The Walmart’s Strategy – Perfect and Not-So Perfect

Walmart, one of America’s multinational retailer corporation, ranked as the 3rd world largest corporation by Fortune Global 500, with 2 million employees worldwide. Walmart call in

Walmart is a family owned business, owned by the Walton family which have a 48% share in the company.

Walmart was founded in 1962 by Sam Walton.

Walmart was not Sam Walton’s first experience with the details that accompanied retail marketing. Sam Walton began his journey at the J.C. Penney Store, then later met the Butler Brothers who at that time owned a chain of stores called Ben Franklin.

Sam Walton obtained a franchise and opened a new Ben Franklin which he called Walton’s Five and Dime.

Walton’s Five and Dime was a big success for Sam Walton as a result of the strategy he used; he attained high sales volume by marking up slightly less than his competitors.

The key to success had been found and Sam Walton decided to take it to the next level.

And on July 2, 1962, the first Walmart was opened and the same principles and strategies used previously were put to play again and this time it created a snowball effect of greater success.

In 1967, Walmart had expanded to 24 stores around the US and had reached $12.6million in sales.

In 1970, Walmart had 38 stores operating in the US with 1,500 employees and sales of $44.2 million.

In 1972, Walmart was traded on the New York Stock Exchange.

In 1975, Walmart had 125 stores operating within the US and 7,500 employees and $340.3million in sales.

In 1980, Walmart had increased exponentially with 1,198 stores recording $15.9 billion in sales and 200,000 employees and went further to launch its $24 million satellite network to link all its stores together.

The simple strategy it put in place catapulted it to greater height and by 1995 Walmart opened stores overseas.

Walmart had grown so big that the business world had to take notice and in 2002, it was listed for the 1st time as America’s largest corporation with revenue of $219.8 billion and profit of $6.7billion.

Walmart earned the respects even in groceries,as the largest grocery retailer in the US, generating 51% of the $258 billion in grocery sales in the US in 2009.

Walmart is a perfect example of how powerful a simple marketing strategy is and here is proof; it operates 8,500 stores in 15 countries under 55 names a few of which are:

· Walmart in US
· Walmex in Mexico
· Asda in the UK
· Seiyu in Japan
· Best Price in India

But…

Its sad to say that despite how perfect a marketing strategy could be there are always factors beyond your control that may affect its effectiveness and in most cases affect your business.

Here’s an example with Walmart:

In the 1990s, Walmart made a bold move to venture into Germany and use the same strategy that had worked in the US. Walmart purchased Wertkauf’s 21 stores for €375million and also Interspar’s 74 stores for €750million.

But every attempted foothold in the German market failed, for the following reasons:

  1. The German market was highly competitive with several companies using the “low price” strategy Walmart uses, giving them no competitive advantage.
  2. Walmart received a bad public reputation as a result of its corporate culture and statement of ethics which prohibited relationship between employees.

After suffering several blows, Walmart bowed out of the German market after recording an estimated €3 billion loss, and sold its stores to Metro; a German company.

This story leaves me with one question; Is there such a thing as a Perfect Market Strategy?

I doubt it.

In marketing, there’s no such thing as a one-size-fits-all approach… its naïve to think it ever exist. Its an illusion created in boardrooms over coffee but reality is always reality.