TRANFORMACION DE WALT MART

THE TRANSFORMATIONS OF WAL-MART: EXPERIMENTING WITH NEW RETAIL PARADIGMS1

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Danielle Cadieux wrote this case under the supervision of David Conklin solely to provide material for class discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors may have disguised certainnames and other identifying information to protect confidentiality.

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Copyright © 2011, Richard Ivey School of Business Foundation Version: 2011-04-20

THE ORIGINAL MODEL

By 2011, Wal-Mart had achieved an extraordinarily large market share in the types of products that it sold. Wal-Mart’s U.S. market share might have been as high as 25 per cent.2 Each of its 2,400 U.S. “Supercentres” was a big-box store of some 185,000 square feet, carrying a vast array of groceries, hardware, electronics, clothing, housewares and seasonal items — all at very low prices. The “Sam’s Club” division offered bulk sales to members at further discounts. Located outside of towns and in city suburbs, each had large parking areas for customer convenience, high ceilings to facilitate restocking and sophisticated point-of-sale technology to analyse sale patterns and facilitate inventory control. Customers could compare famous brand names with Wal-Mart’s own labels. The original model was based on a huband-spoke arrangement of stores and a central warehouse to facilitate logistics. Wal-Mart compelled its suppliers to take an active role in product innovation, cost-cutting and replenishing the shelves. It also continually compelled its suppliers to cut their profit margins. By preventing unionization, Wal-Mart was able to keep wages at very low levels. By 2010, the original model was being transformed through

globalization, the addition of smaller stores, consolidation of supply chains and the “greening” of its products.

Meanwhile, many competitors were losing market share. The U.K. firm Tesco created a competing chain in the United States, but failed to achieve profitability. Perhaps Wal-Mart was heading toward an inappropriate degree of global dominance.

1 This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of Wal-Mart or any of its employees.

2 U.S. sales of consumer products totaled some $2 billion. Of this volume, some product lines were not carried by Wal-Mart, such as automobiles, houses and home improvement goods, leaving approximately $1 billion sales of the types of products carried by Wal-Mart. Wal-Mart’s U.S. sales of more than $250 billion were some 25 per cent of this total.

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GLOBALIZATION: ADJUSTING TO DIFFERENCES

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