ReBlog: The Walmart Way

Over the next few weeks, I will be re blogging my most popular blogs from the past year.  I will be back blogging about business news and concepts in September. If you have any suggestions for blogs, feel free to contact me.

walmart

Walmart is known to be a retail destination where you can buy almost anything for the lowest price around. As you can tell, they are following the value proposition of operational excellence. That can be a scary value proposition to take on because there is always the threat of another company entering the market and being even lower in cost to the consumer. As with anything, rules are only a general concept to follow. Walmart has been able to create a leading market space for itself. This model helped the company become the largest company in the world, when measured by revenue[1].

Walmart is able to leverage its buying power and purchasing contracts to maintain or decrease the cost of an item before it hits the shelves. Walmart has sophisticated data mining abilities to tell the marketing team which 500 items you are most likely to buy that week. Those items are placed in the flyers to entice people in the door. Personally, I have shopped at Walmart (5 times), but I have yet to buy anything. I have been able to find the same item at another retailer at a cheaper price.

Walmart does not only use its buying power to help keep its costs down. As you can see below, Walmart is not a high wage payer within the retail industry. In comparison to Costco, Walmart’s average wage is more than $4 less. Benefit costs are also lower for Walmart but when you look at the second part of the chart, you will see that Costco is able to get more from their employees than Walmart is. As you can tell, employees and employee relations are not high on the strategy list for Walmart. As a matter of fact, a few of Walmart stores have undergone organized labour drives. In the case of one union drive, the store was immediately closed after it was certified[2].

Walmart

I know that many people are unhappy with Walmart’s treatment of their employees, but as I said, it is not high on their list and it is still working for them. I personally know a few people that work for Walmart and they love working there.

Walmart may not treat their employees well, based off your perspective and knowledge, but with 2.2 million employees, they have to be doing something right!

Have an awesome week

Kevin MacDonald is a Business Consultant at L6S Business Consulting Inc (www.L6SBC.ca). L6S offers services in management consulting, Controller and CFO contracting, and lean management with either project work or teaching/mentoring of staff. Kevin has his CMA accounting designation along with a Black Belt in Lean Six Sigma.

Kevin is active in the community by volunteering for different groups and donates platelets at the Canadian Blood Services clinic on a bi-weekly basis.

L6S Business Consulting will also be holding 3 sessions in regards to better understanding and using social media (Twitter, Facebook, and LinkedIn). For more information, please email: info@L6SBC.ca

 Social Media Seminars

[1] http://en.wikipedia.org/wiki/List_of_largest_companies_by_revenue

[2] http://www.cbc.ca/m/news/#!/content/1.2689646

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