Walmart: Consumer Behavior

Our local Walmart here in New Orleans on Tchoupitoulas Street is one of the 3822 stores across America.  Of those 3822 store, 2939 are Super Walmart- meaning they are open 24 hours a day.  This means that there is a Walmart open every hour of every day with on average about 500 people working in each of these stores.  In one store 37,000 come through those doors a week, meaning there are 220 people walking up and down those aisle.  At any given moment in the US there 850,000 American inside of a Walmart store.  We sent one of our team members down to Walmart to talk to some customers to see what they had to say about their expeirence:

Shopper 1:

How often do you come to Walmart?

About once a month

What are your main reasons for coming?

Well today they are having a special on a dog toy my dog really likes.  And I need some other things like salt, glue etc.

About how much do you usually spend on your visits to Walmart?

Probably less than 100 dollars

 

Shopper 2:

How often do you come to Walmart?

Once a week

Why do you come to Walmart as opposed to other stores?

Target is too far and involves waiting in traffic sometimes

Do you you think it is easy to find things in Walmart?

It was overwhelming at first but I come so frequently I pretty much know my way around the store

How is your experience? Like your interaction with employees?

It depends on the time of day.  At night, when everyone get off work it tends to be overwhelming and the employees are stressed.  I prefer coming during the day, everyone is much friendlier.

 

Shopper 3:

How often do you come to Walmart?

Once a month

What do you usually come for?

Mainly for electronics and miscellaneous things; sometimes groceries

How much do you usually spend?

Less then $50

How long do you spend in the store?

I’m pretty quick, in and out

Walmart and Unions

This video discusses the fact that Unions in Brazil, China, UK, and Argentina exist for Wal-Mart workers. This video presents the issue in a very biased manner; however, it is interesting to learn about the unions present in other countries. Obviously this is a very controversial issue and many people have strong opinions on it.

Wal-Mart has been criticized recently for its policy on unions in the United States. An article was just posted in the Washington Post about Wal-Mart’s policy focusing on the fact that Wal-Mart has worked with unionized employees in the United Kingdom. Workers here are not happy about the current policy in the United States. In response to the angry workers, the chief executive stated, “We have a local philosophy… It’s our intention to demonstrate that we are a great corporate citizen.”

Source:
http://www.washingtonpost.com/business/economy/wal-mart-works-with-unions-abroad-but-not-at-home/2011/06/07/AG0nOPLH_story.html

Wal-Mart Financials

Wal-Mart is one of the American institutions as far as companies. We are all well-aware of its small-town origins and entrepreneurship spirit it represented through its founder, Sam Walton. As such, it operates its business through three reportable segments: Walmart U.S., Walmart International and Sam’s Club, and it is extremely profitable. Its net income has steadily increased year after year 2008 to 2012, from $12.86 billion to $15.77 billion.

The Walmart U.S. segment includes the company’s mass merchant concept in the United States and Puerto Rico operating under the Walmart brand as well as walmart.com. It does business in six strategic merchandise units namely Grocery, Entertainment, Hardlines, Health & Wellness, Apparel and Home.The Walmart International segment is comprised of wholly-owned subsidiaries operating in Argentina, Brazil, Canada, Japan, and the United Kingdom. It offers a limited amount of consumer credit products, principally through Chile, Canada and Mexico. Although, Canada’s operations are growing rapidly. While the Sam’s Club segment includes the warehouse membership clubs in the United States and Puerto Rico as well as samsclub.com.

EPS is an especially attractive characteristic of the company as it has seen them grow year over year, like net income, but most notably a jump from 2010 to 2011 of 20.75% from 3.71 to 4.45.

Wal-Mart is an attractive investment if it continues to capitalize on its international segment, and if it diversifies its positions domestically to cater to the new generation of shoppers that are more accustomed to smaller, more personal atmospheres.

 

 

 

Wal-Mart’s New Small Store Strategy

Wal-Mart strategy is ingrained in seeking out the customer and attracting them with a proposition Everyday Low Price (EDLP). Its cost-cutting strategy promotes savings that a consumer, or rival seller, cannot deny. As a result, same-store sales for the “Neighborhood” store are up. Due to the encouraging reports, Wal-Mart is now trying to tap into an $80 billion market by setting up more of these “smaller” versions of the gigantic, typical Wal-Mart Supercenter retail outlet.

The argument for such a strategy is that the Supercenter market is saturated by competitors including Target and Costco. As a result, the company will open 150 new stores Neighborhood stores around the United States to capitalize on the demand for smaller, more personal shopping, a stark contrast from the sterile and endless lanes of merchandise in the megadepots.

These smaller stores are approximately one fifth of the size of the former big-box locations, but the reason for expanding them now is because the company has lowered cost, increased profit margins, and boosted sales to the point where it was only a matter of time until this strategy was going to be employed.