Walmart Case Analysis

Published: 2021-06-29 06:55:58
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Category: Business

Type of paper: Essay

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1. What are the sources of Wal-Mart’s competitive advantage in retailing?
In order to achieve a competitive advantage in retailing, Walmart used a combination of
technology, competitive benchmarking and operational efficiency to lower cost structures. They
also created a culture where the workforce was empowered to make decisions at a store level
to optimize operations to meet local market conditions. Walmart had the lowest operating
expense as a percentage of sales at 18% as opposed 25% for Kmart giving them higher
operating margins. In addition they excelled in generating revenue/sq ft. Based on our analysis
we found that walmart has 0.27$/Sq ft as opposed to 0.1$/Sq ft for Kmart.
In the following sections we will explore each of the above mentioned techniques.
Technology : Walmart was the leader among retail chains in adopting technology to improve
bottom line.
● Traiting – Information systems were used to index product movements in the store to
over other stores and market traits, giving store managers data on local demand and
empowered them to make decisions on which products need to be displayed or taken off
shelf space. This helped reduce lost sales and leftover inventory at Walmart Stores, and
also lower operation costs compared to its competitors.
● Electronic Scanning: To facilitate dynamic pricing in store and improve operational
efficiency, Walmart introduced electronic scanning of UPC codes at point of sale.
● Refunds Tracking: A technology system was implemented to track refunds and check
authorizations that helped minimize shrinkage arising from pilferage or shoplifting.
● Satellite System: Walmart installed a satellite system in 1983 that improved
communications between stores, distribution centers and headquarter and resulted in
better sales forecasting based on data analysis. The satellite system was further utilized
for credit card authorizations that helped Walmart expand its customer base. Walmart
also improved its inventory control via satellite system.
● “Pick to Light” System: A computerized system allowed associates to find correct
location within distribution system for the orders, improving operations of distribution
center that could serve up to 150 stores within an average radius of 200 miles.
● Electronic Data Interchange (EDI): Walmart installed EDI with 3600 vendors to expedite
ordering, enable electronic invoicing and share inventory information to improve sales

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