Walmart - the high cost of low price

Here is a link to some notes on the excellent video called: "Walmart - the high cost of low price"

http://www.scribd.com/doc/37416671/Walmart-Dvd-Statistics

#business

Business Facts

Walmart sold more bananas than any other item in 2012

Social Media & Business - Walmart blitz Facebook

Apparently Walmart placed millions of adverts on Facebook... did it work?

http://business.time.com/2012/12/20/why-walmart-took-over-facebook-for-72-hours/

Business Quotes

Found this great quote from America’s favourite shopkeeper, who started his empire in 1962 in Bentonville, Arkansas. Mr Sam Walton of Walmart.

“There is only one boss. The customer. And he can fire everybody in the company from the chairman on down, simply by spending his money somewhere else.”

Sam Walton, founder of Walmart

Walmart and other stores react at last to the Newtown tragedy

It seems like it has been a long time coming, but several of the big stores in the US are starting to react to the weapons used in the tragic events in Connecticut.

This may be a case of taking a short term hit in sales and profit for a long term retention of loyal customers. Perhaps social responsibility in action. There may have been a boycott of these stores if they didn’t take a stand. An example, perhaps, that customers have more influence over stores than voters do over politicians?

Read more here:

http://money.cnn.com/2012/12/18/news/wal-mart-dicks-guns-connecticut/index.html

Walmart's failure in South Korea

Following on from their failure in Germany, Walmart failed in another market with a more easily identifiable different culture to that of America and The West: South Korea.

Walmart were keen on gaining a foothold in the South Korean market and again followed the principles which had worked well during their rapid expansion in the USA during the 70s and 80s. New stores were built on out of town or suburb sites due to the land cost being much lower.

The layout of the stores were similar to what worked in America with the famous ‘Action Alley’ and the old mantra of pile ‘em high, sell ‘em cheap in full verse.

Sadly for Walmart it really didn’t work out. In 2006 they sold their 16 stores to local company Shinsegae and their brand called E-mart. Why?

It comes down really to the average South Korean consumer/shopper.

Firstly, they don’t do end of the week big shops. Koreans prefer to shop daily, so increased frequency in shops and obviously smaller shops. This may have something to do with the smaller housing and smaller refrigerators that are common in East Asia.

Secondly, the South Korean shopper likes to be able to walk to their shop. They are not into the culture of driving miles to get a good deal the way Americans and increasingly the British are now in the habit of.

Thirdly, the South Koreans are patriotic. Perhaps this comes from the stalemate of the Korean War and the threat of their communist northern neighbours or maybe not? The South Koreans would rather buy a Korean product or shop in a Korean store than buy from the Imperial Food Conglomerate that is Walmart.

Finally, and in my opinion, most crucial of all is Korean culture. The South Koreans work long hours and work very hard. They like to spend their hard earned cash but are not too bothered about cheap items. Yes they like value, but they like quality also. Walmart were perceived (rightly or wrongly) by the South Koreans as being cheap and of poor quality. Even the store layout was criticised as looking like a warehouse.

This is in contrast to the E-mart brand which has seen some of their stores been described as “like spas”.

Walmart is not alone in failing in South Korea. Carrefour, Nestle, Nokia and even Google have all failed to set the heather on fire.

Ironically, Tesco has performed better. Tesco has placed a more local focus on what the stores look like and indeed content. They go for small packages in their Korean stores and crucially, unlike Walmart, have a local partner in Samsung, the electronics giant. Indeed, many Samsung managers and employees have transferred to Tesco to help them in their quest of eating into the South Korean grocery market.

Samsung’s local dominance also aided Tesco when creating a valuable supplier network, again something that in the US is a major strength for Walmart, but in the Oriental land of South Korea, has proven to be a noose around her neck.

Again, I think this is another interesting story/case to share with students in order that we all realise the importance of culture and that even though the world is becoming smaller, there are still differences, which let’s be honest, should be celebrated. How boring life and business would be if everything and everyone was the same!

Walmart's failure in Germany... was it cultural?

Tesco have recently announced they are going to leave the American food and grocery market to the Americans, after selling Fresh and Easy. Tesco have been taking flak for this, but they are not alone in terms of cutting their losses.

Sam Walton founded Walmart in 1962. The rapid growth of the small Arkansas store eventually reached every state in the USA and indeed has travelled across borders. The Walmart principles of keeping costs and prices cheap to entice customers has seen them become the world’s largest retailer. However not every country and culture has greeted Walmart with open arms. The example of their glorious failure in Germany is one to think about.

Walmart bought Wertkauf in 1997 and Interspar in 1998, existing German grocers. They didn’t do exactly badly. Sales of $2 billion kept an 11,000 strong staff going in 85 stores. Remarkably, their market share was only around 1.1%! Less than a decade later, Walmart’s Teutonic adventure was over, as in 2006 they sold the entire German Walmart operation to rivals Metro.

Many reasons have been put forward as to why Walmart failed.

The main reasons do seem to be cultural.

German staff are more reserved than Americans and certainly more unionised. Stories of German employees hiding in toilets to avoid the embarrassing team practices seem to be true. A team chant or song that was often used early in the mornings was also axed as staff just didn’t get it.

Customers in Germany had also become used to self-service checkouts, without need of staff help. This again was alien to Walmart. The employment of the extra staff Walmart like to use to create their atmosphere and in store culture resulted in Walmart’s labour costs sitting around the average for the industry.

In addition, the ‘Walmart welcome’ – smiling employees or ‘greeters’ as customers enter the stores had to be stopped, as the Germans – often an unfounded focus of fun for British comedians for claiming the Germans lack a sense of humour, in particular the men interpreted this as a form of flirting!

The unions did not approve of many of Walmart’s dealings with employees and their overall industrial relations. Even when they moved their HQ lock, stock and barrel they expected the staff to move with them. To their surprise, the majority of employees (including many executives) preferred to quit rather than up sticks. This seems alien to American ideals and indeed again something becoming more prevalent in the UK.

Walmart’s pricing tactics came under fire from regulators also. Walmart were accused of destroyer pricing – setting prices artificially low to destroy competitors – in order to put small local grocers out of business. Walmart were ordered to raise prices. Ironically, Walmart, who so often aim for the low cost, value market, had nowhere to go as Germany has strong discount stores such as Aldi and Lidl.

The tagline of “Everyday low prices” simply didn’t ring true in Germany.

German legislation also stood in the way of standard Walmart practices. Walmart often open 24 hour stores… 7 days a week. Germany has restrictive shopping practices which denied Walmart this often used advantage.

Even the locations of the stores they inherited from Wertkauf and Interspar were in rather less family friendly areas, which put off many target customers. The Interspar stores were generally viewed to be run down and also in need of a total refit. It took Walmart a considerable amount of time to upgrade these stores, and by then the writing was already on the wall.

Also Walmart’s practice of parachuting in American executives to lead the transition did not go down well either. Germans preferred German managers with local market knowledge.

So it seems that the generic ideals of globalisation may not work in every culture, without significant adaptation. Is Walmart’s ‘Rural America’ model inflexible enough not to grow and adapt to different peoples?

Perhaps Tesco have learned from their rivals and cut their losses as they focus on a culture and market with greater long term potential profits and a culture that perhaps is more suited for a very British type of supermarket: India.

International Business News: India

GOVERNMENT IN AIR INDIA TALKS

MUMBAI: The government is in talks with the apex bank on providing relief to the cash-strapped national carrier Air India, civil aviation minister Vayalar Ravi said on Thursday.

"The discussions with Reserve Bank of India (RBI) are on. The discussions are on about Air India's balance sheet, financial position and future projects," Ravi said, adding that he was yet to get a response from the central bank on the issue.

Earlier on Thursday, sources told Reuters, the RBI has approved extension of the tenure of loans to troubled state-run carrier Air India to 15 years from 10 years.

INDIA OPENS DOORS TO GLOBAL SUPERMARKET PLAYERS

CHANDIGARH: India's growth story is still "credible" and the move to open up the economy to global supermarket chains will help growth and control inflation, RBI governor Duvvuri Subbarao said on Friday.

"It's commendable that government has taken the initiative. Let's hope that it will improve the logistics chain and supply chain management in agriculture," Subbarao said in a speech in Chandigarh.

Late Thursday, the government approved 51 percent foreign direct investment in the supermarket sector, paving the entry of firms such as Wal-Mart, Tesco and Carrefour into one of the world's largest untapped markets.

RUPEE DOWN ON DOLLAR

MUMBAI: The rupee on Friday weakened by 19 paise to close at 52.25/26 against the dollar following fresh demand for the US currency from importers and weak equity markets.

Increased capital outflows as well as firm dollar overseas kept the rupee under pressure.

At the Interbank Foreign Exchange ( Forex) market, the domestic unit opened lower at 52.15/16 a dollar from previous close of 52.06/07. It immediately touched a high of 52.06 on late morning recovery in stocks amid expectations of intrusion by the central bank and government's efforts to encourage foreign investments by liberalising some proposals.

WALMART WELCOMES INDIA'S NEW POLICY

NEW YORK: The world's largest retailer Walmart has termed India's decision to allow 51 per cent FDI in multi-brand retail as a "first important step" and said it will study the finer details of the new policy to determine the impact on its ability to do business in India.

Walmart, which has been waiting in line with other global retailers like Carrefour and TESCO to tap the growing and lucrative Indian market with a 1.2 billion-strong population, said it was "grateful" that the Indian government realised and appreciated the value that foreign retailers like itself will bring to strengthen the country's economy.

"We believe that allowing 51 per cent FDI in multi-brand retail is a first important, step. However, we will need to study the conditions and the finer details of the new policy and the impact that it will have on our ability to do business in India," Bharti-Walmart MD and CEO Raj Jain said in an emailed statement to PTI.

FOOD INFLATION EASES IN INDIA

NEW DELHI: After hovering above double-digits for five consecutive weeks, food inflation eased in mid November prices of vegetables, fruits moderated much to the relief of policymakers. Data released by theCommerce ministry on Thursday showed food inflation stood at 9.01% in the week to November 12, easing from the previous week's 10.63%. It stood at 11.38% in the same year-ago period.

Finance Minister Pranab Mukherjee hoped the moderating trend would continue. "I hope there will be moderation in the inflation and it will have its impact on the year-end inflation," Mukherjee told reporters.

The government expects overall inflation to ease between 6% and 7% by March-end 2012. Vegetables prices rose an annual 17.60%, easing from the previous week's increase of 27.26% while fruits prices went up 4.59% year-on-year, slower than the previous week's annual rise of 5.99%. The index for food articles group declined by 0.7% to 198.5 from 199.8 (Provisional) for the previous week due to lower prices of poultry chicken (6%), bajra and fruits and vegetables (2% each) and condiments and spices, urad, fish-inland, maize and moong (1% each). But the prices of masur and coffee (4% each), tea (2%) and barley, ragi, fish-marine, wheat and gram (1% each) moved up.

Sources: BBC News, Times of India

Walmart in equal rights court action

Yesterday was International Women’s Day. So perhaps it is pertinent to highlight an impending court case in the United States between 6 female workers (or associates) and Walmart.

The women claim they have been overlooked wrongfully for promotion and pay increases during their tenure with the supermarket giant. If the case is proven successful by the US Supreme Court then it could change corporate history and perhaps at least in the supermarket industry provide equality for women.

This class action – which is when a small number of claimants sue on behalf of a larger group – it could result in a payout to over 1.6 million women Walmart associates.

The claim is filed in the famous 1964 Civil Rights Act which was passed into law by President Lyndon B. Johnson and is more famous for trying to improve the rights and freedom of African Americans in the US.

So if Walmart loses the case then they could not only find their reputation damaged severely, but out of pocket to the tune of billions of dollars!

Walmart in equal rights court action

Yesterday was International Women’s Day. So perhaps it is pertinent to highlight an impending court case in the United States between 6 female workers (or associates) and Walmart.

The women claim they have been overlooked wrongfully for promotion and pay increases during their tenure with the supermarket giant. If the case is proven successful by the US Supreme Court then it could change corporate history and perhaps at least in the supermarket industry provide equality for women.

This class action – which is when a small number of claimants sue on behalf of a larger group – it could result in a payout to over 1.6 million women Walmart associates.

The claim is filed in the famous 1964 Civil Rights Act which was passed into law by President Lyndon B. Johnson and is more famous for trying to improve the rights and freedom of African Americans in the US.

So if Walmart loses the case then they could not only find their reputation damaged severely, but out of pocket to the tune of billions of dollars!