case
A09-04-0012
Wal-Mart Stores Inc.:
Dominating Global Retailing
Mr. Lee Scott could afford the look of confidence. He had just spoken to investment analysts about the phenomenal results from the second quarter of 2003. Despite the general weakness in the world economy and the uncertain environment that prevailed, Wal-Mart had reported sales growth of 11%, amounting to $6.4 billion. The company’s associates were indeed doing the Wal-Mart cheer in faraway places like
Germany, South Korea, China, and the United Kingdom. In three decades, it had grown from its rural
Arkansas roots to become the world’s largest company, and quite possibly the most powerful retailer.
The meteoric growth did bring with it a fair share of problems. At a macro level, there had always been questions about the ability of Wal-Mart to sustain the pace of growth it had demonstrated in recent years. Once the company vaulted over the $200 billion level in annual sales, it was clear that incremental growth would be challenging. There was a nationwide backlash against big-box retailers, and Wal-Mart was front and center in that controversy. Some of the upstart chains such as Dollar
General were gearing up to nip at the heels of Wal-Mart. They claimed that customers felt lost inside the cavernous stores of Wal-Mart and that they would gladly shop at Dollar General stores, which, although much smaller, offered comparable low prices.
The emerging markets that held a lot of promise were being bitterly contested by other major players such as Carrefour, Metro, Auchan, Ahold, and Tesco. Since many of these competitors had moved into the international marketplace long before Wal-Mart, there was an experience curve handicap that Wal-Mart had to contend with.
From an operational viewpoint, the suppliers were in for a rocky ride, since the nature of their relationship with Wal-Mart had begun to change radically. Given its huge base of power, the company was able to extract significant
Wal-Mart Stores Inc.:
Dominating Global Retailing
Mr. Lee Scott could afford the look of confidence. He had just spoken to investment analysts about the phenomenal results from the second quarter of 2003. Despite the general weakness in the world economy and the uncertain environment that prevailed, Wal-Mart had reported sales growth of 11%, amounting to $6.4 billion. The company’s associates were indeed doing the Wal-Mart cheer in faraway places like
Germany, South Korea, China, and the United Kingdom. In three decades, it had grown from its rural
Arkansas roots to become the world’s largest company, and quite possibly the most powerful retailer.
The meteoric growth did bring with it a fair share of problems. At a macro level, there had always been questions about the ability of Wal-Mart to sustain the pace of growth it had demonstrated in recent years. Once the company vaulted over the $200 billion level in annual sales, it was clear that incremental growth would be challenging. There was a nationwide backlash against big-box retailers, and Wal-Mart was front and center in that controversy. Some of the upstart chains such as Dollar
General were gearing up to nip at the heels of Wal-Mart. They claimed that customers felt lost inside the cavernous stores of Wal-Mart and that they would gladly shop at Dollar General stores, which, although much smaller, offered comparable low prices.
The emerging markets that held a lot of promise were being bitterly contested by other major players such as Carrefour, Metro, Auchan, Ahold, and Tesco. Since many of these competitors had moved into the international marketplace long before Wal-Mart, there was an experience curve handicap that Wal-Mart had to contend with.
From an operational viewpoint, the suppliers were in for a rocky ride, since the nature of their relationship with Wal-Mart had begun to change radically. Given its huge base of power, the company was able to extract significant