HISTORICAL OVERVIEW

In 1950, Walton purchased a store from Luther E. Harrison in Bentonville, Arkansas, and opened
Walton's 5 & 10.
[1]
Thus, the Ozark Mountain town of 2,900 residents would become the
headquarters for the world's largest retailer.
In 1962 Walton invested 95% of the capital to open the first Walmart store
At some point Sam Walton made the decision to achieve higher sales volumes by keeping sales prices
lower than his competitors by reducing his profit margin. Inspired by the successes of other discount
department store chains Walton's assistant, Bob Bogle, came up with the name "Wal-Mart" for the new
chain.
By 1977, Wal-Mart expanded into Illinois and made its first corporate acquisition, assuming ownership
and operation of the Mohr-Value stores, which operated in Missouri and Illinois.
[4]
This was followed by
the acquisition of the Hutcheson Shoe Company in 1978. In the same year Walmart also branched out
into several new markets, launching its pharmacy, auto service center, and jewelry divisions.
The 1990s saw an era of furious growth on an unprecedented scale and the incorporation of
several new ideas and technology into the business.
In 1990, US sales had quadrupled to $32 billion over the previous five years [2] and Walmart
acquired The McLane Company, a food service distributor,
[6]
which was later sold to Berkshire
Hathaway in 2003.
[7]

In 1991, the company expanded into Connecticut, Delaware, Maine, Maryland, Massachusetts,
New Hampshire, and New York. Walmart expanded worldwide this year, with the opening of
their first store outside the United States in Mexico City. They also acquired Western
Merchandisers, Inc. of Amarillo, Texas. 1991 also saw the launch of the Sam's American Choice
brand of products
As of October 2009, Walmart stores operate in Argentina, Brazil, Canada, Chile, China, Costa Rica, El
Salvador, Guatemala, Honduras, India, Japan, Mexico, Nicaragua, Puerto Rico, the United Kingdom, and
the United States.
[24]
The only store with old features is the one in Antioch, California until its remodel in
November 2010.

Walmart has 8,500 stores in 15 countries, under 55 different names.
[14]
The company operates
under the Walmart name in the United States, including the 50 states and Puerto Rico. It operates
in Mexico as Walmex, in the United Kingdom as Asda, in Japan as Seiyu, and in India as Best
Price. It has wholly owned operations in Argentina, Brazil, and Canada. Walmart's investments
outside North America have had mixed results: its operations in the United Kingdom, South
America, and China are highly successful, whereas ventures in Germany ,South Korea and India
were unsuccessful.
Reasons of Success
Walmart began with the goal to provide customers with the goods they wanted when and where
they wanted them. Walmart then focused on developing cost structures that allowed it to offer
low everyday pricing. The key to achieving this goal was to make the way the company
replenishes inventory the centerpiece of its strategy, which relied on a logistics technique known
as cross docking. Using cross docking, products are routed from suppliers to Walmarts
warehouses, where they are then shipped to stores without sitting for long periods of time in
inventory. This strategy reduced Walmarts costs significantly and they passed those savings on
to their customers with highly competitive pricing. Walmart then concentrated on developing a
more highly structured and advanced supply chain management strategy to exploit and
enhance this competitive advantage.
In October 2005, Walmart announced it would implement several environmental measures to increase
energy efficiency. The primary goals included spending $500 million a year to increase fuel efficiency in
Walmart's truck fleet by 25 percent over three years and double it within ten, reduce greenhouse gas
emissions by 20 percent in seven years, reduce energy use at stores by 30 percent, and cut solid waste
from U.S. stores and Sam's Clubs by 25 percent in three years. CEO Lee Scott said that Walmart's goal
was to be a "good steward for the environment" and ultimately use only renewable energy sources and
produce zero waste.
[42]
The company also designed three new experimental stores in McKinney, Texas,
Aurora, Colorado, and Las Vegas, Nevada with wind turbines, photovoltaic solar panels, biofuel-capable
boilers, water-cooled refrigerators, and xeriscape gardens.
[43]
Despite much criticism of its
environmental record, Walmart took a few steps in what is viewed as a positive direction, which
included becoming the biggest seller of organic milk and the biggest buyer of organic cotton in the
world, as well as reducing packaging and energy costs.
[44]
Walmart also spent nearly a year working with
outside consultants to discover the company's total environmental impact and find where they could
improve. They discovered, for example, that by eliminating excess packaging on their toy line Kid
Connection, they could not only save $2.4 million a year in shipping costs but also 3,800 trees and a
million barrels of oil.
[44]
Walmart has also recently created its own electric company in Texas, Texas
Retail Energy, and plans to supply its stores with cheap power purchased at wholesale prices. Through
this new venture, the company expects to save $15 million annually and also lays the groundwork and
infrastructure to sell electricity to Texas consumers in the future.
[45]
The company launched a new Supercenter concept in Plano, Texas, intended to compete against stores
seen as more upscale and appealing
[46][47]
The new store has wood floors, wider aisles, a sushi bar, a
coffee/sandwich shop with free Wi-Fi Internet access, and more expensive beers, wines, electronics, and
other goods. The exterior has a hunter green background behind the Walmart letters, similar to
Neighborhood Market by Walmarts, instead of the blue previously used at its supercenters.
Companys main focus was on providing excellent customer experience to all the individuals, saving their
money by providing products at low cost.
Walmart began with the goal to provide customers with the goods they wanted when and where
they wanted them. Walmart then focused on developing cost structures that allowed it to offer
low everyday pricing. The key to achieving this goal was to make the way the company
replenishes inventory the centerpiece of its strategy, which relied on a logistics technique known
as cross docking. Using cross docking, products are routed from suppliers to Walmarts
warehouses, where they are then shipped to stores without sitting for long periods of time in
inventory. This strategy reduced Walmarts costs significantly and they passed those savings on
to their customers with highly competitive pricing. Walmart then concentrated on developing a
more highly structured and advanced supply chain management strategy to exploit and
enhance this competitive advantage.

Walmarts supply chain strategy
Walmart has been able to assume market leadership position primarily due to its efficient
integration of suppliers, manufacturing, warehousing, and distribution to stores. Its supply chain
strategy has four key components: vendor partnerships, cross docking and distribution
management, technology, and integration.

Walmarts supply chain begins with strategic sourcing to find products at the best price from
suppliers who are in a position to ensure they can meet demand. Walmart establishes strategic
partnerships with most of their vendors, offering them the potential for long-term and high
volume purchases in exchange for the lowest possible prices.

Suppliers then ship product to Walmarts distribution centers where the product is cross docked
and then delivered to Walmart stores. Cross docking, distribution management, and
transportation management keep inventory and transportation costs down, reducing
transportation time and eliminating inefficiencies.

Technology plays a key role in Walmarts supply chain, serving as the foundation of their supply
chain. Walmart has the largest information technology infrastructure of any private company in
the world. Its state-of-the-art technology and network design allow Walmart to accurately
forecast demand, track and predict inventory levels, create highly efficient transportation routes,
and manage customer relationships and service response logistics.

Wal-Marts supply chain management strategy has provided the company with several sustainable
competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-
store variety and selection, and highly competitive pricing for the consumer. This strategy has helped
Walmart become a dominant force in a competitive global market. As technology evolves, Walmart
continues to focus on innovative processes and systems to improve its supply chain and achieve greater
efficiency.
Reaons for unsuccess of walmart
Walmart, the most successful retail operation in the US, failed to make even a dent in the
largest and most vibrant European economy (Germany) after losing a billion dollars in the
process of bungling their German market experiment with so much failure it is now the stuff
of local urban legend.. Lets examine the reasons.
Cultural Hubris
The problem was the companys business philosophy, which had always worked so well,
wrote Frankfurts Brsenzeitung in what pretty much amounted to an obituary. Its
people-centered but that doesnt actually work when the people arent
American.
The company gave the job of masterminding Wal-Mart Germany to an American who
didnt speak a word of German.
The Germans werent fond of the Walmart practice of hiring old people to accost greet them
at the door, nor were the German workers impressed with morning warm-up sessions
(Higher Profits Uber Alles! Can I get an Amen there Fritz!!)
Economic Hubris
They have all kinds of laws over here against the kind of disruptive market capitalism that
has decimated small towns across America, (and still threatens the world economy IMHO):
1. You cant sell below cost in the Eurozone countries just to run your competition our of
business, even if you have a billion dollars to give it a go. Helps to level the playing field.
Gives the small guys half a chance to compete with the bigger players.
2. You cant abuse the workforce with falling wages and expect the government to
subsidize your slave-wage workforce with food stamps and healthcare just to make ONE
corporation rich at the expense of the society at large. Something else the German workers
were repulsed by? A ban on flirting in the workplace. Germans to Walmart: You Dont
Own Us.
Playing by the same rules as everybody else proved FATAL for Walmart here in
Germany. This Atlantic Times summed up Walmarts German problem nicely back in 2006,
One consequence was less competitive prices than those of their rivals.
I dont think the American business community learned much though. The same US based
recap of the Walmart fiasco quoted above, also said this:
The third problem was bad press. The media reported that shoppers were turned off
by Wal-Mart staff hired to greet them at the door and bag their groceries. This sort of
thing was and still is unusual practice in Germany, so it was done away with.
Dam you media. If only you hadnt highlighted all of Mitt Romneys lies Walmarts practices,
we would have Seal Team Six deployed alongside the IDF right now Walmart in Germany!
There is a full thirty five pages of Walmart Schadenfreude, (apparently written as a German
business college research paper) at the end of the abstract reprinted here from linked
English language PDF following.
Clearly dominating the US retail market, Wal-Mart expanded into Germany
(and Europe) in late 1997. Wal-Marts attempt to apply the companys proven US success
formula in an unmodified manner to the German market, however, turned out to be
nothing short of a fiasco. Upon closer inspection, the circumstances of the companys
failure to establish itself in Germany give reason to believe that it pursued a
fundamentally flawed internationalization strategy due to an incredible
degree of ignorance of the specific features of the extremely competitive German retail
market. Moreover, instead of attracting consumers with an innovative approach to
retailing, as it has done in the USA, in Germany the company does not seem to be
able to offer customers any compelling value proposition in comparison with
its local competitors. Wal-Mart Germanys future looks bleak indeed.
Walmart has really, really low prices. There's a few reasons for this - the company is one of the best in the world at logistics, so they manage
to have fast turnover of inventory without keeping too much onhand at any given store. I'd love to see how their logistics division runs
sometime - I remember reading that they've got some of the most sophistication about predicting and automatically changing stock at
stores based on factors like the weather changing that are hard to pin down.
So they've got sophisticated logistics and forecasting, which means they order, ship, and sell goods quickly. That's important - the less time
an item spends on the shelves unsold, the more money a retailer makes. The less time there's an empty spot on the shelves, the more money
a retailer makes. Walmart keeps the shelves not empty most of the time while moving goods quickly.
This means they can charge less. And because they're so big, they've got a lot of bargaining power with their suppliers. There's over 4,000
Walmart-owned stores in the USA doing over $258 billion in sales.
Let's talk 1998. Population of South Korea in 1998 is around 46 million. American economy 1998 is in extremely good shape. Population of
South Korea is just a bit under 50 million people. The fundamentals of the South Korean economy were excellent, but the Asian Financial
Crisis had just destroyed the exchange value of the Korean won.
Walmart sees all of this and thinks something like, "Hey. Growing economy with good fundamentals. Just had a financial crash, so their
currency is trading artificially low. We've got a strong domestic economy. Let's expand into South Korea."
That was, y'know, almost correct. This was a, "Hey! This is a fantastically good opportunity to buy!" type buy on Walmart's part.
And they got it all right. Everything. Except one little thing - Koreans weren't interested in going to Walmart.
Yup, the stars were all aligned, the U.S. dollar was artificially high, the South Korean won was artificially low, Walmart had been experiencing
great domestic growth, and the South Korean economy looked like it would be in pretty good shape after the financial crisis shook itself out.
But Koreans weren't interested in the Walmart model.

To explain why, I'll say - you gotta go walk around South Korea. I can explain it and it'll make sense, but it's the kind of thing that wouldn't
really resonate unless you go to Korea.
Korea's got the longest work hours in the developed world, and it's not even really close.
According to the OECD's 2004 report, Korean average work hours per year comes in at 2390. Japan, internationally renowned workaholic
land? Only 1828. USA? 1777.
Now, I could show you stats all day, but what really drove it home for me was when I was walking back from a bar to where I was staying. I
left the bar around midnight, and stopped to have a chicken sandwich and fries, maybe 12:30AM. There was some screwup in the kitchen of
the fast food joint, so I wound up having to wait - after having already paid - for about 20 minutes. That's probably a rare occurrence in
Korea, but it worked out well because I had a good chat with a Korean guy who works in the marketing/sales side of an animation studio.
He was in a full suit with tie, but his tie was loosened a bit. He looked worn out. After we got our food, we sat and chatted another 30
minutes or so. I ask him what he was doing - some kind of formal party?
Nope. He was just on a break from work. He wasn't even done yet. He started work around the regular time - 9AM or so - and was still
working after midnight. He was going to work another hour or two before sleeping for a few hours, and then working some more.
He explained that this is a bit more hours than he normally puts in, but not that much more.
Wow.
So, Koreans work a lot. A whole lot. A lot, a lot, a lot.
When they're not working, they're not interested in lower quality experiences for less money.
Damn near everything in Seoul is really, really nice. All the restaurants, the food, the transit and trains, the buildings, everything. It's clean and
prestigious and high quality and upscale. The whole country. It's like Japan in that regard.
So, Walmart rumbles in, gets a good price on the currency, and opens 16 spartan Walmart stores with low prices.
Things don't sell.
Now, I could again explain and explain, but I'll just say - you had to be there. The Korean chain Emart's parent company eventually bought
the scraps off the Walmart Korea heap, Walmart losing $800 million in the process.
Emart and Walmart are night and day different. Emart is closer to a spa than a warehouse. As you walk through the isles, there's samples of
fresh juice, fresh coffee, fresh grilled meat, fresh hot and iced teas... I'd just gone in to buy some tuna and fruit, and I walked out (1) having
eaten effectively a whole lunch worth of little samples, and (2) with about five times more groceries than I intended to buy. There must've
been 40 plus samples in there, all managed by different friendly, smiling staff.
Added to that, Walmart only opened 16 stores, and you see they lose their edge in the logistics system and being able to squeeze suppliers.
Really bad combination - none of the economies of scale and established network/market intelligence, plus not understanding local tastes.
Thus, their prices aren't that low compared to American Walmart vs. American Walmart's competition. And, Koreans aren't interested in their
somewhat low prices. They're working themselves to the bone constantly, everyone's under crazy amounts of pressure (even the kids), and
thus, they want every moment they're not working/studying/homemaking to be a full-featured luxurious prestigious life experience.
It speaks to not walking around enough. It's the kind of thing you could read in a case study plenty, but not "really get it" until you see it in
real life. The numbers all worked for Walmart - growing economy, good price on currency, and local incumbents a bit weak due to financial
situation. If the country rebounded quickly, they'd have gotten in on their real estate and capital investment cheaply. If the economy
stagnated or deteriorated, they'd be in the kind of competitive environment that discount retailers thrive in.
But they didn't walk around enough. Koreans work, work, work, work, work. When Koreans aren't working, they want the best. Not the best
price. The best. Combine that with a bit of a nationalist sentiment that favors local companies, and you've got an $800 million loss on your
hands.
Y'know, getting into Korea with the American discounting model still might've been worth a try. But after some walking around, it seems like
the kind of place you'd need a strong fallback plan if Koreans don't buy into discounting. Either a contingency plan to revamp the stores to
Korean standards, or start negotiation in advance on licensing/partnering with a Korean company, something like that.
Numbers are good, but you can't just trust the numbers. Gotta walk around too.
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