WAL-mart has come to be the world’s largest retailer of recent times. Its expansion especially in the United States market is presumed to have contributed to around 10% of the total economic growth o9f the United States over the last few years. The company was founded by Sam Walton and its first store was opened in Rogers Arkansas in the year 1962. Ever since the company has grown by leaps and bounds and by the end of the year 2002 the company had become the world’s largest retailer.The winning strategy for Wal-Mart has been the provision of branded products at low prices as well as the existence of a world class distribution network. By the end of January 2007 Wal-Mart had more than 4068 stores in the united states alone as well as a market share of more than 28.8% in the home market(Thompson DataStream)Wal-Mart’s distribution systems:Despite being a retailer Wal-Mart is also involved in the production of some of its merchandise.
Among these are mostly textile products that are produced mostly in Latin American countries. Wal-Mart has its own distribution system including ware houses, trucks and trailers. Wal-Mart has more than 3,000 suppliers including Johnson ;Johnson, Clorox, and Procter ; Gamble. As part of its operations strategy wall-mart does not wish to be overly dependent on any supplier and thus no supplier accounts for more than 4% of its total supplies.
Some products within its product line are shipped directly from the manufacturing plants to Wal-Mart stores directly; other products are delivered to the Wal-Mart stores by manufacturers. The distribution mode depends on the distance from the Wal-Mart outlet to the nearest Wal-Mart ware house as well as the distance from the ware house to the production facility. Thus it is possible for some products to be flown to their stores e.
g. cut flowers while other products are generally carried by road.Over the past few years About 85 percent of the merchandise sold by Wal-Mart stores word wide was shipped directly through wal-marts’ distribution system to its stores.Wal-Mart uses a “saturation” strategy for the expansion of its outlets.
This standard provides that it is possible to drive from a wal-mart distribution center to a wal-mart store within a single day irrespective of the distance. This strategy ensures that one distribution center can be able to serve over 150 stores within a day.In relation to the retail chain, wal-marts’ initial idea was to build large discount stores in remote or localized areas and towns with a marketing strategy of providing what they called “everyday low prices”. This was aimed at pulling in more customers to their stores.
In addition to this wal-mart is continuously investing in more and more ultra-modern stores in order to improve on service delivery and customer satisfaction. In addition the chain store is increasing its services in order to make the retail store a one-stop shopping center. To lure in more and more customers wal-mart is investing in the sprucing up of its stores in order to make them more attractive.On top of this the retailer is seeking the construction of retail chains that display an aspect of the community surrounding the specific store. For example the monument store in Colorado that was opened in September 2006 was designed with the monument community at mind and that was why the exterior was customized using river rocks to give it a unique external appearance associated with the community. In addition wal-mart also invests in the creation of an attractive interior design for its stores.
Among these special features include efficiency lighting, larger and wider restrooms and aisles respectively, energy saving skylights as well as new signage. In addition the interiors are customized e.g.
the apparel section has wooden floors.Any firm that is capable of attaining profits that exceed the average profits in the industry it operates is claimed to have a competitive advantage. All firms seek to achieve a sustainable competitive advantage in their fields of operations.
Michael porter has identified two types of competitive advantage; these are differentiation advantage and cost advantage.Competitive advantage exists when a firm delivers benefits similar to those provide by its competitors but at less costs (cost advantage), or when the firm delivers products to its customers that have a higher value than those provided by competitors (differentiation advantage).Wal-Mart has competitive advantage over Kmart chain stores on four different perspectives. Firstly wal-mart has a competitive advantage over Kmart on gross revenue; additionally the company has competitive advantage on the fields of market capitalization, percentage of market share as well as the numbers of chain stores within the domestic market.CONCLUSION:Channel management has come to be one of the most important features of a firm’s competitive strategy. General mistakes in this field can end up costing firms millions of dollars at the same time bringing to an end the careers of many distribution channel managers.This is the reason why wal-mart is continuously investing in more efficient and less labor intensive distribution systems to improve not only customer satisfaction but also corporate profitability.