Walmart

Here’s another installment (bonus!) of the strategy series: Walmart.

Walmart’s tagline (Save money. Live better.) speaks a lot about Walmart’s strategy: commoditize everything and make it about the price tag. Walmart does an excellent job of treating everything, be it computers, electronics, kitchen supplies, bathroom supplies, shoes or clothes, as commodities. Walmart commoditizes everything in its stores, cutting costs and margins and leading way to lower price tag on goods in there.

How does Walmart get successful in this strategy? I believe there are two main factors leading to Walmart’s success in execution. First, Walmart picks the brands that are willing to sell their products as commodities. With lots of options available in every category and Walmart being a retail powerhouse, it is always possible for them to get enough brands, including the well known ones like Dell and Levi’s, willing to commoditize and be part of Walmart’s machinery. Second, Walmart allocated its resources to develop a phenomenal supply chain that helps them reduce costs and optimize their operations. With zero storage space and inventory on wheels and conveyor belts, Walmart manages to keep costs low and make up on credit from its suppliers.

I believe a very clear strategy with perfect execution makes this one retail behemoth stand tough and consistently beat Wall Street expectations even when every other retailer is going south.

3 responses to “Walmart

  1. They are able to cut prices because they have manufacturers overseas who work for less than a dollar an hour and they do not treat their employees with respect or benefits…check my blog for “Are Wal-Mart’s Low Prices Enough to Save Face.”

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