Comparison Wal-mart Wal-mart was founded by Sam Walton and his brother, James Bud Walton, in 1962.

. Revolutionized discount retailing, with the result that by 1989 Walmart was the worlds largest retailer. Proposition was simple: Deliver a wide array of merchandise at discount prices topped up by a friendly service. First Wal-mart Discount City store in Rogers, Arkansas Waltons operated a number of franchised stores from the chainrejected a suggestion to open discount stores in small towns. Discount City store concept consisted of servicing small and middle sized towns at prices equal to or lower than prices in nearby cities. 1972: Build a warehouse that allowed him to buy large volumes of merchandise at lower prices. Strategy of covering small towns, virtually ignored by other competitors, the expansion progressed rapidly without any substantive direct competition until the mid 1980s. 1993: Wal-mart was in 47 states and its expansion led to competition with Kmart, Target, Sears and J.C. Penney, for which the established players were ill prepared. 1990s: Moved beyond its rural expansion strategy and began diversifying into grocery operations (Wal-Mart Supercenters), membership warehouse clubs (SAMS Clubs) and deep discount warehouse outlets (Buds Discount City). By the time: prepared for forays outside the United States. The stores were located mostly in France but also throughout Europe, Asia, and Latin America. Invented hypermarket concept Usually located within a commercial center Location strategy: -Place stores outside towns in areas where highways provided easy access and land could be acquired inexpensively. High degree of consumer acceptance -> fuelled Carrefours growth stemmed. Product strategy: - Any product a consumer could think of purchasing more than once a year could be bought at Carrefour store. Price strategy: - Prices averaged 5 to 10 percentage points under those of retailers in traditional outlets. 1998: Carrefour felt the need to differentiate itself and to better respond to client needs. Carrefour The second largest retailer in the world after Wal-mart, Carrefour had humble beginning in the summer of 1960. It was an initial test of the on-stop shop formula where consumers could get almost all of their shopping needs satisfied at one location. 1969: Move into Belgium, began its internationalization 1999: Merger with Promodes

Staff management
Empowering yet controlling employees, maintaining Walmarts costs and prices below everybody elses, and aimed at logistics excellence by maintaining technological superiority.

Differentiation strategy: - Developing a local products purchasing base and selling private labels. - Purchasing locally was one of the Carrefours key strategies, both in France and internationally. - Please local authorities and to meet local customers needs. - Buying locally supported Carrefours specialization strategy.

Empowering Employee 1998: Wal-mart was the largest private employer in the US, employing 910,000 associates
Associates were given responsibility, recognition and a share of the profits and were expected to be totally committed to the company and its success. Wal-mart associates strove to provide exceptional customer service and everything possible was done to make shopping at Wal-mart a friendly experience. Associates were well rewarded for their commitment and dedication. Taking care of his associatesin terms of moral and motivational boosts in addition to financial rewards = the first and most fundamental step to taking care of his customers. Managers, supervisors and store personnel with over one year of employment had incentive compensations or bonuses based on store profits and were offered stock ownership. Give associates at all levels a perspective of the total business, training was extensive and located away from the home office. New associates being trained by assistant managers from other stores, and store managers received training in the distribution centers to get an understanding of the internal workings of the distribution network.

David Glass
1988: a CEO and President. 1976: Executive VP of finance in, as frugal as Sam Walton, spent two to

three days a week visiting stores.

Wal-mart did not operate regional offices

But owned a fleet of aircraft and centralized regional VP weekly meetings in the main headquarters.

Every Friday - Weekly merchandise meeting, store and individual product sales were discussed Every Saturday - Management, Associates, Friends and Relatives participated in an informal information-sharing motivation session. Every Monday - Decisions taken over the weekend were implemented throughout the stores.

Price
Everyday-Low-Prices For keeping prices below competitors:
- Check Walmart and the competitions stores thoroughly, counting the number of cars in the car park and going so far as to taking a tape measure and evaluating shelf space.
Everyday-low-prices was a genuine strategy and not just a

slogan. Wal-mart offered brand name products at prices consistently lower approximately 24 percentthan those found at department or specialty stores.

Advertising Wal-Mart produced only 1213 major circulars per yearspending 1.5 percent of sales.

Advertising Carrefour, typically ran 50 to 100 advertised circulars per year - spending 2.1 percent of discount store sales on advertising

Technological Superiority Used not only in setting price and product offerings, but also in areas such as communication, distribution and the control of supplier relations.

A satellite system that enabled communication and electronic

scanning throughout the store, supplier and distributor networks.

Allowed requests for merchandise at the point of sale to be transmitted to the headquarters or to a suppliers distribution centers instantly.
Distribution was centralized in Wal-marts distribution centers and a system known as cross-docking was used to reduce handling and inventory costs.

Wal-marts truck fleet delivered to stores 24 hours a day and picked up merchandise from suppliers on return trips running at a sixty percent capacity on backhaul.

Supply Chain:
Wal-marts relation with its 3,600 suppliers was enhanced by an Electronic Data Interchange (EDI) system.

Late 1980s: Key suppliers were already directly managing Walmarts merchandise inventory. Wal-mart restricted its supplier: Limited the workweek to sixty hours, provided safe working conditionsand did not employ child labor. Three operating divisions: 1. Wal-mart store division included:
- Discount Stores (the initial Wal-mart format selling general merchandise) - Supercenters (a combination discount store and supermarket).

2. SAMs Club (membership warehouse club) 3. The international division.

International Expansion
~Reason~
Early 1990s: operating more than 2,000 stores worth more than US$73 billion, the stagnant American economy was making it difficult to sustain the companys historic double-digit comparable store sales growth. Limited domestic options:

Carrefour ward off Wal-mart in Brazil and Argentina in the mid1990s. To counter Wal-mart, Carrefour slashed prices, remodeled, and even relocated stores. Carrefour withdrew from the United States after a first unsuccessful attempt in the 1980s and had stayed out of Britain and Germany, the two European countries Wal-mart had recently entered.

began to consider expansion outside the US

1991: First external foray was into Mexico, formed a partnership with CIFRA, Mexicos most successful retailer.

Result of an improved economic landscape Promise associated with the North American Free Trade Agreement (NAFTA) 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.

1992: The move into Puerto Rico and Argentina did little to bolster the companys fortunes. 1995: Acquired Lojas Americanas in Brazil. 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. 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.

Four years after entering Argentina, Walmart learned: Donald C. Bland, president and CEO of Wal-mart Argentina suggested, following our blueprint too closely wasnt a good idea.
Caught up with local competitors, not only by catering to the demand for locally preferred items, but also by changing its store layout to integrate French touches, such as wide aisles. Wal-mart also discovered that Carrefour was a nimble competitor.

Wal-mart store opening in one Argentine city was delayed by construction problems for four months, Carrefour seized the opportunity to renovate its closest store. Wal-mart was aware that a Carrefour shopper who stopped to buy groceries or a pair of tennis shoes could also get a watch repaired, order mobile telephone service, rent a car, or book plane tickets and hotel rooms for a vacation. Wal-mart offered few such services. 1996: Made its first attempt at selling in Asia by entering China 1998: Subsequent entry into Korea in 1998. 1997: Entered the European market by acquiring the German retailer Werkauft Up two years later, acquire: - another German chain, InterSpar, - ASDA, a British retailer Compared with Carrefour: Wal-mart took a cautious approach to foreign expansion, with foreign sales in 1998 accounting for only nine percent of Walmart revenues, against the 44 percent for Carrefour.

Carrefour had been an innovator in store design, softening the look of its warehouse-size buildings by installing wood floors and nonfluorescent lights in some departments and putting service counters in the food department, where shoppers can get meat, cheese, and bread sliced to order.

Promodes merger with Carrefour, Promodes had 62 percent of its sales in France, 29 percent in Spain and the rest in other countries. Promodes was considered Carrefours major retail rival but its performance was nowhere near as good.

1997: With the purchase of 21 warehouse-sized stores from the German chain Wertkauf GmbH
German consumers, the most price sensitive in Europe, quickly warmed to the Every-day-low- price slogan as well as the customer service often lacking at domestic retailers stores, much to the consternation of the staid and established German retail sector.

1999: Wal-mart announced the acquisition of English retailer Asda Group With the purchase of Asda, Wal-marts biggest to date, the company doubled its international sales to more that US$25 billion. Frances Carrefour, the worlds eighth-biggest grocery retailer and Netherlands Ahold, the number seven worldwide, were expected to accelerate their global expansion plans. 1999: Carrefour launched a friendly Euro 15.9 billion bid for rival Promodes, thereby potentially creating Europes largest retailer with a market value of US$48 billion Carrefour would probably prefer to buy Promodes than have it snatched up by Wal-mart, giving the US group a big chunk of its market, Promodes operations were expected to strengthen Carrefours position in many ways.
The joint groups revenues it would lessen the volatility of Carrefours extensive and growing investments in emerging markets, providing more long-term stability in operating performance. A wider presence in the low growth but stable European markets would provide a stronger cash-flow base on which Carrefour could continue its international expansion.

Wal-mart was under the threat of being left without the critical mass of stores in key markets to become a major European player. Its biggest European holding, Britains Asda, was only onefifth the size of the bulked up Carrefour.

Smoothing the cyclicality of Carrefours non-food business.

Operating strengths of the proposed merger would be offset by significant risks, particularly on Carrefours financial structure. Promodes with its weaker financial structure would stretch Carrefours financial structure further, even if the transaction was going to be entirely financed with new equity. Carrefour not only became Europes largest retailer but surpassed Wal-mart in two critical South American markets that where the key to Wal-Marts global expansion, Brazil and Argentina. 2000: Carrefours purchase of Promodes, referring the rest of the deal to the French and Spanish authorities.

The new Carrefour was now the number one retailer in Brazil, Argentina, and Taiwan, as well in France, Spain, Portugal, Greece, and Belgium. Wal-mart had stayed away from Carrefours strongholds in France and Southern Europe. European governments moved to protect small merchants through the control of large new store openings. The only way to grow in Europe seemed to be through acquisition After Germany and UK, Wal-mart was clearly expected to target France. Carrefour lacked a presence in three key mature markets: the UK, Germany, and the United States, which would balance the risk of its investments in emerging markets. Carrefour withdrew from the United States after a first unsuccessful attempt in the 1980s and had stayed out of Britain and Germany, the two European countries Wal-mart had recently entered.