience by offering a one-stop solution by offering a wide range of products. It’s worth mentioning that Wal-Mart acquired volume through a careful consideration of locations, away from competition.
There was not one dominant player within the industry; they were more equally balanced thus increasing rivalry. The High fixed cost for running a discount store resulted in an economies of scale effect, this can be seen when Wal-Mart decided to gain economies of scale by building their own distribution centres to add value. Going public in order to finance the extra storage was important for Wal-Mart to utilise capacity as efficiently as possible, they did this by creating distribution hub around 15-20 stores. The increased rivalry continues, this was due to the low levels of product differentiation and little in the way of own branding, products were standard in nature through all discount stores. Also the low switching cost and consumer awareness of shopping around to find the best bargains increased competition around stores to capture customers.
They have a good variety of products to shop for. Wal-Mart has many competitors, but one of the strengths that the company has the ability to lower the prices for their customers need. Wal-Mart can be consider a unique store because of one special strategy that they have. The strategy consists of comparing the prices of the other stores, if the other store has an ad of a lower price than Wal-Mart, then they will give it to them to the same price. Many costumers is one of the plus that they give to Wal-Mart because this means that they don’t have to go store by store catching all the specials that they have.
It seems that Costco and Sam’s Club are more similar with a strategy to have great products at the lowest prices, similar to most other companies in general. BJ’s offered those products at low prices but also tried to incorporate more products, some smaller sizes and a little more focus on the customer by giving them the convenience of aisle markers, self-checkouts, and express lanes. I feel that in terms of the bottom
WALMART STORES: “EVERY DAY LOW PRICES” IN CHINA Question 1 Why is Wal-Mart successful in the US? * Focus on price and service – Providing the best quality goods at the lowest price in a friendly environment. Wal-Mart is well-known for selling brand name products for less. Moreover, providing great customer service, showing respect for the individual and striving for excellence become its organizational culture, which has been carried out through the company’s history and been followed by employers as well as employees, no matter what the location is. * Successful marketing to attract customers.
One strategic initiative presently contemplated is to reduce company costs by consolidating financial advisors in 5-10 person offices in large metro areas. While this strategy offers some benefits, we believe the opportunity costs outweigh the cost savings. On the other hand…..”thesis……did we decide to consolidate just a few offices or leave all of them the same and focus on expansion?” Compared to other financial investment firms, Edward Jones is relatively small with limited resources and limited access to cash (Exhibit 5). Since its foundation it has remained a limited partnership. While remaining private has yielded benefits, it also limits its access to cash- not sure if I should just erase this.
Hence the tagline “Always Low Prices “ Sears on the other hand does not follow a policy of discounts. Their main strategy lies in updating their merchandise section and offering flexibility in paying for the merchandise gradually over time, especially through their proprietary credit cards. • Store Size and Store Revenue: Total retail area is higher for Wal-Mart at 313,217,355 sq. ft as compared to Sears at 92,700,000 sq. ft and the revenue generated per sq feet is higher for WalMart at $348.49 per Sq.
These two retailers sell almost the same products and they have similar strategies which are low price and high-quality service. As the customers are price-oriented, the small companies and local retailers which are impossible to achieve the same low price can only compete through specialty products. For example: Frank’s Nursery focus on garden related products and Sears specializes in selling craftsman tools. What’s more, the home improvement industry’s expected revenue growth is only 5.39%. It means the competition will become more intensive.
Some analysts also believe that even when the economy improves, your average consumer will still look for ways to save money and continue to frequent the dollar discount stores. Finally it is the opinion of a third analyst that it is all dependent sustainable job creation. Not any job, but one with a livable income that can support a family. Without a living wage consumers will continue look for inexpensive ways to shop. RUNNING HEAD: Dollar General 3 The keys to Dollar General’s success have been location, product selection, and the decision to renovate vs building a new location.
Wal-Mart is basically a store where someone can buy everything unlike K-Mart. Second, the affordability and quality of goods at each store are different. At Wal-Mart items can be found for a lesser price than K-Mart. Wal-Mart will match the price if an item is found for less at another store, but K-Mart does not do this. Usually items at K-Mart are usually a couple of dollars higher than Wal-Mart.