Wmsc Presentation Rev

SURVIVING IN A WAL-MART SUPERCENTER ENVIRONMENT

By

Kenneth E. Stone

Professor of Economics

Iowa State University

2Ken Stone, ISU, Ames, IA

Top Ten North American Retailers By Sales, 2001

$31.1

$32.0

$34.3

$34.8

$37.9

$39.9

$41.1

$50.1

$53.6

$219.8

$0 $100,000 $200,000 $300,000

K Mart

J.C. Penney

Safeway

Costco

Albertson's

Target

Sears

Kroger

Home Depot

Wal-Mart

Millions of DollarsSOURCE: Chain Store News


Top 10 U.S. Corporations By Sales, 2002

72.9

85.9

99.7

112.0

125.9

138.7

162.4

177.3

191.6

219.8

0 50 100 150 200 250

Phillip Morris

IBM

Chevron/Texaco

Citigroup

General Electric

Enron

Ford Motor

General Motors

Exxon-Mobil

Wal-Mart

Sales ($ Billions)SOURCE: Fortune Magazine


Top U.S. World Corporations by Sales, 2002

120.0

125.0

135.0

136.0

138.0

162.0

174.0

177.0

191

219.8

0 50 100 150 200 250

Toyota

GE

Royal Dutch/Shell

Daimler/Chrysler

Enron ?

Ford Motor

BP

GM

Exxon/Mobil

Wal-Mart

Sales ($ Billions)SOURCE: Fortune Magazine


Top North American Food Stores, 2001

$11.9

$12.9

$15.3

$20.9

$34.3

$37.9

$50.1

$76.0

$0 $10 $20 $30 $40 $50 $60 $70 $80 $90 $100

Meijer's

Winn-Dixie Stores

Publix

SuperValue

Safeway

Albertson's

Kroger

Wal-Mart Supercenters

Billions of Dollars

1

2

3

4

5

6

7

8

SOURCE: Supermarket News


Top North American Food Stores, 2001

$3.2

$3.8

$4.0

$4.4

$5.0

$5.1

$9.0

$11.0

$0 $2 $4 $6 $8 $10 $12 $14

Super Target

Hy-Vee

Pathmark Stores

Shaw's Supermarkets

Fred Meyer

Super K Mart

H.E. Butt

A & P

Billions of Dollars

9

10

11

12

13

14

15

16

SOURCE: Supermarket News


Average Sales Per Store for U.S. Supercenter Stores, 2001

$33.64

$35.00

$36.33

$42.12

$64.55

$70.09

$77.83

$80.02

$0.0 $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 $70.0 $80.0 $90.0

Big Bear Plus

DAIEI USA

Fred Meyer

Super K Mart

Biggs

Super Target

Wal-Mart Supercenters

Meijer

Millions of DollarsSOURCE: DSN Retailing Today


Average Sales Per Store for U.S. Club Stores, 2001

$8.89

$42.58

$60.30

$138.91

$0.0 $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0

Smart & Final

BJ's Wholesale Club

Sam's WarehouseClub

Costco

Millions of DollarsSOURCE: DSN Retailing Today


U. S. MARKET SHARE OF MAJOR GROCERY RETAILERS

Source: Fortune Magazine

1995 1996 1997 1998 1999 2000 20012

4

6

8

10

12Market Share (%)

Wal-Mart Kroger Albertson's Safeway

Wal-Mart

Kroger

Albertson’s

Safeway


WAL-MART SUPERCENTER MARKET SHARES

SOURCE: Trade Dimensions, Dec. 2001

31.9

24.2

21.2

17.8

16.2

15.7

15

13.6

12

Springfield, MO

Memphis

Oklahoma City

Birmingham

Albuquerque

Kansas City

Saint Louis

Indianapolis

Des Moines

Market

0 5 10 15 20 25 30 35 40

WM Market Share, %

An Overview of Wal-Mart


SIZES OF WAL-MART SUPERCENTERS

• 109,000 Sq. Ft.– Smaller towns

• 150,000 Sq. Ft. – Market areas of 30,000+

• 180,000 Sq. Ft.– Market areas of 30,000-50,000

• 220,000 Sq. Ft.– Market areas larger than 50,000


WAL-MARTSUPERCENTERS

LADIESAPPAREL

MENSAPPAREL

CHECKOUTS

GROCERY

HEALTH &BEAUTY AIDS

PHARMACY COSMETICS

LAYAWAY

FABRICS & CRAFTS

SEASONAL

TOYS & GAMES

HARDWARE

PAINT SUPPLIES

AUTOMOTIVE

BA

BY

WO

RLD

GIR

LSA

PP

AR

EL

SPORTINGGOODS

DRESSINGROOM

HOSIERY

SHOES DAIRYBAKERYBEDDING DRAPERIES

SMALL APPLIANCES

HOUSEWARES

INT

IMA

TE

S

CA

ME

RA

SE

LEC

TR

ON

ICS

RE

CO

RD

ER

S

CARDS & BOOKS

DELI

OFFICE SUPPLIES

PET FOOD

HOME DECOR& FURNISHINGS

MEATS

PRODUCE

CANDY, CIGARETTES,CRACKERS, & COOKIES

BO

YS

AP

PA

RE

L

FASHIONACCESSORIES

JEWRY

DOMESTICS

GA

RD

EN

CE

NT

ER

AU

TO

CE

NT

ER

PUBLIC RESTROOMS

DELI CAFE

ICE CREAM

120,000 SQUARE FEET


WAL-MARTSUPERCENTERS

LADIESAPPAREL

MENSAPPAREL

CHECKOUTS

GROCERY

HEALTH &BEAUTY AIDS

PHARMACY COSMETICS

LAYAWAY

FABRICS & CRAFTS

SEASONAL

TOYS & GAMES

HARDWARE

PAINT SUPPLIES

AUTOMOTIVE

BA

BY

WO

RLD

GIR

LSA

PP

AR

EL

SPORTINGGOODS

DRESSINGROOM

HOSIERY

SHOES DAIRYBAKERYBEDDING DRAPERIES

SMALL APPLIANCES

HOUSEWARES

INT

IMA

TE

S

CA

ME

RA

SE

LEC

TR

ON

ICS

RE

CO

RD

ER

S

CARDS & BOOKS

DELI

OFFICE SUPPLIES

PET FOOD

HOME DECOR& FURNISHINGS

MEATS

PRODUCE

CANDY, CIGARETTES,CRACKERS, & COOKIES

BO

YS

AP

PA

RE

L

FASHIONACCESSORIES

JEWRY

DOMESTICS

GA

RD

EN

CE

NT

ER

AU

TO

CE

NT

ER

PUBLIC RESTROOMS

DELI CAFE

ICE CREAM

PLUS 60-70,000 SQ.FT.OF GROCERY SPACE


Number of Wal-Mart Supercenters in the U.S., 2002

Alaska - 0 StoresHawaii - 0 Stores 1,066 Stores

3

36

10

5

011

14 13

22

62

07

10

19

19

53

36

135

40

4334 43 53

69

31

3449

39

30

13

8

39 1934

17

5

4520

45

430

2

1

0


Wal-Mart Supercenter, 220,000 Sq. Ft., Ankeny, IA


Wal-Mart Supercenter, 109,000 Sq. Ft., With Gas Station, Knoxville, IA


Number of Neighborhood Markets in the U.S., 2002

Alaska - 0 StoresHawaii - 0 Stores 31 Stores


Wal-Mart Net Sales1981-2001

1.4 3.4 6.4 11.920.6

32.6

55.5

82.5

104.9

137.6

193.3219.8

-30

20

70

120

170

220

81 83 85 87 89 91 93 95 97 99 '01 '02

Fiscal Year

Billion $


39 Centers

Wal-Mart Regional Distribution Centers, 2002


Wal-Mart Food Distribution Centers, 2002

26 Centers


Cost of DistributionAs a Percentage of Sales

5.0%

3.5%

1.3%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Sears K-Mart Wal-Mart

Source: Discount Store News


Cost of Distribution ComparisonFor $25 Billion Annual Sales

$325 Mil.

0 200 400 600 800 1000 1200 1400

Sears

K-Mart

Wal-Mart

$550 Mil. more than Wal-Mart

$925 Mil. more than Wal-Mart

$875 Mil.

$1.25 Bil.


SUPER TARGET STORE LAYOUT

GENERALMERCHANDISE


SUPER TARGET FOOD LAYOUT-ARCHER FARMSAISLE 1 AISLE 2 AISLE 3

Bread Soup AsianStuffing Canned ItalianPeanut Butter Canned Fruit MexicanJams/Jelly Dry

Rice/BeansKosher

Salad Dressing Packaged Dinners

CoffeeKetchup Canned Tea

AISLE 4 AISLE 5 AISLE 6

Baking Mixes Lunch Box CookiesOil Juice Box Popcorn

Syrup Cereal CrackersSpices Pudding Cups Natural JuiceDried Fruit Granola Bars JuiceJello Natural Cereal Powdered

DrinksAISLE 7 AISLE 8 AISLE 9

Water Soda Laundry New Age Beverages

Tonic Water Dish SoapSport Drinks Trash Bags BleachSnack Nuts Plastic Wrap StarchNatural Insect Household Chips Air Freshener Fabric

SoftenersAISLE 10 AISLE 11 AISLE 12

Paper Towels Wine Frozen DinnersBath Tissue Champagne Frozen PastaNapkins Beer Meal SolutionsFacial Tissues Drink Mixes Frozen PotatoPaper Plates Wine Coolers Frozen

VegetablesPaper Cups Liquor Frozen Bread AISLE 13

Frozen Meat

Frozen Frozen JuiceFrozen PizzaFrozen DessertsIce Cream


TARGET 5-YEAR SALES PROJECTIONS

*=Projected

29.332.9

37.843.5

50.1

57.6

2000 2001* 2002* 2003* 2004* 2005*

Year

0

10

20

30

40

50

60

70Sales ($ Million)

SOURCE: DSN Retailing Today

Impacts of Wal-Mart Stores on Existing Businesses

12 Year Study of Regular Wal-Mart Stores in Iowa


IMPACTS OF BIG BOX STORESRules of Thumb

• Local businesses that are selling something different are in good luck and will probably experience an increase in sales because of the “spillover” effect of the additional traffic.

• Local businesses that are selling the same merchandise as the big box store will probably lose sales unless they reposition themselves.


Change in General Merchandise Salesin Iowa Towns, 12 Years after Wal-Mart

-13

-29

56

44

26

-7

-33

-5-4

-40-30-20-10

010203040506070

4 Years 8 Years 12 Years

Years After Wal-Mart

Non Wal-Mart Towns Wal-Mart Towns Cities

Percent Change


Change in Building Materials Salesin Iowa Towns, 12 Years after Wal-Mart

-19-24

-14-10

1420

-32

36

2

-40

-30

-20

-10

0

10

20

30

40




Percent Change


Change in Eating & Drinking Salesin Iowa Towns, 12 Years after Wal-Mart

-4

-6

5

76

-2-3

3

1

-10

0

10




Percent Change


Change in Automotive Salesin Iowa Towns, 12 Years after Wal-Mart

-2-5

4

02

15

-2

20

0

-10

0

10

20

30




Percent Change


Change in Food Store Salesin Iowa Towns, 12 Years after Wal-Mart

1

8

-4

3 31

16

1

-2

-10

0

10

20




Percent Change


Change in Home Furnishings Salesin Iowa Towns, 12 Years after Wal-Mart

-26

-32

0

-3 -1

0

-38

32

-50

-40

-30

-20

-10

0

10




Percent Change


Change in Apparel Salesin Iowa Towns, 12 Years after Wal-Mart

-17

-30

-10

-21

-27

1

-38

35

-50

-40

-30

-20

-10

0

10




Percent Change


Change in Specialty Store Salesin Iowa Towns, 12 Years after Wal-Mart

-18

-30

-4 -5

-11

1

-30

6

0

-40

-30

-20

-10

0

10




Percent Change


Change in Services Salesin Iowa Towns, 12 Years after Wal-Mart

-17-20

-5-2 -2

6

-14

8

4

-30

-20

-10

0

10




Percent Change


Change in Total Salesin Iowa Towns, 12 Years after Wal-Mart

-11

-17

7 6

-3

7

-18

12

4

-20

-10

0

10

20




Percent Change


CHANGES IN TOTAL SALES IN IOWA SMALL TOWNS, 12 YEARS AFTER WAL-MART*

* Towns Under 4,000 Population

-9.6

-13.9-16.4 -17.6

-22.7

-26.5-29.1

-27 -27.4 -27 -27.1 -27.3

-35

-30

-25

-20

-15

-10

-5

01 2 3 4 5 6 7 8 9 10 11 12

Year After Wal-Mart

Per

cen

t C

han

ge


Percent Change in Per Capita Sales in Iowa Stores, 1983-2000

-69.8%-65.5%

-37.6%

-37.1%-30.3%

-22.7%

-21.3%

-13.8%

-11.4%-11.1% 95.6%

-80% -60% -40% -20% 0% 20% 40% 60% 80% 100%

Percent Change in Sales

Men's Apparel Stores

Variety Stores

Women's Clothing

Shoe Stores

Misc. Apparel Stores

Drug Stores

Garden Supply Stores

Grocery Stores

Jewelry Stores

Hardware Stores

Department Stores


U.S. Stores Impacted by Discount Department Stores, 1980-2000

-44.5%

-43.6%

-28.9%

-22.0%

-21.3%

-21.3%

-19.9%

-15.2%

-10.9%

50.1%

-60% -40% -20% 0% 20% 40% 60%

Conventional Dept. Stores*

Men's & Boy's Clothing

Hardware Stores

Women's Clothing

Household Appliance Stores

Shoe Stores

Variety Stores

Grocery Stores

Auto & Home Supply Stores

Discount Dept. Stores*

Percent Change in Real Sales* Percent Change from 1987-2000


Percent Change in Sales of Iowa Firms Due to Lifestyle Changes, 1983-2000

18.6

19.3

44.2

68.7

69.3

72.7

75.2

75.6

82.4

295.3

0 50 100 150 200 250 300 350

Eating & Drinking Places

Used Merchandise

Book & Stationery Stores

Sporting Goods Stores

Family Apparel Stores

Appliance & Entertainment

Home Furnishings Stores

Building Materials

Gift & Novelty Stores

Hobby, Toy, Craft Stores



U.S. High Growth Stores, 1980-2000

14.4%

20.2%

37.7%

49.6%

58.3%

62.0%

98.8%

109.2%

124.3%

274.3%

0% 50% 100% 150% 200% 250% 300%

Floor Covering Stores

Furniture & Home Furnishings

Eating Places

Sporting Goods

Building Materials Supply

Drug & Proprietary Stores

Family Clothing Stores

Appl., Radio, TV & Computer

Book Stores

Mail Order


Texas Supercenter Study


Department Store Sales Changes in Texas Towns After Wal-Mart Supercenters Opened

32.2

37.1

25.8

0 5 10 15 20 25 30 35 40

Non SupercenterTowns

SupercenterTowns

Percent Change

Year 1

Year 2

Year 3


Grocery Store Sales Changes in Texas Towns After Wal-Mart Supercenters Opened

0.5

-17.6

-2.7

-13.5

-1

-8.1

-20 -15 -10 -5 0 5


SupercenterTowns

Percent Change

Year 1

Year 2

Year 3


Drug Store Sales Changes in Texas Towns After Wal-Mart Supercenters Opened

10.2

-20.2

2.7

-11.5

3.6

-6.4

-25 -20 -15 -10 -5 0 5 10 15


SupercenterTowns

Percent Change

Year 1

Year 2

Year 3


Total Sales Changes in Texas Towns After Wal-Mart Supercenters Opened

-2.64

1.7

-1.45

2.77

-1.21

3.85

-3 -2 -1 0 1 2 3 4 5


SupercenterTowns

Percent Change

Year 1

Year 2

Year 3

MISSISSIPPI WAL-MART SUPERCENTER STUDY


% Change in Av. General Merchandise Pull Factor for Mississippi Host Counties After Entry of Wal-Mart

SupercenterCounties Less Than 100,000 Population

52.0%59.0%58.0%

49.0%

40.0%

0%

10%

20%

31%

41%

51%

61%

71%

Year 1 Year 2 Year 3 Year 4 Year 5


% Change in Av. Food Store Pull Factor for Mississippi Host Counties After Entry of Wal-Mart Supercenter

Counties Less Than 100,000 Population

-16.8%

-13.4%

-8.4%

-12.6%

-10.1%

-18%

-16%

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%Year 1 Year 2 Year 3 Year 4 Year 5


% Change in Av. Total Sales Pull Factor for Mississippi Host Counties After Entry of Wal-Mart Supercenter

Counties Less Than 100,000 Population

3.1% 3.1%

9.4%10.4%

4.2%

0%

2%

4%

6%

8%

10%

12%

Year 1 Year 2 Year 3 Year 4 Year 5

Study of Impact of Iowa Wal-Mart Supercenters


IMPACT OF WAL-MART SUPERCENTERS ON HOST TOWNS IN IOWA

Food Stores

-15

-3.5

-8

-1.6

-16 -14 -12 -10 -8 -6 -4 -2 0

SC Town

WM Town

Pull Factor Percent Change

Year 1

Year 2


Dillow’s Super Value Closed One Year After Wal-Mart Supercenter Opened in Ankeny, IA


Jubilee Food Store in Polk City, IA, Closed3 Months After Wal-Mart Supercenter Opened in Ankeny, IA


Town & Country Grocery in Slater, IA, Still Open4 Years After Wal-Mart Supercenter Opened in Ankeny, IA



General Merchandise

37.2

-5.5

36.7

-2

-10 0 10 20 30 40

SC Town

WM Town


Year 1

Year 2



Total Sales

5.1

-6.8

5.6

-4.9

-8 -6 -4 -2 0 2 4 6 8

SC Town

WM Town


Year 1

Year 2


First-Year Impact of Supercenter on Host Town Sales

(200,000 Sq.Ft., Average Town Population = 25,000)

-45

-30

25

70

-10

-60 -50 -40 -30 -20 -10 0 10 20 30 40 50 60 70 80

Loss by all HostTown

Loss by ExistingGM

Loss by ExistingGroceries

Net Gain inTown Sales

New Store

Sales ($Million)Based on Studies in Iowa & MS

Actions Necessary for Competing


HAVE AN ATTITUDE CHECK

• In a free-enterprise economy, all firms are free to compete.

• Recognize that big-box stores will enlarge the trade area size.

• It is possible to co-exist in a mass merchandise environment.

• You will probably need to change your mode of operation.


DEVELOP A STRATEGY

• Analyze the Market– Ages

– Income

– Life styles

• Analyze Your Business and the Competition for:– Strengths

– Weaknesses

– Market Share


DEVELOP A STRATEGY

• Determine your competitive advantage

• Determine your niche

• Determine necessary changes– Target market– Inventory– Pricing structure– Marketing methods


Wal-Mart’s Over-archingStrategy is Every-Day-

Low-Prices

The Word “Sale”is Never Mentioned

In Today’s Ads.


Wal-Mart’s MottoWent from “Alwaysthe Lowest Price” to“Always the LowPrice”.


Wal-Mart’s Motto Added “on the Brands You Trust”But Dropped this as Private Label Was Added.


Wal-Mart Used the Term “Sale” in Their Earlier Ads,But Dropped it in Order to Strengthen EDLP


FINALLY, WAL-MART REALIZED THAT IT COULDN’T HAVE SALES AND EDLP


Wal-Mart Adopted the “Smiley Face” as aSymbol for Falling

Prices, a euphemism forSale.


EDLP Has Evolvedto

“Always, Low Prices”


Wal-Mart Grand OpeningsFocus on Special Valueson Price-Sensitive Items


MERCHANDISING TIPS

• Try to handle different merchandise.

• Fill the voids.

• Buy well.

• Consider upscale merchandise.

• Emphasize private-label merchandise.

• Get rid of slow-moving items.


Private Label SKU Count and Share of Sales, 2000

Company SKU Count PL Share of Total Dollars

A & P 2,300 23%

Winn Dixie 2,700 23%

Kroger 6,000 20%

Safeway 3,000 20%

Wal-Mart 5,000 20%

Albertson’s 6,000 16%


MARKETING TIPS

• Know and evaluate your market.

• Focus your advertising; stress competitive advantage.

• Sharpen your pricing skills.

• Opening hours convenient to customer

• Adopt a “no hassle” returns policy.


CUB (SUPERVALUE)-UPSCALE BOX STORE

Big SelectionLow Prices

Low ServiceGood Hours(Bag Your

Own)


HY-VEE, MIDWESTERN STATES

Hy-Vee has Stores in

Several Midwestern

States. New Stores

Are Very Large with

Large Selections,

Many Amenities and

Full Service.


HY-VEE FEATURES HIGH QUALITY MEATS


Fareway is an IowaChain that has anOutstanding MeatDepartment and

Produces Very GoodWeekly Circulars,Featuring GoodValues on Price-Sensitive Items


ALDI is a Limited-Selection, Low-Service

Store Featuring LowPrices Primarily onPrivate-Label Items


BANANAS ARE HIGHLY PRICE-SENSITIVEPrice Check, Ames & Ankeny, IA, Late July, 02

Dahl’s $.19

Aldi $.25

Super T $.45

Fareway $.45

WM SC $.48

CUB $.49

Hy-Vee $.49


MIRACLE WHIP IS VERY PRICE SENSITIVEPrice Check, Ames & Ankeny, IA, Late July 02

WM SC $1.97

Cub $1.99

Super T $2.00

Fareway $2.19

Dahl’s $2.49

Hy-Vee $2.79

K Mart $3.39


Wal-Mart $2.00

Fareway $2.00

Super T $2.04

Cub $2.59

Dahl’s $2.69

K Mart $2.79

Hy-Vee $3.39

SNACK CRACKERS ARE SOMEWHAT PRICE SENSITIVEPrice Check, Ames & Ankeny, IA, Late July 02


LAUNDRY DETERGENT IS VERY PRICE SENSITIVEPrice Check, Ames & Ankeny, IA, Late July 02

WM SC $5.24

Super T $5.24

Cub $5.48

Hy-Vee $5.49

Fareway $5.49

K Mart $5.99

Dahl’s $5.99


SALTINE CRACKERS ARE PRICE-SENSITIVEPrice Check, Ames & Ankeny, IA, Last Week July, 02

Fareway $1.50

Super T $1.54

WM SC $1.67

Hy-Vee $1.99

Dahl’s $2.09

Cub $2.19

K Mart $2.19


PAPER PRODUCTS (LIKE KLEENEX) ARE PRICE-SENSITIVEPrice Check, Ames & Ankeny, IA, Late July, 02

Super T $.89

Hy-Vee $.97

WM SC $.98

Fareway $1.07

CUB $1.09

Dahl’s $1.17

K Mart $1.29


PET FOOD IS VERY PRICE-SENSITIVEPrice Check, Ames & Ankeny, IA, Late July 02

CUB $7.55

WM SC $8.28

Super T $8.29

Dahl’s $8.79

Hy-Vee $9.17

Fareway N/A


COFFEE IS SOMEWHAT PRICE-SENSITIVEPrice Check, Ames & Ankeny, IA, Late July 02

Dahl’s $5.55

WM SC $5.67

CUB $5.89

Fareway $5.89

Super T $6.49

K Mart $6.49

Hy-Vee N/A


LOW WATTAGE BULBS ARE PRICE-SENSITIVEPrice Check, Ames & Ankeny, IA, Late July, 02

CUB $0.99

WM SC $1.10

Super T $1.14

Fareway $1.48

Hy-Vee $1.48

Dahl’s $1.99


HIGHER WATTAGE BULBS ARE NOT PRICE-SENSITIVEPrice Check, Ames & Ankeny, IA, Late July, 02

CUB $1.46

Fareway $1.69

Hy-Vee $1.69

Super T $1.94

WM SC $1.96

Dahl’s $1.99


WAL-MART IS ESTABLISHING A LARGE PRIVATE LABEL SELECTION (GREAT VALUE)


WAL-MART PRICING STRATEGY

Every Day Low Prices means we will be as low or lower than the competition on all similar items we carry. It has never been our intention to beat the competition on every item. We ignore short-term incentives designed to hype sales for a short period of time. This means we do not support couponing, rebates, sweepstakes, unnecessary advertising, etc. because those activities add costs that will come back to us in the form of higher cost of goods.



“Our basic competitive policy for the fresh department is:

– Use the 850 list plus any items specified by your regional vice president.

– Meet all competitive prices.

– If a competitor lowers the price on additional items in the marketplace, then you are to meet the price of the additional competition items.

– If a competitor lowers additional items again, then you should meet the price on those additional items, plus lower prices on other key items.”



“Wal-Mart will not be undersold by any competitor. If a competitor has a lower price on any item, we will meet that price. Store Managers have the authority to lower our prices to meet or beat our competitors. We must regularly check our competitors and react to any changes.”


STRESS CUSTOMER RELATIONS

• Offer a friendly greeting to customers.

• Solicit complaints, take action.

• Go the extra mile.

• It costs less to keep existing customers.

• Live by the golden rule.


OFFER GREAT SERVICE

• Develop knowledge of store and products.

• Offer deliveries/Carry-outs.

• Develop special order capability.

• Become a one-stop service center.

• Exceed customer expectations.


Some Stores, Like HardwaresAre Adding a Variety of

Services as a Way ofAttracting Customers


DEVELOP A TEAM CONCEPT

• Set a good example.

• Train employees well.

• Have regular company meetings.

• Empower employees.

• Develop participative management.

• Consider “open book” management.

• Reward employees on total performance.


CONTINUALLY IMPROVE OPERATIONS

• Adopt modern technology.

• “Brain-storm” to find better methods.

• Persist in reducing operating costs.

• Maintain and repair facilities (carts).

• Know your financial statements.

• Network with other merchants.


Self Checkout StationIn 45 States, Over 2,000 Stores


TIPS FOR GROCERS

• Find your niche.– Meats– Full service– Deli/catering

• Price-sensitive items within 10% of WM• Stress private label items• Focus on faster and easier shopping• Feature carry-out and/or drive-by service


TIPS FOR GROCERS (Cont’d)

• Develop a loyalty program• Clean and repair (restrooms, carts, dairy,etc.)• Check big-box prices on “blind items”• Post in-store signage when you have lower price

on “blind items.”• Advertise regularly, showing good prices on price-

sensitive items.• Always state your competitive advantages in your

ads.


SAM WALTON’S TEN COMMANDMENTS OF BUSINESS

LEADERSHIP1. Commit to your business.2. Share your profits.3. Motivate your partners.4. Communicate all that you know.5. Appreciate what your associates do.6. Celebrate your success.7. Listen to everyone in the company.8. Exceed your customer’s expectations.9. Control your expenses better than competitors10. Swim upstream and avoid conventional wisdom.


FOR ADDITIONAL INFORMATION

Contact: Kenneth E. StoneProfessor of EconomicsIowa State UniversityAmes, IA 50011

Phone: (515) 294-6269Fax: (515) 294-1700E-mail: [email protected]: WWW.econ.iastate.edu/retail