The power that Wal-Mart holds with CPG’s is crucial. Wal-Mart is able to dictate to these companies how they should price their goods. It is generally lower than the company would like. However, that company has no strong say in the matter because if they want to have the goods in Wal-Mart stores, they have to comply with Wal-Mart’s rules. So, by Gillette and P&G merging, they would have more negotiating power when dealing with superstores like Wal-Mart and Target.
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.
Also the low switching cost and consumer awareness of shopping around to find the best bargains increased competition around stores to capture customers. Corporate stakes were high for Wal-Mart, this can be seen in its earlier years (Ben Franklin stores) where they were losing
Porter's Five Forces Model Bargaining Power of Customers: LOW Wal-mart faces the weak intensity of the bargaining power of buyers in the retail industry environment. The large population of buyers makes it difficult for them to impose significant pressure on retail firms. • Customers usually make small purchases • A large number of customers • Wal-Mart;s main customers are individuals • Consumer could shop at a competitor who offers comparable products at comparable prices, but the convenience is lost. Bargaining Power of Suppliers: LOW The bargaining power of suppliers has weak intensity in the retail industry environment. There are many suppliers in the retail industry.
Third, items normally offered as loss leaders are often large or fragile, making it difficult for the customers to buy in bulk so as to avoid repeat visits to Wal-Mart and lastly, in some instances, loss leaders are displayed on the floor or left dirty, scratched, or broken so potential customers are enticed to buy the model that is a “step up”. All in all, loss leaders serve to build customer relationships. For example, Wal-Mart will slash prices on hot toys such as “Bratz and Hot Wheels” for the
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.
Wal-Mart Stores, Inc. Question 1 The case highlights competition between three major firms in the discount store industry – Wal-Mart, Kmart and Target. These firms sell relatively homogeneous goods, do not cooperate and compete aggressively in pricing. Additionally, the firms operating have significant market power and due to the existence of barriers to entry because of high initial investments, the number of firms is fixed in the short/medium-run. Thus, it was considered that Wal-Mart stores exist in an oligopolistic competition where it operates numerous stores that provide consumers with products and services.
Frequent shoppers often have a resistance to new discount stores. K Mart’s Lay-Away plans also help those customers who need an installment plan for purchases. (GlobalData, 2011) K Mart SWOT Analysis -A discussion here about the SWOT- K Mart’s Main Problems K Mart has many problems. The first of which is segmentation, which involves choosing a market to focus on, and identifying and focusing a business model specifically for that market or group of people. The segments that K Mart should focus on are Black American families, Asian families, Hispanic families, and a multi-ethnic family which live in the urban areas, along with families living in suburbs of cities.
Improper maintenance of stock and stacking below the eye-level on store shelves make the products – Livon, Set Wet and Zatak – less visible than their ‘rivals’ in the respective product segments. Proposed solutions for the distributor include a segregation of areas based on Income Density and use of statistical analysis to determine patterns based on historic data. At the level of the retailer, steps are needed to increase visibility of the concerned products by better
• Good HR policies, work culture and values in the organization. Weakness • Whirlpool is in an industry which require constant innovations that are sometimes hard to come by. • It tied up with Sears, the largest retailer of white goods to produce goods for them, only to be sold under Sears’ private brand label Kenmore. • Consumers generally did not associate a brand name of the parent company if the two weren’t the same. • Whirlpool failed to capitalize on its Dominant Consumer Franchise initiative which added special features to existing products.