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“She went on to say that the day our store opened turned out to be the biggest day she had ever had since her paint store opened. ‘You’re pulling all these people into our shopping center. And the neatest thing happened to me Saturday. A man came in looking for a particular kind of paint and said he knew we had it. He said he knew because he’d been in the Wal-Mart looking for it, and the paint department manager told him we had it and sent him on over.
If your store is complementary to Walmart, then being near Walmart can increase your sales. But don’t count on Walmart keeping off your turf forever.
I am positive that we are most welcome in almost every community where we do business. That’s partly because of our economic contribution. But it’s also because we go out of our way to instill a sense of community
Get tightly integrated with the local community for competitive advantage.
Our vendors resented us for prying the lowest prices cut of them.
Walmart ‘s size is an advantage when negotiating with suppliers
we need to use middlemen to deal with smaller manufacturers and make the process more efficient.
we give the manufacturer the advantage of knowing what our needs are going to be a year out, or six months out, or even two years out. Then, as long as they are honest with us and try to lower their costs as much as they can and keep turning out a product that the customers want, we can stay with them. We both win, and most important, the customer wins too. The added efficiency of the whole process enables the manufacturer to reduce its costs, which allows us to lower our prices.
Help suppliers cut their costs, but don’t compromise on price when buying
‘If you were a customer, what related items would you want to buy with this? And how would you find them?’
Cross-selling
Kmart had interested me ever since the first store went up in 1962. I was in their stores constantly because they were the laboratory, and they were better than we were.
“From the time anybody first noticed Sam, it was obvious he had adopted almost all of the original Kmart ideas.
The percentage of gross margin in this industry—really, the markup on merchandise—has dropped steadily from around 35 percent in the early sixties to only 22 percent today. Almost all of that represents increased value and savings to the customers
Hypermart—giant stores with groceries and general merchandise under one roof.
when one of our experiments works, watch out. Take Sam’s Clubs, for example. It was an experiment when we started it up in 1983, and now nine years later it’s a $10 billion business with more than 217 stores and terrific growth potential. Sam’s are big stores in warehouse-type buildings aimed at small-business owners and other customers who buy merchandise in bulk.
👍Walmart warehouses (serving local branches) are also acting as wholesale shops for external customers
a whole new class of sub-discounter undercutting our prices, wholesalers with very low overhead who were selling at margins way below the 22 percent in the discount business—5 to 7 percent.
I like to keep everybody guessing. I don’t want our competitors getting too comfortable with feeling like they can predict what we’re going to do. And I don’t want our own executives feeling that way either.
Information is power. Seek out information from competitors and never give any back
the efficiencies and economies of scale we realize from our distribution system give us one of our greatest competitive advantages.
“When you own and manage your distribution and logistics channel, you have a great competitive advantage over companies that rely on third-party suppliers.
I guess we’ve always known that information gives you a certain power, but the degree to which we can retrieve it in our computer really does give us the power of competitive advantage.
I tried to operate on a 2 percent general office expense structure. In other words, 2 percent of sales should have been enough to carry our buying office, our general office expense, my salary, Bud’s salary—and after we started adding district managers or any other officers—their salaries too. Believe it or not, we haven’t changed that basic formula from five stores to two thousand stores. In fact, we are actually operating at a far lower percentage today in office overhead than we did thirty years ago, and that includes tremendous expenses for computer support and distribution center
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Some people have crowed a great deal about all their philanthropy over the years, but too many of these foundations, I suspect, were only begun as tax shelters without much real sense of purpose. Many of them seem to have become very nice places to work for a small group of folks who have built up pretty thick crusts of administration and bureaucracy.
Wal-Mart has been a powerful force for improving the standard of living in our mostly rural trade areas, and our customers recognize it.
There’s no charity at all involved in this program, and, in fact, I’m proud to say that it benefits us at Wal-Mart in a very direct way. Every job we save creates another potential Wal-Mart customer who’s not worrying about where his or her next dollar’s coming from. They have a job, and we have a customer.
Information is power, and the gain you get from empowering your associates more than offsets the risk of informing your competitors.
We can get beyond a lot of our old adversarial relationships and establish win-win partnerships with our suppliers and our workers,
the business that offered the most promise for the least amount of money.
