THE TOP TEN WAL-MART, THE WORLD'S LARGEST RETAILER, GETS HIGH MARKS FOR LOW PRICES.
Byline: Dianne M. Pogoda
NEW YORK--Wal-Mart, the powerhouse retailer, has risen from a single store in Bentonville, Ark., to the world's largest retailer. With 1993 sales of $67.3 billion and volume projected at about $85 billion this year, it has never lost sight of its customer, according to retail observers. Attention to the customer and low prices is the company's long-standing credo. Wal-Mart, which ranked fourth in the survey, expects to break the $100 billion mark by the end of 1995. This represents remarkable growth, considering that just 10 years ago, the firm rang up $4.6 billion in sales. It currently operates 2,021 stores, excluding Sam's Clubs. By metro area, Wal-Mart placed second in Chicago, third in Dallas, and fourth in Atlanta and Phoenix. In terms of demographics, Wal-Mart's appeal crosses all age and income groups, but is particularly strong with working women age 30 to 39, with household incomes of $25,000 to $35,000 and children under 18. The top reason consumers selected Wal-Mart was price, cited by 80 percent of respondents. That was followed by selection, cited by 56 percent, location, and size/fit, each cited by 23 percent. Wal-Mart is a retail trendsetter. For example, it popularized "everyday low prices," and instituted the now-common concept of "people greeters"--associates who welcome customers to stores. The one area in which Wal-Mart is not known as a leader among discounters is apparel. However, it still racks up a hearty volume in soft goods. At the discount store division, which had sales of $45.7 billion last year, soft goods made up 27 percent of overall sales, or roughly $12 billion. That's more than the total volume of the nation's largest department store concern, May Department Stores Co., which had sales of $11 billion in 1993. Asked why Wal-Mart is their favorite store, typical replies were: "It's cheaper. I can afford it"; "They have good selection. I'm not looking at the same stuff every time"; "They are a lot cheaper than going to Macy's." "It's conveniently located to my home," said one respondent. "They have low prices and good quality." "I'm a large size and they have a very good selection and a very good price," said another. "They have a good variety," added another. "They have different styles and a great selection in sportswear. I'm short and I wear small sizes. I can always find something in my size. I like the idea that all the clothes are made in the U.S.A." When consumers were asked to name the best store in terms of personnel and service, Wal-Mart ranked fourth behind Nordstrom, J.C. Penney and Mervyn's. But it was ranked the best store in terms of convenient shopping hours. Wal-Mart did not score first as the best place to buy in any category. It ranked second for hosiery, socks and pantyhose; third for sportswear/casualwear, and fourth for jeans and activewear/bodywear. That could be because its strength is its hard goods and consumables. Because of the volume it commands, it can undercut just about any other retailer on prices of basic products. However, Wal-Mart has no interest in chasing fashion--observers say if it did, it would. Its focus for future growth is in groceries, using a supercenter format. In soft lines, the company has a low-buck, low-fashion approach. Its apparel areas are neat and stocked with the usual mass brands of casual sportswear--mostly jeans, fleece, knit tops--and some private label merchandise. For a year or so, the retail giant has been forging into new regions--it has already established beachheads in the Northeast and Mexico, and in 1995 will open in Brazil and Argentina. It is also gobbling up other chains, most recently 122 Woolco stores in Canada and 103 of Kmart's Pace warehouse clubs. Also forging into Asia, Wal-Mart has stores planned for Hong Kong and China over the next 15 months. Most important to the bottom line, Wal-Mart has kept its cost of operations among the lowest in the industry by continually slashing unnecessary functions and using state-of-the-art systems for operations, inventory control and information management. This is translated into low prices at retail. "Wal-Mart is the most customer-driven retailer in America," said retail consultant Kurt Barnard. "It also has the legacy of Sam Walton, who never passed up the opportunity to update systems. The company has a clear sense of who its customers are and what they want."
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