Wal-Mart’s primary competition in US includes department stores of the likes of Target and Kmart. Costco offers competition to Sam Club format of Wal-Mart. In niche small markets, dollar stores are offering strong competition to Wal-Mart.
Kroger competes with Neighbor market and supercenters of Wal-Mart especially on the grocery product line. Target competes with Discount stores and supercenter shopping formats of Wal-Mart with Target commanding a small premium on prices as it follows fashion trend. Market segment of Target is the high-income customers leading to higher margin realization. ($ 50,000 of target vs. EDLP strategy of Wal-Mart by leveraging purchasing scale has pushed down prices compared to other retailers.
Average prices in Kmart and Target is at least 10-15% higher than Wal-Mart and focuses its competition on product variety and quality.
Revenue growth of Costco during 2008-2012 (22.64%) is almost doubled that of Wal-Mart (11.86%) during the same period. Target had a moderate growth of 11%.
The % of sales of large scale suppliers like P&G, Lever, PepsiCo, and Kraft with Wal-Mart is higher than the competitors ensuring maximum product availability, demand fluctuations and supply chain variability linked with promotions(Graff, T. O. (1998).)
EDLP strategy however resulted in a low price reputation driving volumes which also resulted in lesser need for frequent advertisement. EDLP strategy also results in lowering of inventory and logical costs. It will also ensure that the promotional cost/ trade spending cost will be drastically reduced. EDLP pricing strategy provides incentive for customers to travel long distances to shopping outlets, hurting retailers in near proximity(Casadesus-Masanell, ...
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Walmart Analysis. (2008).Retrieved from http://voices.yahoo.com/walmartanalysis1743207.html
Walmart's Keys to Successful Supply Chain Management. (2013). Retrieved from University of San Francisco: http://www.usanfranonline.com/walmart successful supply chain management/
Casadesus-Masanell, R., & Larson, T. (2009). “Competing through business models (D)”. Harvard Business School, Case 710-410.
Casadesus-Masanell, R., & Ricart, J. E. (2008). “Competing through business models (A)”. Harvard Business School, Case 708-452
Graff, T. O. (1998). “The locations of Wal-Mart and Kmart supercenters: contrasting corporate strategies.” Professional Geographer, 50(1), 46-57.
Graff, T. O. and Ashton D. (1994) “Spatial diffusion of Wal-Mart: contagious and reverse hierarchical elements.” Professional Geographer, 46(1), 19-29.
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