Wal-Mart's Business Performance Overview
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Questions and Answers

What was Wal-Mart's original slogan regarding pricing?

Always the Lowest Price. Always.

How did competitors influence Wal-Mart's pricing strategy in the 1990s?

Competitors prompted a change to the slogan 'Always Low Prices. Always.'

What significant sales opportunity did Wal-Mart identify among their U.S. store visitors?

10% of visitors left without a purchase, representing $9 billion in lost sales.

What is a 'Rollback' in the context of Wal-Mart's pricing strategy?

<p>A 'Rollback' is a temporary discount on key items by at least 10% for an average of 75 days.</p> Signup and view all the answers

What pricing strategy did Wal-Mart adopt for non-locally sourced items?

<p>Wal-Mart set the prices nationally for general merchandise and zoned for food prices.</p> Signup and view all the answers

How much were store managers allowed to match or beat a competitor's price?

<p>Store managers could match or beat the lowest competing price by up to 5%.</p> Signup and view all the answers

What were the results of pricing checks conducted by Wal-Mart against Kmart and Target?

<p>Wal-Mart conducted weekly price checks showing a differential of at least 2%-4% lower prices.</p> Signup and view all the answers

What strategies did Wal-Mart use to promote its EDLP image?

<p>Wal-Mart promoted its EDLP image through advertising and sponsoring community events.</p> Signup and view all the answers

What was Wal-Mart's total revenue for the fiscal year 2003?

<p>$246,525 million</p> Signup and view all the answers

How much did Wal-Mart incur in cost of goods sold during FY 2003?

<p>$191,838 million</p> Signup and view all the answers

What was the gross margin for Wal-Mart's discount stores?

<p>$16,404 million</p> Signup and view all the answers

How much did Wal-Mart report as net income for FY 2003?

<p>$8,039 million</p> Signup and view all the answers

Which competitor reported the highest revenue in FY 2003?

<p>Target with $43,917 million</p> Signup and view all the answers

How did Wal-Mart's sales per square foot in 2003 compare to those of Target and Kmart?

<p>Wal-Mart's sales per square foot in 2003 were $440, significantly higher than Target's $249 and Kmart's $221.</p> Signup and view all the answers

What was the SG&A expense for Wal-Mart's supercenters?

<p>$16,008 million</p> Signup and view all the answers

What was the interest expense reported by Kmart in FY 2003?

<p>$155 million</p> Signup and view all the answers

What was the impact of shrinkage on Wal-Mart's discount sales in 2002 compared to its competitors?

<p>Wal-Mart's shrinkage was under 1% of discount sales, while its competitors faced shrinkage rates of 2%-3%.</p> Signup and view all the answers

In terms of sales per employee in 2003, how did Wal-Mart's performance compare with that of Target and Kmart?

<p>Wal-Mart had a sales per employee average of $176,000, which was higher than Target's $151,000 and Kmart's $145,000.</p> Signup and view all the answers

What was the five-year CAGR for Wal-Mart's sales?

<p>15.6%</p> Signup and view all the answers

What labor strategies did Wal-Mart implement to control payroll expenses?

<p>Wal-Mart shared performance information with associates, solicited their ideas, and offered profit sharing.</p> Signup and view all the answers

Which competitor showed a negative growth rate in terms of revenue over the five-year period?

<p>Kmart with -0.9%</p> Signup and view all the answers

What role did store managers play in the operational efficiency of Wal-Mart compared to its competitors?

<p>Store managers at Wal-Mart had strong incentives and autonomy, allowing them to make decisions that enhanced operational efficiency.</p> Signup and view all the answers

What was Wal-Mart's EBIT for FY 2003?

<p>$13,644 million</p> Signup and view all the answers

What was the market value of Wal-Mart's equity in FY 2003?

<p>$210,987 million</p> Signup and view all the answers

How did Wal-Mart's pricing strategy and operational practices contribute to its competitive advantage?

<p>Wal-Mart's Every Day Low Price (EDLP) strategy reduced labor requirements and allowed for steady operations.</p> Signup and view all the answers

What distinguishes Wal-Mart's spending on operational costs compared to its competitors?

<p>Wal-Mart maintained lower labor expenses and better inventory control, resulting in reduced operational costs.</p> Signup and view all the answers

How much equity did Target report in book value for FY 2003?

<p>$9,443 million</p> Signup and view all the answers

In terms of energy management, how did Wal-Mart achieve efficiency across its U.S. stores?

<p>Wal-Mart controlled the lights, heat, and air conditioning of all U.S. stores from its headquarters in Bentonville.</p> Signup and view all the answers

What was the asset total for Wal-Mart's international segment?

<p>$4,404 million</p> Signup and view all the answers

Which segment of Wal-Mart had the lowest gross margin?

<p>Club with $3,348 million</p> Signup and view all the answers

Study Notes

Wal-Mart's Business Performance

  • In 2003, Wal-Mart generated $246,525 million in revenue, surpassing competitors such as Target and Kmart.
  • Wal-Mart's Discount Stores, Supercenters, and International divisions were significant revenue contributors.
  • Wal-Mart's gross margin was 54,687 million, significantly higher than its competitors, while its SG&A expenses were 41,043 million, indicative of its focus on maintaining cost control.
  • Wal-Mart's net income reached $8,039 million, highlighting its profitability.

Pricing Strategy

  • Wal-Mart prioritized an everyday low price (EDLP) strategy.
  • In 2002, Wal-Mart dedicated $10 billion to promotional items, particularly its “Rollback” program.
  • Suppliers absorbed the cost of rollbacks, benefiting from increased volume and preferred placement within Wal-Mart stores.
  • Wal-Mart set national prices for general merchandise and zonal pricing for food items, allowing for regional adjustments.
  • Wal-Mart conducted weekly price checks on competitors’ stores, consistently undercutting their prices.

Marketing and Sales

  • Wal-Mart promoted its EDLP strategy through advertising, community involvement, and in-store excitement.
  • Wal-Mart's sales per square foot significantly outperformed competitors, reaching 440,versus440, versus 440,versus249 for Target and $221 for Kmart.
  • The EDLP strategy helped minimize labor costs, as displays and price changes were less frequent, leading to a steady operation.
  • Wal-Mart demonstrated lower shrinkage rates compared to its competitors, with shrinkage under 1% of discount sales in 2002.
  • Wal-Mart achieved efficient in-store execution, from receiving and processing to shelving products.
  • Wal-Mart’s store managers held significant autonomy, balancing local sourcing with company-wide promotions.

Human Resources and Efficiency

  • Wal-Mart emphasized employee policies, including profit sharing, open communication, and idea sharing.
  • Wal-Mart focused on tightly controlling payroll expenses, which represented roughly half of its operating expenses.
  • Wal-Mart's sales per employee significantly surpassed its competitors, reaching an average of 176,000in2003,versus176,000 in 2003, versus 176,000in2003,versus151,000 for Target and $145,000 for Kmart.
  • Wal-Mart achieved labor productivity gains through IT and non-IT initiatives like cross-training and resource optimization.

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Wal-Mart Stores in 2003 (Abridged Version) PDF

Description

This quiz explores Wal-Mart's business performance in 2003, highlighting its revenue generation, gross margin, and net income. It also discusses the company's pricing strategy, including its everyday low price approach and promotional initiatives. Test your knowledge on how Wal-Mart maintained its competitive edge and profitability during this period.

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