How long does the Walmart orientation take

The Wal-Mart system

Wal-Mart has done it again. For the final quarter of 2003 as well as for the fiscal year that ended at the end of January, the Arkansas-based corporation recorded records in sales and profits. The annual profit rose by around 13 percent to 8.9 billion dollars, the annual turnover climbed by around 12 percent to 256.5 billion dollars.

Wal-Mart was able to increase its pace of growth especially abroad: the foreign sales of the more than 1,300 stores, 92 of them in Germany, rose by around 17 percent to 47.6 billion dollars. The annual operating profit of the international Wal-Mart business division rose approximately 19 percent to 2.4 billion dollars.

From shop to group

With the business results exceeding the expectations of the analysts, Wal-Mart once again underscores its undisputed leading position in the retail sector. That was not always so. The brothers Sam and Bud Walton opened the first Wal-Mart store in Rogers, Arkansas in 1962. In contrast, the first company of the Aldi family Albrecht was founded in 1913. The fact that Wal-Mart made it to the clear number one in the industry in less than 40 years is due to the company's rapid expansion.

"The Wal-Mart story is fascinating," says Jens Jung, an analyst at Independent Research, describing the story from local retailer to global industry leader. The reasons for the expansion are customer orientation and price aggressiveness. "Wal-Mart grew so quickly because the company first put the customer first in the 1980s, long before the company did in Europe."

"Who's number one?"

For Wal-Mart, the customer is king. "That is why Wal-Mart, in contrast to its German competitor Metro, is not relying on staff-free shopping in the future, but continues to consider personal customer service to be important," emphasizes Jung. The best-known examples of this philosophy are the so-called Ten Foot Rule and the Wal-Mart Cheer. According to the Ten Foot Rule, Wal-Mart employees must greet customers less than four meters away and offer them their help. At the Wal-Mart Cheer, the employees spell the company name loudly together. The cheer ends with the company motto: "Who is number one? The customer. Always!"

Wal-Mart is just as consistent in its pricing policy. "Wal-Mart was the first retailer to get percentages out of its suppliers," says Indenpendent Analyst Jung, explaining the group's strategy. "Wal-Mart knows that in retail, profit is only possible through purchasing power and price." For a long time now, competitors have also been trying to lower their suppliers' prices. However, many of them may be late. "Wal-Mart has continued to grow through takeovers and has thus been able to achieve ever stronger economies of scale (size effects) when purchasing goods." Due to its market power in purchasing, Wal-Mart can now put a lot of pressure on its approximately 10,000 producers. For many of them, the group is the most important or even the only customer.

Cooperation with brand manufacturers

However, in contrast to German discounters such as Aldi and Lildl, Wal-Mart attaches great importance to branded products and branded advertising in addition to its own products. That's why the company works with most of the major food companies.

The end of the company's success story is apparently not in sight. The biggest competitors like Carrefour or Ahold are too small to challenge Wal-Mart for the top position in the industry for the foreseeable future. "The only problem could be managing the differences in mentality in the many international commitments," says Jung. "So far, Wal-Mart has succeeded in integrating the acquisitions." Only in Germany is the group not making good progress, despite some acquisitions, and is not yet represented among the industry giants. Instead of leaving the field, independent research expert Jung is counting on further acquisitions of Wal-Mart in Germany.