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Walmart Strategy

Introduction

Wal-Mart the world's largest retailer in 2006, next to only Exxon Mobil, with an 8.9% retail store market share in the US and a global turnover of $312 billion, is the most famous example of a successful retail strategy. However, Wal-Mart's international operations spread across 14 markets outside US, has been a mixed bag of experiences for the company. Despite Wal-Mart's impressive track record and strength, the question is, "How can it stay ahead?" given the rapidly changing retail landscape, newly emerging markets and aggressive global competitors.

Business Model

Wal-Mart operates under nine different retail formats through primarily three retailing subsidiaries: Wal-Mart Stores Division U.S., Sam's Club, and Wal-Mart International.



As per the Generic Strategies Framework of Michael Porter, Wal-Mart has adopted a strategy somewhere between "Focused Low-Cost" positioning and "Cost Leadership" where-in,
- Market scope— Global operations cater to a diverse customer base. In the US price conscious low and middle income consumers with a focus on smaller towns.
- Source of competitive advantage—consistently low prices with high customer service and stringent cost control measures.

Global Strategic Intent:
- Dominate the retail space across the world
- Cash on the retail boom in emerging economies and capture market share
- Replicate the success achieved in the US markets and become the world's largest retailer

Financial Data For the last 5 years

Year Sales
(in $mn) Revenue Grth (YoY) NI
(in $mn) ROA ROE
2006 $312,427 9.538184 11,231 8.90% 22.50%
2005 285,222 11.27184 10,267 9.30% 22.60%
2004 256,329 11.63377 9,054 9.20% 21.30%
2003 229,616 12.55079 7,955 9.20% 20.90%
2002 204,011 12.84606 6,592 8.40% 19.40%
2001 $180,787 6,235 8.60% 21.30%

The United States Strategy

In the United States, Wal-Mart's chief competitors in low-end general merchandise include Home Depot, Sears Holdings Corporation's Kmart...