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Wal-Mart itself has a big brand and the market leader of Retail sector in US. Wal-Mart employs 1.6 million associates worldwide in more than 3,700 stores in the US and more than 1,500 throughout the rest of the world. Strategy of Wal-Mart is the low price. Wal-Mart outlets is spread throughout the world and doing well. Vision Statement:Our vision is to provide good quality and services to our customers,while remaining the market leader and striving daily to be the most admired company. Mission Statement:To provide quality products at an everyday low price and with extended Customer servicealways. Wal-Mart Slogan: - Save money, live better
The culture consists of Wal-Mart: Quality product at low prices everyday Respect for the individual. Service to our customers. Strive for excellence.
Divisions of Wal-Mart Neighborhood Markets (groceries) Sams Club (membership) Discount stores (FMCG& apparels) Wal-Mart super centers (groceries) McLane (Acquired just now)
Divisions
International Totals
Discount stores
942
supercenters
238
Sams club
71
Neighbourhood markets
37
SWOT of Wal-Mart:-
STRENGHT
Cost Advantage Low Price and Customer oriented Strong Supply Chain Brand Image Use IT for to support international logistics Expansion Strategies
WEAKNESS
Wal-Mart sell products across many sectors it may not have the flexibility of some of its more focused competitors The company is global but has presence in relatively few countries worldwide
OPPORTUNITY
To take over or joint venture to enter in global market Put efforts on social welfare better image Expansion of stores in Asian market like Indian, China. New location and stores types for market development
THREAT
Being number one means that you are the target of local and global competitors Being global brand means can face political problem operating business in Price competition
Competitive Advantage of Wal-Mart1. Supply Chain Management: This is one of the best competitive advantages. Wal-Mart has two main supplier P&G and HUL. The supply chains add the value to the company.
2. Price Leadership: Wal-Mart always sells product on low price and they forward this benefits to their customers.
3. Exchange benefit: The Wal-Mart customer can exchange their purchased product through any Wal-Mart outlets.
4. Brand Image:The strongest competencies of Wal-Mart are there brand image in the minds of consumer. It is the leader of the world retail industry.
Retail industry is one of the largest growing industries in India. In India it has economy of 13% GDP. India has uppermost number of outlets per person and it is 7 per thousand. Retail sector has over 14 million outlets operates in India. Indian retail space per capita at 2 sq. ft. / person is lowest in the world and Indian retail thickness of 6 percent is highest in the world. India has an annual income of over 45 lakh from 1.8 million households. The retail industry is divided into two sectors; the first is organized and second unorganized sectors. a)Organized sector:It mostly target market is urban area and their target customeris high income and middle class. eg:- Hypermarkets, Retail chains, supermarket and Retail outlets etc., b)Unorganized Sector:It refers to the conventional formats of low-cost vending. It is mostly run by localities in their respective regions. Its target market is rural areas and semi-urban regions and their Targeted customer is middle and lower middle class. eg:- Local Kirana shops, general stores, street vendors etc.,
Total Retail: Rs.2,000,000 crore (Rs.20,000 billion) Modern retail size: Rs.1,64,000 crore (Rs.1,640 billion): 8.2 per cent of total retail Employment in modern retail: 10 direct employment in retail and 100 indirect employment per Rs.1 crore (Rs.10 million) sales
Total employment in modern retail: 1.65 million Estimated indirect employment in modern retail: 1.65crore Dependence on modern retail: Over 1.8 Crore people
The retail industry in India is anticipated to twice in worth from US$ 330 billion in 2007 to $640 billion by 2015. Actually, India has topped AT Kearney's annual Global Retail Development Index (GRDI) for the third year in a row as the most attractive market for retail investment. (AT Kearney GRDI ranks the top 30 emerging countries for retail development and identifies windows of opportunity for global retailers to invest in developing markets) There are many mergers and takeovers going on in recent time Wal-Mart acquired McLane. It is trying to expand business in Asian continent mostly in India. Indian competitors in Retail industry are Kirana stores, Pantaloon, K Raheja corp. group, Trent, Landmark, A V Birla group, etc. Analysts believe the sector is likely to show significant growth of over 9 % p.a over the next 10 years and also see rapid development in organized retail formats, with the proportion likely to reach a more respectable 25% by 2018.
Here are some common barriers to entry: High cost of entry New entrants will require huge capital, infrastructure, labour to enter in Indian retail industry. Brand loyalty When brand loyalty is strong within an industry, it can be difficult and expensive to enter the market. Government PolicyGovernment new retail policy constrainnew foreign retailers those policies are: Said location must have population more than 10 lakh. Said company has to invest more than 5 million dollar for said outlet. Said company has to employ local unskilled labours.
Distribution ChannelsNew entrant will get problem through existing distribution channel of market, while entering in India.
Economies of scaleLogistic is strongest distinctive point of any company. When company produce more quantity it can reduce cost. It helps to provide low price product to the consumer with high in profit with low cost. It requires high economies of scale.
Some factors affecting buyer power are: Size of buyer Larger quantity buyers will have more power over suppliers in retail industry. Number of buyers When there are a small number of buyers, they will tend to have more power over suppliers. The Department of Defense is an example of a single buyer with a lot of power over suppliers. Purchase quantity and quality Indian consumer can buy high quantity of product, if there will low price of product, because of the low price factors consumer will neglect quality factor. Indian consumers mentalityMostly Rural Indian consumers buy products form local suppliers (Kirana stores) and urban consumers prefer both sources of supplier. Discount factorIt makes the consumer to buy product through internet from different companies with different types of discount like gift, cash discount etc.
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AV Birla Group It has a strong presence in apparel retail and owns renowned brands like Allen Solly, Louis Phillipe, Trouser Town, Van Heusen and Peter England. The company has investment plans to the tune of 8000 9000 crores till 2010. It has started to expand aggressively to compete with other players.
Trent Itis a subsidiary of the Tata groupit operates lifestyle retail chain, book and music retail chain, consumer electronics chain etc. Westside, the lifestyle retail chain registered a turnover of 3.58 mn in 2006. Trent become famous in short span of time.
Landmark Group It invested 300 crores to expand Max chain, and 100 crores on Citymax 3 star hotel chain. Lifestyle International is their international brand business.
K Raheja Corp Group It has a turnover of 6.75 billion which is cross US$100 million mark by 2010. Segments include books, music and gifts, apparel, entertainment etc.
Reliance It has more than 300 Reliance Fresh stores; they have multiple formats and their sale is expected to be 90,000 crores by 2009-10.
PantaloonRetail has 450 stores across the country and revenue of over 20 billion and is touched 30 million by 2010. Segments include Food & grocery, e-tailing, home solutions, consumer electronics, entertainment, shoes, books, music & gifts, health & beauty care services. This is the biggest competitor for new retailer coming to India.
Its important to analyze these five forces and their effect on companies who want to invest in. The Porter Five Forces Analysis will give a good explanation for the profitability of an industry, and the firms within it. Porters five forces make a big difference in companys success and failure.This give the clear idea about India present retail industry, it will be easier to plan strategy to make impact in Indian retail industry.
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P.E.S.T.L.E Analysis of Indian Retail Industry:Political Analysis: Strong opposition to FDI in Indias retail sector. Taxation policy VAT. Low access to banking facilities.
Technological Analysis: Online Shopping. Retail media networks(RMN). ERP System. CRM System.
Legal Analysis: Wages act. Weights and measure, octroi etc. Shop and establishment act.
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Retail Industry Attractiveness study:a) These are the several characteristic to determine market attractiveness: 1. Market growth:The business monitor international India retail report for the fourth-quarter for 2011 that total sales will grow from US $ 411.28 billion in 2011 to US$ billion by 2015. 2. Market Size:Indian retail sector is divided in to two groups one is organised group and other one is unorganised .In that only 3% retail market is organised and remaining 97%is unorganised so there is huge scope for growth and expansion in Indian retail sector. 3. Market profitability:Probability in Indian market is moderate. Competitions from both unorganised and organised sector have effect on probability. Higher the competition lowers the profits. 4. Segmentation:As a part of organised sector Wal-Mart targeted an urban area, middle class or higher middle class consumer with high income level. Mostly youngster and Indian housewife will prefer shops like Wal-Mart. 5. Distribution Channels:Distribution channels are direct, wholesale. Wal-Mart will have to apply both distribution channels for consumers. It has also world best supply chain management and IT facilities. It will become convenient for Indian consumer and will be easily available. b) Opprtunity in Indian Retail Market: Overall Indian retail market is about 206 billion dollar and has 5% annual growth. Scope for a growth in Indian retail market is 97%. India has emergence of middle class and consumer. About 60% of Indian population is in age group of 20-30 and youth are more declined towards the modern shopping. Mostly Indian consumers are price conscious, so wall mart strategy Everyday Low Price and wide range of products will attract Indian consumers.
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Recommendation:India is one of the largest growing retail industries and there is so much scope for new entrants in this market. The increase number of buying power of Indian middle class opens doors for new players to make the market attractive and profitable. If Wal-Mart use this planned strategy to make entry in Indian market, it will help them to establish and make sustainable business. Indian retail law does not allow multi-brand foreign retailers to sell directly to consumers So Wal-Mart will have to make 51:49 joint ventures with any Indian company to enter in Indian market. According to me Wal-Mart must enter in Indian retail industry, there is so much scope for such companies.Wal-Mart competitive advantages matches to the Indian consumer, which is a positive reason to enter in India. It will become milestone for Wal-Mart in South Asia.
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