1st year master marketing
Wal-Mart VS Carrefour which retailer will win the battle for global leadership?
Wal-mart was founded by Sam Walton and his brother, James “Bud” Walton, in 1962.
The Walton boys revolutionized discount retailing, with the result that by 1989Walmart was the world’s largest retailer. The Walton’s proposition was simple, deliver a
wide array of merchandise at discount prices topped up by a friendly service.
Although the early 1990s saw Wal-mart operating more than 2,000 stores worth more than US$73 billion, the stagnant American economy was making it difficult to sustain the company’s historic double-digit comparable store salesgrowth. With limited domestic options, Wal-mart, for the first time, began to consider expansion outside the US seriously.
Wal-mart’s first external foray was into Mexico where, in 1991, it formed a partnership with CIFRA, Mexico’s most successful retailer. The success of Wal-mart’s Mexican expansion was seen by several analysts as the result of an improved economic landscape; the promiseassociated with the North American Free Trade Agreement (NAFTA); and familiarity and demand for US products, as many of the middle class population had relatives living in the US or were under the influence of the “American-way-of-life”. Wal-mart’s external efforts in Mexico and the move into Puerto Rico and Argentina in1992 did little to bolster the company’s fortunes. Sales growth was down again in1993 and the firm’s stock plummeted 22 percent, destroying nearly US$17 billion of value. For the first time, the giant’s performance was being doubted. However, the company continued moving offshore. In 1994 it purchased 122 Woolco stores in Canada and quickly converted their operations to the Wal-mart format. However, to assuage local fears, the company moved carefully, giving Canadian vendorsequal opportunity to supply their stores. In 1995, Wal-mart acquired Lojas Americanas in Brazil. Although success in Canada was expected and predictable, South America was the biggest challenge to date for Wal-mart. It was the first region where cultural habits were different from those of the US and where it faced highly competitive and well established competitors, such as Carrefour. In Argentina,for instance, sales stumbled at first, as Wal-mart was selling cuts of meat and cosmetics preferred in the US. In Brazil it was selling golf clubs in a country were golf is an elite game and few consumers have money to care for and purchase the equipment. In 1996, Wal-mart made its first attempt at selling in Asia by entering China with a subsequent entry into Korea in 1998. It entered theEuropean market by acquiring the German retailer Werkauft in 1997 and followed this up two years later as it went on to acquire another German chain, InterSpar, and ASDA, a British retailer.
Wal-Mart strategy “Everyday-Low-Prices”
Sam Walton’s obsession with keeping prices below competitors led him to check his and the competition’s stores thoroughly, counting the number of cars in the carpark and going so far as to taking a tape measure and evaluating shelf space. He looked out for good ideas and was not afraid to copy them. This attitude assured that “Everydaylow- prices” was a genuine strategy and not just a slogan. Wal-mart offered brand name products at prices consistently lower approximately 2–4 percent than those found at department or specialty stores.
Theeveryday-low-price strategy implied that there were few promotions.
Another factor seen by Wal-Mart as a competitive advantage was the Technological superiority. Technology was used not only in setting price and product offerings, but also in areas such as communication, distribution and the control of supplier relations.
The first Carrefour store opened on 3 June 1957, in suburban...