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Walmart the silent killer. Wal-Mart is now the largest grocery chain in the
US, with 14 percent of all grocery sales ? nearly twice ...
Submitted by oct845 on May 4, 2006
Category: Business
Words: 769 | Pages: 4
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Popularity Rank: 48,556
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Wal-Mart is now the largest grocery chain in the U.S., with 14 percent of all grocery sales — nearly twice the sales of Kroger ($95 billion vs. $51 billion). Wal-Mart also does 20 percent of the retail toy business.
Wal-Mart went public on October 1, 1970. Since then its stock has climbed from 5 cents (split adjusted) to a high of $63 in March 2002. Its stock has dropped more than 20% since then, reaching a low price of $42.31 on September 22, 2005.
For the fiscal year ending January 31, 2006, Wal-Mart reported net income of US$11.2 billion on US$316 billion of sales revenue (3.5% profit margin). It is the largest private employer in the United States, Mexico and Canada. It holds an 8.9 percent retail store market share, with $8.90 out of every $100 spent in U.S. retail stores being spent at Wal-Mart.
Different explanations have been offered for this success:
The company has always paid a great deal of attention to site selection; in the company's early years, Sam Walton would fly over small towns in a private plane to identify prospective locations. The company claims it analyzes potential locations to find those that would support "one and a half" stores. Although the intended location was a seemingly small rural town, being up in a plane would reveal a lucrative market if the surrounding communities were taken into account, defying the conventional wisdom that a discount store requires a sizable city. Wal-Mart then promptly moved quickly to pre-empt these discovered locations, since allowing a competitor to locate would likely cause a price war that would make both discount stores unprofitable. Lastly, rural towns were less likely to have organized unions and community activists unlike large urban centers. "This strategy gave Wal-Mart a near monopoly in its local markets and enabled the company to ride out the recessions of the 1970s and 1980s more successfully than its then larger competitors such as K-Mart." [15]
Wal-Mart...
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