Wal Mart consumer offer

Wal-Mart premises its retail proposition on four determinants of store choice: low prices, wide assortment, friendly service and community support. Low prices are derivative of a margin schedule that in the US averages 27.5% over various product categories. The margin also varies by international market according to the inherent competitive forces. In Canada, for example, the average competitive margin was 34%. Wal-Mart set its average Canadian margin at 32% and made the Canadian market very profitable for the international division. Other elements in Wal-Mart's pricing policy are to label key items, e.g. toothpaste, soap, and shampoo, at cost or less to have the lowest local prices. Price rollbacks are another important device for communicating a low price image.

As to assortment, the large 16 700 m2 Wal-Mart Supercenters, 11 100 m2 department stores and 9000 m2 SAMS Club warehouse clubs increase the possibility of a one-stop shopping trip. In the Supercenters, there are 80 000 general merchandise SKUs and 10 000 food SKUs. The technologically superior inventory management and logistics system ensures these products are in stock and on the shelf. The EDLP pricing rather than weekly sales and promotions acts to minimize stockouts and ensure high service (in-stock) levels.

The Neighbourhood Market format stores, Wal-Mart's new experimental format, may be an option at this stage of Wal-Mart's international strategy. The 3700 m2 hybrid food, pharmacy, health/beauty care and convenience store was identified as a 'fill-in' in North American markets and as an alternative to shoppers who were uncomfortable in the larger Wal-Mart stores.

On service, Sam Walton once said 'satisfied, loyal, repeat customers are at the heart of the Wal-Mart's spectacular profit margins, and those customers are loyal to us because our associates treat them better than salespeople at other stores If you want people in the stores to take care of the customers, you have to make sure you're taking care of the people in the stores. That's the most important single ingredient of Wal-Mart's success'. A greeter at the door, often an older associate and always the same person, immediately creates recognition and familiarity when the shopper enters the store. In this way, tine impersonal, giant warehouse suddenly becomes a personal, known neighbourhood shop. Associates then practice 'aggressive hospitality' on their 'guests'. The 'Ten Foot/3 Meter Rule' states that if any customer comes with 10 feet/3 m, the associate is to ask if they can help in any way. A liberal return policy, fast checkout and 'satisfaction guaranteed' motto also contribute to a positive customer experience.

Wal-Mart engages in actions that respond to family, community and national norms. Family activities and children of associates are portrayed in flyers, purchases where possible are made from local and national suppliers, and national flags and colours are used in store signs and checkout areas. The origin of these institutional actions traces back to the small town roots of Sam Walton and Wal-Mart. In contrast to other retailers that started in the large metro markets, Wal-Mart began in small towns and cities in the south-eastern US. An important tradition of smaller communities is for the local retailer to be an integral part of the community fabric. Thus, Wal-Mart associates identify a local charity or community activity to support as part of a storewide effort.

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