WalMarts P.O.C.K.E.T.S. Strategy

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Wal-Marts P.O.C.K.E.T.S. Strategy
Michael Bergdahl International Speaker,
Author Wal-Mart Competition Authority
March 18, 2009 Valladolid, Spain
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Lions or Gazelles?
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Bird-Dog
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X Bentonville, Arkansas Wal-Mart
Headquarters
X
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1962 The year Sam Walton opened his first
store in the rural USA.
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Wal-Mart Big s

• 176 million customers weekly
• 70 of goods are made in China
• 2.1 million employees
• 7500 Stores
• 120 Distribution Centers

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Wal-Mart Big s

• 2008 Sales EUR 316 Billion
• US404billion
• EUR 36,000,000 sales every hour
• US46 million
• EUR 20,233 profit every minute
• US25,000

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Wal-Mart International

• USA, Japan, United Kingdom, Canada, Mexico,
  India, China, Argentina, Brazil, Guatemala,
  Honduras, Costa Rica, El Salvador, Nicaragua,
  Chile, and Puerto Rico

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The Strategies that made Wal-Mart the World's
Largest Company.


The Tactics that made Sam Walton the World's
Richest Man.
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Wal-Marts P.O.C.K.E.T.S. Strategy
Price Operations Culture Key Item
Promotion/Product Expenses Talent Service

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Price
Price Strategy Question
How did Wal-Mart turn its Every Day Low Price
Strategy into such a powerful competitive
advantage?
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Price
Answer
While others focused on how much they could
charge for their products, Sam Walton focused on
how little he could charge.
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Price
Sam Waltons Discounting Principle Hed buy an
item for 80 and
price it at 1.00 rather than 1.20. He made ½
the profit per item but he sold 3 times as much
thereby generating a greater profit overall

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Price
The Supercenter Advantage Grocery Stores typical
margins of 1 to 1.5 Supercenters general
merchandise creates profit margins of 5 to
7 The blending of the two creates 3 to 4
profit margins overall
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Price
Pricing Lessons The
Wal-Mart Way
Economies of scale buying EDLP translates
around the world Offshore manufacturing low
cost of labor
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Operations
Operations Strategy Question What makes
Wal-Marts Store Operations so unique?
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Operations
Answer Wal-Mart is a Logistics,
Distribution,Transportation, and Technology
Driven Company that also has Retail Stores!
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Commoditization
Operations

• Wal-Marts Retail Strategy is supply chain
  driven, not merchandise driven.

Cross docking distribution centers No Warehouses
Largest privately owned IT systems in the world
7000 privately owned truck fleet largest in the
USA
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Operations
Hurricane Katrina Wal-Marts trucks arrived in
New Orleans days before the United States Federal
Government!


Fact College Students worldwide study Wal-Marts
Renowned Logistics
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Operations
Operations Lessons The
Wal-Mart Way
Invest in Technology Continuous learning /
improvement Share Best Practices with Partners
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Culture
Culture Strategy Question How did Sam Walton
turn the people at Wal-Mart into the key
ingredient in the companys success?
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Culture
Answer Sam Walton believed if you take care of
your employees, your employees will take care of
your customers your business will take care of
itself.
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Culture
Sam Waltons Golden Rule Values
Respect for the Individual Serve your
Customer Strive for Excellence
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Culture
Sam Waltons 10 Rules for Success
1 - Controlling Expenses 1 -
Serving Customers 1 - Risk-Taking 1 - Your
Personal Commitment 6 - Treatment of People
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Sam Walton put people first
Culture

• - Employees are Associates
• - Customers are Neighbors or Friends
• Managers are Coaches
• Suppliers are Vendor Partners

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Culture
Culture Lessons The
Wal-Mart Way
Treat employees like business partners Solicit
ideas from employees - use them Communicate
financial details with employees Share your
profits with all employees
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Key Item Promotion / Products
Key Item Promotion / Products Strategy Question
What is the secret to Sam Waltons strategy for
selecting products and services for
Wal-Marts stores?
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Key Item Promotion / Products
Answer
Sam Walton used an outside-in approach to gather
product ideas by visiting his stores, talking to
customers and employees visiting his
competitors stores!
You cant merchandise the world from Bentonville!
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Key Item Promotion / Products
One Agenda Sam Walton required every employee at
Wal-Mart to think like a Retail Merchant
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Key Item Promotion / Products
Saturday Morning Meetings Product
Presentations by the Buyers
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Key Item Promotion / Products
VENDORVILLE Wal-Mart buys directly from
manufacturers, who are its vendor partners,
sharing sales data by store. Over 1000
suppliers have Bentonville Offices
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Key Item Promotion / Products
Key Item Promotion / Product Lessons
The Wal-Mart Way
Form Trusting Partnerships Negotiate with
integrity Stand behind your products
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Expenses
Expenses How important is expense control to
Wal-Marts overall retailing strategy? Sam
Walton
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Expenses
Answer
The success of Wal-Marts Every Day Low Price
(EDLP) strategy is made possible by driving costs
out at every step of the supply chain.
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Expenses
Managing Costs Wal-Marts success in creating
EDLP is driven equally by buying products at the
lowest prices and continuously reducing costs.

Savings in cost are passed on to customers by
lowering prices
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Expenses
Expense Control at Wal-Mart Centralized
Temperature Control Office Supplies / Paper
Costs Executive Travel Employees spend money as
if they were writing the check from their
personal checking accounts!
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Expenses
Sam Waltons People Greeters
Theft control specialists
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Expenses
Expense Control Lessons The Wal-Mart Way As
volume rises expenses go down Lead by your own
example Culturally integrate cost control
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Talent
Talent How did Sam Walton get hundreds of
thousands of employees to execute his aggressive
tactics?
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Talent
Answer Sam Walton set very high standards for
his team of average people, empowered them to do
their jobs, and then they performed at above
average levels.
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Talent
H.E.A.T.K.T.E. High Expectations
Are The Key To Everything Operational
Excellence
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Talent
Talent Pool -
Bentonville - hired off the farms - 75 of
managers promoted internally - Demoted
non-performers
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Talent
Talent Lessons The Wal-Mart Way Hire for
attitude and teach skills High performance from
average people Deal with non-performers

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Service
Service What is the importance placed on
customers and customer service at
Wal-Mart?
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Service
Answer The focus of all of Wal-Marts
Strategies and Tactics, across its entire supply
chain, are driven by the need to improve the
customers experience.
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Service
Sam Waltons
Legendary Service Standards Service Desk The
customer is the boss 99.9 of Customers are
honest Internal Customer Service
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Service
The Wal-Mart Cheer
Who is Number One?
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Service
Service Lessons The Wal-Mart Way One agenda
The Customer Stand behind your products /
services The customer is the boss
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Wal-Marts P.O.C.K.E.T.S. Strategy
Michael Bergdahl International Speaker,
Author Wal-Mart Competition Authority
www.michaelbergdahl.net