The Transformations of Wal-Mart: Experimenting with New Retail Paradigms

Beginning in the 1990s, Wal-Mart sought to maintain its rapid growth by investing outside of the United States. It chose to enter other countries through the purchase of existing retail chains. This process created a new set of challenges, since the existing chains had their own corporate cultures and operating procedures, and Wal-Mart experienced several surprising defeats. In 2000, Wal-Mart launched a chain of what it called Neighborhood Markets, limited to the sale of groceries. Meanwhile, its Latin American acquisitions included stores of only 4,000 square feet. In 2010, Wal-Mart announced a strategy to create a major chain of mini-Supercenters, each of some 40,000 to 60,000 square feet, to be located within cities. Some of the new smaller stores would be focused on local ethnic groups, with Hispanic neighborhoods being an obvious target for this paradigm. In addition to the need to change its inventory levels and to rely on parking buildings rather than large parking lots, Wal-Mart encountered strong opposition from labour unions. Meanwhile, Wal-Mart was using its new small-format stores in China. It was also experimenting with online grocery sales with home delivery. Wal-Mart was continuing to cut costs by consolidating its global purchases and shifting to more global supply chains with the elimination of many wholesalers. At the same time, Wal-Mart was taking a dramatic position in compelling its suppliers to adopt green practices, conducting audits of its suppliers, and refusing to purchase from those who failed to measure up to new environmental standards.

This case can be used to ask students to:<ul><li>Determine the key success factors for Wal-Mart in the United States, and evaluate the difficulties in transferring these success factors to other nations.</li><li>Analyze the foreign exchange risks confronted by Wal-Mart. </li><li>Evaluate the likely success of Wal-Mart’s various transformations, and assess its expansion processes. </li><li>Determine whether Wal-Mart poses such a threat to competition, decent wages, and benefits that its expansion should be limited by some countries, as it was in India. Is Wal-Mart a force for good? </ul></li>

• Globalization
• Market Strategy
• Retail Chains
• Supply Chains
• Store Formats
• Environmentalism
• United States