Wal – Mart Case Study

I. THE CHALLENGE

With Wal-Mart being number one means that they are the target of competition,

locally and globally. Being a global retailer means that you are exposed to political

problems in the countries that you operate in. The cost of producing many

consumer products has fallen because of lower manufacturing costs. Manufacturing cost

has fallen due to outsourcing to low-cost regions of the World. This has lead to price

competition, resulting in price deflation in some ranges. Intense price competition is a

threat.

Consumer spending accounts for about 70 percent of total economic activity, so wary shoppers are a worrisome sign for retailers entering the crucial holiday season.

"U.S. consumers are no longer panicked, but they remain cautious. They are spending just enough to keep the economy out of recession. Retail sales rose 1.4 percent last month, the Commerce Department said. But excluding a big rebound in auto sales, the gain was just 0.2 percent. Strength at general merchandise stores like Wal-Mart was offset by sales declines at furniture stores, appliance stores and hardware stores.

In spite of the seemingly inexorable march of Wal-Mart towards the complete domination of the retail and food market, there are a number of notable examples of companies that challenge Wal-Mart effectively.

Despite Wal-Mart’s incredible dominance in the US market, it has been continually out-performed by one rival Costco, a discount warehouse club similar to Wal-Mart’s Sam’s Club. Although Sam’s Club has 71% more stores, Costco managed to chalk-up 5% more sales in 2002 than Sam’s Club. In fact, a typical Costco earns twice as much as Sam’s Club. Sam’s and Wal-Mart in general have been continually scrambling to catch up with Costco. Workers at Costco are some of the best-paid retail workers in the industry and have comprehensive health care benefits. www.carma.com/

II. PUBLIC REPUTATION

Healthcare is one of...