Walmart Overseas: An analysis

Résumé du document

The idea behind what would become Walmart was a store that would offer a large variety and volume of products offered at low prices, everyday. Sam and J.L. Walton, the founders of Walmart, believed that American small towns would benefit from a large retail shopping center because of the everyday low prices and the large quantity of products; they also believed that a large discount retail store would benefit from small towns and make a significant profit. People would be willing to purchase everyday products at everyday low prices. The first store under the Walmart name (Walmart Discount City) opened in 1962 in Rogers, Arkansas.

During the 1970s, Walmart enhanced its production and distribution methods by building its own warehouse to store its products. The idea was Walmart could purchase its products in bulk and store them in its warehouse. This way Walmart could ensure that its store's shelves would remain stocked. Walmart went public in 1970 and was listed on the New York Stock Exchange by 1972. By 1977, Walmart ranked first on return on equity, return on capital, sales growth and earnings growth among America's discount and variety stores.

Throughout the 1980s, Walmart continued to acquire new businesses and expand as a company. Walmart developed a new type of store that offered items in bulk and required a membership fee under the Walmart name called Sam's Club. Walmart also tried to adopt the idea of a “Hypermart” (a store that combined retail, restaurants, banks, and even a video rental store). The idea of the “hypermart” was taken from a French entrepreneur, but the idea fell through when the costs to heat and cool the extremely large facilities, traffic congestion, and lack of parking space created more drawbacks than advantages.

In order to rectify the mistakes of the “Hypermart”, Walmart developed the “supercenter” concept in 1988. Walmart constructed smaller facilities that offered just grocery and retail items instead of the extra perks like the video store and restaurants.
Company Criticisms
While Walmart had been extremely successful since its humble beginnings in Rogers, Arkansas in the 1950s, Walmart did face several setbacks on the way to becoming the fastest company to reach $1 billion.

One of Walmart's criticisms was that it avoided dealing with sales representatives and often was able to get vendors to cut their prices even more than the vendors had originally planned. In 1987, there was retaliation from a variety of manufacturer representatives claiming that by eliminating them from the buying process, Walmart took over the manufacturers' control on how to sell their products.

In order to correct some of its negative image caused by the retaliation from manufactures, Walmart created a “Buy America” program. The program's goal was to work with the manufacturers to help create American-made products that would compete with foreign imports. Walmart was successful at cutting its imports by approximately five percent between 1985 and 1989.

Tags: Walmart expansion strategies, Walmart Brazil, Carrefour