Wal-Mart Sets Three Goals for Next Year

Discussion
Jun 06, 2005
George Anderson

By George Anderson

Wal-Mart didn’t get to be the world’s largest retailer by resting on its laurels and the company’s chief executive, Lee Scott, told shareholders at the company’s annual meeting
last week that there is plenty of room for improvement, “especially in the Wal-Mart stores in the U.S.”

Mr. Scott and other company executives laid out three goals the company has set for itself for the next year. According to a report from Reuters, these include: “Making the company
a better place to work, improving the shopping experience, particularly for women, and being more aggressive in buying merchandise.”

Mike Duke, executive vice president and CEO of Wal-Mart Stores Division, said, “Sometimes our checkout lines are too long and we’re not staffed properly. We did a great job of
focusing on the opening price point customer. We may not have focused enough on the customer who is willing to pay for a little better quality and style.”

Mr. Scott said that focusing on the customer who is willing to spend more is a top priority for Wal-Mart. “We need to widen our appeal to a broader range of customers.”

Moderator’s Comment: What importance would you put on each of the three goals – making the company a better place to work, improving the shopping experience,
and being more aggressive in buying merchandise – laid out by Wal-Mart to help the company achieve continued growth?

It’s not surprising considering the various challenges Wal-Mart has faced on the legal and public relations front that it would address its working conditions.
We just found it interesting, although not directly connected, that a report by USA Today said more workers are now quitting jobs to find other work than those who are
being fired or laid off.

George Anderson – Moderator

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14 Comments on "Wal-Mart Sets Three Goals for Next Year"


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Ron Margulis
Guest
15 years 8 months ago
A point on each of the three goals — Making the company a better place to work: To a certain degree, this is the most crucial goal, because the company is still suffering from very high turnover. If a company with 1.4 million workers turns over even 40% of those employees each year, the training costs are bound to spiral, and customer service will suffer, which leads to…. Improving the shopping experience: I was in central Florida last week, and visited a store that was as hectic as I’d ever seen a Supercenter. Merchandise was all over the place (literally bulging out of one of the backroom doors), the grocery area was well stocked but not very attractive and there were only a few clerks to be found. Not a great experience for one shopper who, mistaking me for a staff member, asked me to help her with an appliance she was considering. It turned out that the unit didn’t have the features she was looking for, which leads to…. Being more aggressive in buying… Read more »
Dan Gilmore
Guest
Dan Gilmore
15 years 8 months ago

Just my quick thoughts:

As powerful as Wal-Mart is, there are starting to be some chinks in the armor. Think this is a good thing overall for the U.S. retail and consumer goods sectors. Eventually, based on growth rates, the Justice Department would have to bust it up in a decade or so anyways.

Do they still teach the ‘wheel of retailing’ in college? If I remember right, it describes how retailers start out as the low price and or niche player, but eventually move upstream in terms of merchandise and customers, and broaden their offerings, leaving opportunities for downscale and/or niche players to come in again and start the whole thing over…. W-M CEO Lee Scott’s comments certainly sound like the wheel turns, even for Wal-Mart.

Mark Burr
Guest
15 years 8 months ago
Wal-Mart is kind of in a pickle. Their goals are very, very difficult. They will have a hard time making their stores a better place to work in without changing their model. They will also have a hard time changing their product mix to appeal to a more ‘upscale’ consumer, without changing their staffing model. They have rung about every cent possible out of their supply chain. It will be difficult to continue to pressure suppliers out of a profit in order for them to be profitable. All that said, if anyone can, it will be Wal-Mart. Yet, knowing that, there is continuous new and existing competition. The competition also has a share of not only the consumers wallet, but also the consumer’s ear. If any competitor or group of competitors forgets about them and begin to really focus on themselves and meeting the consumers needs, they could find themselves with more problems. Again, all that being said, I am not implying they are in a bad spot. I am also not implying that they… Read more »
Bob Bridwell
Guest
Bob Bridwell
15 years 8 months ago

I recently saw a well-known tv business show talking about some of the reasons for virtually no growth in Wal-Mart’s stock price over the past. Several points were put forth: (1) With the increase in the growth of supercenters, more and more traditional grocery-store items are sold that are thinner margins; (2) More importantly, that other retailers were taking aisles away from them in the general merchandise category.

He called this taking aisles away from Wal-Mart and anecdotally made the case that certain specialty retailers were succeeding. His analysis suggested that more and more reliance on food side sales would be unsustainable on the profit side.

George Whalin
Guest
George Whalin
15 years 8 months ago

It seems like most of us find it easy to be critical of the largest company in the world whether it’s General Motors or Wal-Mart. It was impressive that management recognized and acknowledged the problems facing the company. It will be interesting to watch and see what steps they take to solve these problems.

Making Wal-Mart a better place to work is an important step to fixing problems at Wal-Mart, but just as important is to improve the shopping experience. Over the years the shopping has gotten much worse, and in many of the company’s stores is simply awful.

It was also interesting that Wal-Mart management wants to expand their merchandise offerings to reach a wider group of consumers. While I don’t think Target should be worried, as Wal-Mart broadens its merchandise selection, this will likely continue to cause problems for specialty retailers and others serving customers who want better quality goods.

David Livingston
Guest
15 years 8 months ago

I think the most important goal is making Wal-Mart a better place to work. They need to develop a workforce army of 1.7 million Wal-Mart fanatics who will defend their company against the radical anti-Wal-Mart extremists. They only reason why the anti-Wal-Mart wackos exists is because of disgruntled employees. Small changes like lowering the waiting period to get on health care to 90 days instead of 180 would significantly reduce the number of Wal-Mart employees on public health programs. Also, provide more bonuses and financial incentives on a more frequent basis, and include a more attractive stock purchase program. The more employees are vested in Wal-Mart’s success, the happier the workforce will be. The next time the anti-Wal-Mart crybabies interfere with Wal-Mart it will be like stepping barefoot on a fire-ant mound. I don’t expect Wal-Mart to become another Publix, but they have a lot of room to improve.

M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 8 months ago

Honda, VW, and now Hyundai and other car retailers have gradually moved upscale — and “up-price” — as an illustration of Dan Gilmore’s reference to the Wheel Of Retailing. What bug driver in the 60s would have imagined that VW would introduce the $106k V12 Phaeton in 2004?

Wal-Mart has always operated as if they wanted all the business possible, and looking upscale fits their M.O. perfectly. What will be interesting is how they approach this opportunity without alienating their customer base, and how they will source quality (i.e., not Chinese-made) products. The last of their three goals — more aggressive buying — must have current and potential future suppliers quaking in their boots. If you’re like me, your initial response to this news was, “WM can get MORE aggressive?”

Arlene Jones
Guest
Arlene Jones
15 years 8 months ago
Wal-Mart will soon enter the “urban” market in my hometown of Chicago. Contrary to many published stories, the area is not “impoverished.” It is already being predicted that the store will have something like $150 million in annual sales (which is in line with a Home Depot that opened several years ago and generated $1 million a week in sales). My question would be, can they keep their product in line and in stock to support their goals? Can they pay inner city workers little to no money and then expect their customer base all to be the same minimum-wage employee base? I mean there is only so much that $5.65 an hour will buy seeing that there is no discount on rent/electricity/cooking gas or gasoline. Yet to attract a customer like myself, I don’t mind the crowds. I do mind a store that looks like a tornado hit it. I will not stand in line for hours on end and, most of all, I hate that rotating plastic bagging thing. I have not gotten… Read more »
Tom McGoldrick
Guest
Tom McGoldrick
15 years 8 months ago

Their greatest priority needs to be improving the shopping experience. This should be closely followed by making sure employees have the tools and training needed to perform their job.

It is hard to imagine they could be more aggressive in buying.

Don Delzell
Guest
Don Delzell
15 years 8 months ago
In the long run, investing in the quality of work life experienced by its associates may prove to be the most important of the three initiatives. IBM, GE and others show how important a cohesive culture is to weathering inevitable difficult periods in profit or growth. Is there evidence that market-basket deficiencies are brought about by perceived poor shopping experiences? Is the core Wal-Mart customer actually experiencing bad service? Never make the mistake that service is unimportant in a low price play…Wal-Mart clearly does not take this for granted. But is this the most important focus? Expanding the merchandise mix in an effort to appeal to secondary demographic customer pools….well, it probably can’t be distinguished from the previous goal. Congratulations to Wal-Mart for understanding that capturing the “better” customer is a joint effort involving both in-store experience and merchandise selection. One without the other is a recipe for disaster. The most important initiative is the combination of the last two. A word of warning: go slowly. Unless they have data I do not, it would… Read more »
Paula Rosenblum
Guest
15 years 8 months ago
You didn’t really give us the choice of “improving the shopping experience.” That’s their best choice, at this point. That, and “sticking to their knitting” – holding to what made them good in the first place. You can’t be all things to all people. Appealing to more upscale customers has been the death knell of many retailers. Making life better for workers is a good idea, and will no doubt reap them better PR, but I’m not sure it’ll reap better sales or bottom line results. I think Wal-Mart has plateaued. They face some competition from dollar stores on the low end, and specialty stores on the “customer friendly” side of the world. Target may ultimately be their strongest competitor. They aren’t going away any time soon, but I don’t see them as quite as formidable a threat going forward. They’ve angered vendors, fellow retailers and “dumbed down” the product mix on the way up. Expect all these to come back and kick them in the years to come.
Edward Herrera
Guest
Edward Herrera
15 years 8 months ago

Trying to be everything to everybody appears to be a bit out of character for Wal-Mart.

In the remake of “War of the Retailers,” Wal-Mart is being slowly weakened by dollar stores and the Aldi’s of the world. Picking a fight with the Target won’t be an easy task either. Wal-Mart will have to be careful if opposing retailers smell blood and begin to take an offensive position.

Being bigger and badder has never made anyone invincible. What ever happened to Goliath, Leroy Brown ,Titanic and the Martians?

Bernice Hurst
Guest
15 years 8 months ago

Watching a profile of Tesco this weekend, it was hammered home that their three unbreakable rules are “be everywhere”, “sell to everyone” and “sell everything”. Much as I dislike the company and its methods (and I am not alone in this even though the VAST majority of the UK population shops there regularly), they obviously work even to the extent that they are well and truly ahead of Asda (owned by WalMart) over here.

Robert McMath
Guest
Robert McMath
15 years 8 months ago
No matter how much Wal-Mart tried to improve its relations with its employees, its established pattern with those improvements will not please everybody. You simply cannot please everyone and there will always be those who complain. Doing more for them, however, could make a pleasanter place for us to shop in. And this is something I feel very strongly about. Traveling as much as I do, I have shopped at various Wal-Marts on both coasts and some across the country. And the variation of the stores in neatness, cleanliness and stock is all over the map — no pun intended. Some of the older stores remain nice places to shop and to return to, but generally the older the store gets, the worse it seems to be as a place to shop. Merchandise is in a mess, misplaced on the shelves and hard or almost impossible to find. I think part of the problem lies in the development of managers who may come up from the ranks, but who do not have the proper training… Read more »
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