BNAD 100 Lecture 6: Retail Notes

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University of Arizona
Business Administration
BNAD 100
Rob Mateucci

Retail Notes I. Industry Overview: Retail A) Retail = the sale of goods or services from "stores" directly to their customers (shoppers) I. Retailers are part of an integrated systems called the "supply chain" • Are at the end of the food chain, but still integrated into the supply chain • Purchase large quantities of products directly through a wholesaler or middle companies and sell smaller quantities to shoppers • Sells products in three groups: ▪ Food, like cereal and fruit ▪ Hard/Durable goods, like appliances and furniture ▪ Soft goods, like clothing and apparel II. Many types of retail outlets: • Convenience store, grocery, hardware, hypermarkets, discount, specialty shops, online II. Company Profile: Wal-Mart A) Wal-Mart 1. A global retail chain that sells all three types of product groups 2. Founded in 1962 by Sam Walton with one store in Arkansas • Sam's mission: "to save people money so they can live better" ▪ This remains W-M's mission and advertising message today ▪ Mission has to permeate the organization, all suppliers, and everyone else ▪ Have built a strong, lasting foundation and relationship with customers 3. Uniqueness of Wal-Mart A) 10 Mind-Boggling Facts About W-M 1. Has 2.2 million employees worldwide--larger than the population of some countries like Luxembourg 2. Generated $444 B in sales in 2012 fiscal year--more than GDP of Denmark 3. Serves appx. 200 million customers every week in more than 10K stores around the world 4. 90% of all Americans live within 15 miles of a W-M store 5. Its distribution network is one of the largest in the world--includes 6.5K tractors, 55K trailers, and more than 7K drivers 6. Each driver drives appx. 100K miles annually--equivalent to driving around the world 4x 7. every 8 cents to the U.S. dollar spent goes toward a W-M purchase 8. Has stores in 27 countries 9. A W-M's distribution center can have miles of conveyor belts, some as long as 12miles 10. original W-M was 1/5 the size of today's W-M and had only 25 employees 4. Wal-Mart's Success (its Business Model) A) 5 Key Factors 1. A streamlined and highly integrated logistics/supply chain system that lowers purchasing costs vs. competition 2. They translate this "everyday low costs" to "everyday low prices" to their shoppers 3. A keen focus on training their employees (associates) in the W-M way with a strong work ethic 4. Giving back to the communities in which they operate, and driving environmental sustainability efforts 5. Measuring every step of buying, shipping, and selling via rigorous analysis of "real-time" data 5. How Wal-Mart Makes $$
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