war-mart business strategy

In 1962, Sam. After Walton put up the Wal-Mart sign in his first store, he wrote "Everyday Affordable Prices" on the left side of the sign and "Satisfactory Service" on the right side. Over the past 38 years, these two sentences have been almost the entire business philosophy of Wal-Mart. From one store to 4,000 stores, this principle has never changed.

“Everyday low prices” - a business model of cost leadership strategy

According to the retail rotation theory, cost leadership strategy is often a powerful weapon for emerging retail format companies to catch up from behind. The implementation of this strategy It covers the cost and expense control in all aspects of the commodity purchase, storage, and sales circulation process. Only by reducing the purchase price and logistics costs of commodities, and reducing the operating and management expenses of commodities, can the cost and expense control of the entire process of commodity circulation be realized. In this regard, Wal-Mart is undoubtedly the most thorough implementer and business model of cost leadership strategy in the retail industry.

Wal-Mart's business purpose is "affordable prices every day, consistent", which refers to "not only one or several types of goods are sold at low prices, but all goods are sold at the lowest price; not only in Selling at a low price temporarily or for a period of time but selling at the lowest price all year round; not just selling at a low price in one place or some areas, but selling at the lowest price in all areas." It is the guiding ideology of striving to make Wal-Mart products cheaper than other stores that makes Wal-Mart a cost control expert in the industry. It ultimately reduces costs to the lowest in the industry and truly achieves parity every day. Let’s take a look at how Walmart does this.

Purchasing cost control Purchasing cost is the focus of enterprise cost control, especially the key to cost control of retail enterprises. To achieve lower purchasing costs, we must purchase in large quantities, sell in large quantities, enjoy volume discounts on prices, and give full play to the scale effect of modern large-scale commerce. Enterprises further transform this large-volume, low-cost purchase advantage into relatively low price competitiveness, thereby effectively stimulating consumers' desire to purchase and allowing retail enterprises to take the initiative in fierce competition, forming an enterprise A virtuous cycle of business operations. In terms of purchasing goods, Wal-Mart has adopted the following practices to reduce costs: First, it adopts a central procurement system and implements unified purchasing as much as possible. Especially for high-profile products sold globally, such as Coca-Cola, Kodak film, etc., Wal-Mart generally signs a one-time purchase contract for the products sold in a year. Due to the huge quantity, its price concessions are much higher than those of its peers, making it impossible for others to purchase them. Comparative advantages; the second is to buy out the goods and settle at a fixed time. Due to the unpredictable changes in the retail market, in order to avoid operating risks, many merchants have adopted consignment sales methods to transfer risks to manufacturers, but this also increases the purchase cost of retail companies. Wal-Mart, on the other hand, implements a buyout policy and fixes the payment of goods without any delay. Although this involves the risk of overstocking and unsalable goods, it can greatly reduce the purchase cost and win the trust of suppliers; third, it is with suppliers Adopt a cooperative attitude. Due to its huge purchase volume, Wal-Mart generally purchases goods directly from factories and maintains long-term cooperative relationships with suppliers. Through computer networking, information sharing is realized. Suppliers can understand Wal-Mart's sales and inventory status at the first time and arrange production in a timely manner. and transportation. Due to the improvement of efficiency and the reduction of supplier costs, Wal-Mart will be able to pass on the benefits it obtains to customers. Under this cooperation model, suppliers, Wal-Mart and customers are all winners.

Logistics cost control is an important symbol to measure the management level of retail enterprises, and is also an important factor affecting the operating results of retail enterprises. Fast information feedback and efficient logistics management system can greatly reduce product inventory, speed up capital turnover, and naturally reduce business costs. Wal-Mart also lags behind its peers in logistics management. Wal-Mart has established a powerful distribution center system. It has the largest private satellite communication system and the largest private transportation fleet in the United States. The computers in all branches are connected to the headquarters. The distribution center receives data from stores. It only takes 2 days for the order to be purchased and delivered to the manufacturer, while it takes 5 days for Kmart and Daggett, the other two large discount stores in the United States. Wal-Mart's logistics expense rate is more than 60% lower than the latter. The reason why Wal-Mart's logistics efficiency is high is that they use the most advanced information technology. The group has more than 1,200 scientific and technical personnel specializing in information systems, and invests no less than 500 million US dollars in information every year.

In the early 1990s, Wal-Mart established a huge data center at the company's headquarters. All the stores, distribution centers and all the commodities operated by the entire group, as well as all the detailed information related to operations such as purchase, sale and inventory adjustments that occur every day, are processed through the backbone network and Communication satellites transmit to data centers. Managers make analyzes and decisions on daily operations and corporate strategies based on information from the data center. Walmart's data center has also established connections with suppliers, enabling rapid response supply chain management. Through this system, manufacturers can access Wal-Mart's computer distribution system and data center, and directly obtain the dynamic status of the merchandise they supply from the POS, such as the sales statistics of different stores and different commodities, the inventory and deployment status of Wal-Mart's warehouses, and sales Forecasts, emails, payment notifications, etc. are used as the basis for arranging production, supply and delivery. Manufacturers and suppliers can check Wal-Mart's production and sales plans through this system. This information system has brought huge benefits to both manufacturers and Wal-Mart.

Other cost control Wal-Mart's cost control is reflected in every small link. In the offices of Wal-Mart’s managers at all levels, there are no expensive office supplies, furniture, carpets, or luxurious decorations. The company often encourages employees to try their best to come up with ideas to save money, and continuously rewards and promotes those who are good at loss control. , creative employees in product display and product promotion. Wal-Mart stores have simple decorations, and most of their products are packaged in large packages. At the same time, the store location will never be located in a busy commercial area with expensive rent. In addition, Wal-Mart tries to reduce advertising expenses as much as possible. They believe that maintaining "affordable prices every day" is the best advertising. Among its peers in the retail industry, Wal-Mart has the lowest advertising expenses but the largest sales. The following is some data comparing Wal-Mart's cost control with its peers, from which we can see the competitive advantage formed by the implementation of Wal-Mart's cost leadership strategy.

"Satisfactory service" - the implementation standard of differentiation strategy. In addition to cost control that outperforms its peers, Waloma's business secret lies in constantly understanding the needs of customers, putting itself in the shoes of customers, and maximizing Provide convenience to customers to the greatest extent possible. Walton often said, “What’s the secret to our success? It’s that we want to exceed our customers’ needs every hour of every day. If you imagine yourself as a customer, you want everything to be exactly what you want—a full range of products.” , excellent quality, low product prices, warm and friendly services, convenient and flexible business hours, convenient parking conditions, etc.” Therefore, although Wal-Mart emerged in the retail industry with a warehouse-style operation, its business method determines that it is impossible to provide too many services. , but they always regard superb service as their supreme responsibility. There is such a slogan hanging in all Wal-Mart stores: 1. The customer is always right; 2. If the customer makes a mistake, please refer to the first one. Wal-Mart not only provides customers with high-quality and low-priced goods, but also provides meticulous and warm services. If customers come to the store to shop on a rainy day, the clerk will pick them up into the store and put them in the car under an umbrella. Once, a customer went to Wal-Mart looking for a special paint, but the store was out of stock, so the clerk personally took the customer to the paint store opposite to buy it. Wal-Mart often says to its employees: "Let us treat customers with kindness and enthusiasm, just like entertaining guests at home, so that they feel that we are always caring about their needs."

Since customer service is an intangible Soft jobs vary from person to person. The service provider will always have factors such as mood and physical condition that affect the quality of the service. It will also be caused by differences in the personal qualities, experience, and training levels of each service staff. Differences in service levels. In order to eliminate differences in service levels, Wal-Mart has established standardized service standards. These service standards are very specific, concise and unambiguous. For example, employees at Wal-Mart stores in the United States are required to swear an oath: "I promise to smile to customers within three meters and look directly in their eyes to express welcome." During employee training, The company even requires employees to smile with a row of eight teeth exposed. Walmart warned employees who entered the store on the first day: "When customers come to the store, they pay us wages. No matter what, we must treat them well." Customers should always try their best to help customers, and always go to customers and ask them if they need help. "

Walmart also declares: "We strive to ensure that every product will satisfy you. If you are satisfied, you can return the product within one month and get back the full payment.

"The reason why Wal-Mart does this is not only because it tries to purchase brand-name and high-quality products while maintaining price parity, and the quality of the goods is guaranteed, but more importantly, it believes that the cost of regaining a customer is higher than maintaining the current price. There are five times more customers. Therefore, Wal-Mart would rather take back an unsatisfied product than lose an unsatisfied customer. In October 1999, Wal-Mart's current president Li Sige came to China. He believed that: China's retail sales. The industry will develop very fast and competition will be extremely fierce. In addition to the intervention of multinational companies, China's domestic retail companies will also have many opportunities to grow. At the same time, they will also face challenges in how to treat customers and cooperate. Partners will be the key to the ultimate victory in the competition. Always consider the needs of customers and meet the needs of customers. Respecting customers and serving customers are the most important things.

It is this kind of time that puts customer needs first. First, the excellent service quality of treating customers well and the business strategy of creating value for customers in terms of price have enabled Wal-Mart to win the trust of customers, which has brought huge returns. "This warning from Mr. Walton to his colleagues has been passed down to this day and has been playing an immeasurable role in the prosperity of Wal-Mart.