By examining how it is that Wal-Mart exerts power in these ways, it is possible to qualify just how strong its effect on the world today is. Wal-Mart certainly has the power to direct action. Within the economic arena, of course, they provide many jobs and their demand for products also creates jobs, which raises manufacturers’ need for more labor. But, Wal-Mart also utilizes its own tactics to affect the economical balance of its customers. Wal-Mart is known for their Everyday Low Prices (EDLP); their guarantee that instead of big sales, their customers can come in and get what they need for less.
· To maintain strong customer loyalty. · To increase the amount and type of stores internationally, as it is in the United States. Industry Environment - Porter's five forces of competition Rivalry of Existing Competitors: · Wal-Mart has a strong competitive advantage against its competitors Kmart and Target. · Rivalry in this industry is not as strong for the competitors compared to Wal-Mart. Barriers to Entry: · High because it is hard to form a large organization that will be competitive at the same size as Wal-Mart with such low prices.
This gave the company a huge marketing advantage over its fellow retail stores within the same market. “Walmart’s everyday low price, or EDLP, strategy stems from these economies. It also helped the retailer garner market share from other companies by strategic pricing. It has strategic pricing through programs like the Savings Catcher, Save Even More, Ad Match, and price rollbacks. (Soni, 2015)“With the power and success that the company is able to harbor its fellow companies like Kroger, K-mart, and Target don 't even stand a chance.
It is actually quite the opposite, Wal-Mart’s supply chain is very customer focused, which is what gives them an advantage over their competitors. Wal-Mart focus’s on the customer and employs a pull strategy, where the demand from customers is the basis for production for Wal-Mart suppliers. This gives them a unique production method, in that they do not produce based on traditional methods rather it is based on short-term forecasts of demand generated by their customers. This allows them to not only keep stock costs low, it also allows them to track demand of individual products. This results in lowered costs of advertising and promoting products because they are able to accurately track demand and can adjust their advertising based on what is selling and what is not resulting in more accurate marketing efforts.
The low pricing and discounting approaches are susceptible to stiff competition and persistent challenges from other industry players as evidenced by the wheel of retailing theory,” that mean the pricing strategy could help success in retailers, and if businessman get less profit, they could have more purchasing. On the other hand, to have the impression from consumers on the pricing, the retailer must have organized the product or banner. For example: point of sale displays of items and prices is one of the most effective retail marketing and brand positioning approaches. This involves the conspicuous positioning of goods on shelves and the use of flashy exhibits and striking placards in the stores that attract customer attention to various sales offers, new arrivals, price cuts, or discounts. The whole concept is designed to attract customer attention and ignite
Kmart, once the leader in the discount store industry, has found itself surpassed by Wal-Mart and Target in recent years and is now facing the possibility of closing its doors. The differences among the companies’ successes can be seen in their business models and strategies. Wal-Mart focused on decreasing expenses and Target established its market placement as a high-quality low-cost discount store. In contrast, Kmart used a promotions-driven business model. Because of this, Kmart focused on trying to generate sales from promotions, rather than trying to cut expenses to increase their profits Management contributed greatly to Kmart’s problems by not paying attention to their business environment.
Many people today proclaim that Wal-Mart has just lost sight on the main goal, making money. While trying to attract more upscale shoppers, the retailer effectively turned its back on its blue-collar customers. Apparently, Wal-Mart does not care, and is attempting to deceive their usual, everyday customers by incorporating more upscale and pricy items into the inventory of the store (Duke 426). Wal-Mart’s everyday customers do not want inflation of price to occur due to the infamous “rollback” scheme. At first glance, Wal-Mart's "rollback" pricing scheme seems appealing however, while the strategy drew in some shoppers with lower prices on select items, it was combined with a rise in prices on many other goods.
This in turn would result with low response rate, which may hinder the popularity of retail shopping. In conclusion, although there might be some factors that hinder the popularity of retail shopping, with its 24-hour availability, a global reach, the ability to interact and provide custom information and ordering, and provide a much more convenience way of purchasing, retail shopping is still at a upper hand position, which attracts more customers and increases it popularity. However, businesses should also pay attention to the factors that limit the increase of popularity for retail shopping and try to eliminate such factors in order to grow larger and become more successful.
The Days Sales Outstanding (DSO) ratio for Rondo is showing improvement, but 71 days is too long to have cash due tied up, assuming that Rondo has extended Net30 or Net35 credit terms to their customers. Much more effort needs to be put into collections since it seems some customers are not paying their bills on time. Rondo's performance is poor in this area. (Could there be other issues here? Are they selling to customers who have no intention of paying them back?
The challenges of keeping the everyday lowest price are consumer benefits, which may have obviously contributed to internal demands. In these economic times Walmart faces many challenges with staying on top as a low price leader. Competitors have also been challenging the retail discounter. Companies like Target, Dollar General and Dollar stores continue to cut prices to lure families away from Walmart. Therefore, since Walmart has continued to expand their business, its basic strategy has shaped the retailer's growth.