Summary of Walmart in 2003

INTRODUCTION:

• Walmart in 2003 net income and sales increase up to 21% and 12% respectively
• Become the world’s largest company with 1.4 million employees and world’s largest private employer
• But Walmart CEO, Lee Scott rated company about 6 from 10 point because he’s not sure whether store manager treating people appropriately, company’s expenses too high, competitors are still better in certain categories.
• Discount retailing: offering lower prices than traditional department stores, such as Walmart, K-Mart and Target → it grow every decades but stagnant for a moment in 1970s because of the ban on resale price maintenance in US and made retail establishments fell by 20%
• In the end of fiscal year of 2003, Walmart operated 4,688 stores. 73% stores located in US

HISTORY:

• Sam Walton, founder of Walmart open his first store in 1945 from the Ben Franklin chain. Walton tried to lower his COGS by ordering more merchandise directly from manufacturers/agents since Ben Franklin charge 25% markup and he focused to small town
• He faced some problems in first half of 1960s but overcame it and by 1970s had 18 stores. In 1970 he took company to public since COGS remained high because lacked of its own warehouse. After made company public, they raised 3.3 million USD
• Walton hire David Glass as EVP of Finance and Distribution in 1976. He pushed an investments of IT system for Walmart for tracking every items whereabout by building automated and distribution centers and linking them by computers to both stores and suppliers → resulted inventory-taking lags from months, to weeks and to real time in 1990s
• Walmart installed private satellite network in 1980s to creating communication channel between stores since top managers’ visit time more limited.
• Walton personality and eagerness to make company’s culture like a family was showed by himself as he get close to every single of employee in Walmart and treat them like a family. He also worked very hard even when he got cancer, he still worked at least six days until he passed away in 1992. David Glass then took his position as CEO continued until 2000. Under his lead, Walmart revenues grew from $20 bi to $200 bi, then Lee Scoot took over.

STORE’S FORMAT:

Walmart stores in US grouped into division 1 (discount stores, supercenters and neighborhood markets) and SAM’s Clubs. Discount store is largest store based on size. This kind of store been kept with current development of flexible space and expansion of retail categories. Supercenter is like discount store but added a full-line grocery store or specialty deparments (more focused on food).  Neighborhood Markets more focused into suburban areas and have smaller stores. SAM’s Club is warehouse club format used high-volume, low-cost merchandising, bulk buying and rapidly changing assortments → kalo di Indonesia kaya Indogrosir atau Lotte Wholemart. Walmart.com is walmart in internet (online buying).

PROCUREMENT:

Walmart spent $ 107 bi in 2003 for US suppliers and the suppliers more willing to come Walmart HQ. Walmart using a system to build partnerships with a widening circle of suppliers by sharing of information electronically with electronic data interchange (EDI) since 1980s to communicate with suppliers. The system called Retail Link contains forecasting, planning, replenishing and shipping applications and have private exchange to Walmart point-of-sale data of the two year sales trendas and their inventories of product on a store by store basis. It cost $ 4 bi to develop Retail Link, and all Walmart suppliers required to use Retail Link in 2002.