Surely, pure low-price play isn’t working too well for the giant

What’s in a name? Well, with due apologies to Shakespeare, there’s actually everything in a name; at least in the world of retail! Don’t you agree? Then answer this: what name first strikes a familiar tone in your temple when you hear the words ‘global retailing giant’? The chances are that almost every individual would return a punching response – Walmart! Now, that’s partly because of its low-cost offerings and partly because of Sam Walton and his vision for the brand. Today, this Arkansas-based retailer is the largest corporation in the world (no. 1 on the Fortune Global 500 list) and has therefore undoubtedly become the largest retailing mammoth in the history of the planet, as the numbers prove: a swashbuckling $379 billion in revenues for the year-ended 2007 (equals to 32% of India’s GDP) and is still hopeful of reaching newer heights in the face of the monstrously decelerating economic slowdown. But while the world of finance is crumbling everywhere around this gargantuan entity, it is snuggly seated in the cockpit with its low-price model of business giving to the consumers what they really need at a time when liquidity is not at its best for both the economy and the individual households. Surely, at a time when conspicuous consumption is slated to reach its lowest levels in over a decade and a half, Walmart stands tall above the clutter of retailing giants as Liz Crawford, President, Crawford Consulting confirms, “Some retailers will go out of business, and others may consolidate for economies of scale. But Walmart is at an advantage, because it already has economies of scale as well as integrated operations.”

Noticeably, this advantage is because the retail chain carries the legacy of Sam Walton who is the personification of the globally accepted ‘low-cost factor’, and which still stands as a truly reliable foundation for this retail chain. However, many experts also argue that Walmart hasn’t been able to add any extra pages in its book of success post the Walton era, except the fact that every year, for the past decade, it’s revenue has risen (something which was a direct spillover of global economic prosperity)! So has the company lost its sheen with time, and especially when we compare it to the Sam Walton era?

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).