How did Walmart grow when it was a small company?

[Boojatta]

Why can't small, independent retailers use the strategies that it used?

Do small, independent retailers feel morally obligated to obey unwritten rules that aren't laws and that prevent growth?

[hunter]

1. Wal-Mart is like the rot on dead meat.

They haven't been able to establish themselves within living economies.

===============================

World's Biggest Retailer Wal-Mart Closes Up Shop in Germany

Louisa Schaefer, Deutsche Welle, 28.07.2006

Wal-Mart moved into Germany in 1998, hoping to repeat its phenomenal US success in Europe's biggest economy.

It didn't turn out that way. From the beginning, Wal-Mart found its American approach to business did not quite translate into German.

''As we focus our efforts on where we can have the greatest impact on our growth and return on investment strategies, it has become increasingly clear that in Germany's business environment, it would be difficult for us to obtain the scale and results we desire,'' Michael Duke, a vice chairman of Wal-Mart, said in a statement.

The Wal-Mart retreat from Germany is expected to cost it about $1 billion (794 million euros).

http://www.dw-world.de/dw/article/0,,2112746,00.html

[JackRiddler]

11. Now there is a better question: What kills Wal-Mart? ...

You'll enjoy the following late send-up of Wal-Mart's failure in Germany:

While the German debacle qualifies as old news, it’s worth revisiting. At first blush, given the vaguely similar cultural/political antecedents, one might think an American business would have a greater chance of succeeding in Europe than in an Asian setting, but, as the German experience has shown, that’s not necessarily the case. Indeed, while the nominal Communist regime of China embraced Walmart’s corporate philosophy, the Germans rejected it. Since Walmart’s abrupt 2006 exit there’s been much discussion as to why the venture failed. One of the explanations (favored by environmentalists) is that Germany was simply too “green” for a slash-and-burn outfit like Walmart, that Germany’s enlightened consumers resented Walmart’s destructive love affair with plastic bags and plastic junk While there may be some truth to the “green” theory, three other explanations seem to make more sense.

First was the chanting. Arguably, what initially stuck in the craw of German workers was the mandatory chanting. Walmart employees are required to start their shifts by engaging in group chants and group exercises, a practice intended to build morale and drive home the importance of company loyalty. While performing synchronized calisthenics Walmart employees are required to chant, WALMART! WALMART! WALMART! Apparently, this kind of happy horseshit didn’t go over well with the Germans. Maybe they found it too embarrassing, maybe they found it too regimented, maybe they found this aggressive, mindless and exuberant group-psychology too painfully reminiscent of certain rallies, like one that occurred in Nuremberg some years ago.

The second problem was the smiling. Walmart requires its checkout people to smile at customers after bagging their purchases. Plastic bags, plastic junk, plastic smiles. Walmart employees who refuse to flash a bright but insincere smile can be fired. But alas, in German society, merchants and customers don’t exchange reflexive smiles. In Germany, smiles are genuine; in Germany, smiles actually mean something. Walmarters grinning like jackasses at total strangers not only didn’t impress the Germans, it unnerved them.

And third was the ethics problem. Walmart corporate policy prohibited sexual intercourse among employees. This applied to all in-store romances: boyfriends and girlfriends, and husbands and wives (even if they met at work and fell in love). Apparently, the Arkansas-based company has no problem with screwing the environment, but objects to employees doing it with each other. Although a German court struck down this sexual prohibition in 2005, Walmart’s bizarre ethics policy left a bitter residue; and that, coupled with the ritual chanting and the mandatory smiling, more or less poisoned the whole deal. So Germany is now verboten to Walmart. Presumably, they’ll open stores in Libya to take up the slack.

http://www.counterpunch.org/2011/08/26/germany-chokes-on-walmart/

[bighart]

2. In part Sam Walton's early success was going into underserved rural markets

that most other chains avoided. Business climate and culture have changed drastically since that time.

[FarLeftFist]

3. Most probably enjoy being small businesses, less headaches, also

Wal-Mart is like a cancer. It comes to towns, puts many other businesses out of business, then in some cases closes up shop leaving the town without all the small businesses it originally had i.e. Clothing, Pharmacy, Grocery, Electronics, etc.

[Tom_Foolery]

4. I think the answer lies within these pages...

I read it a long time ago. It's actually a good read.

[FarLeftFist]

5. Not his products though.

[Tom_Foolery]

12. Unfortunately, true! n/t

[On the Road]

6. It's Possible That Starting a New Walmart Today Would be Difficult

I suspect most independent retailers are swamed just trying to make ends meet. Growing a new Walmart would require not only managing a successful local store, but putting tremendous time and resources into expansion. The two activities require different skills and a lot of drive.

It is common for a growing retail operation to rack up an enormous amount of debt opening new stores. Things have to go smoothly for the plan to work and failure is common. For example, my cousin's girlfriend's ex started over a dozen successful small companies and (according to her) went bankrupt each time he tried to expand into larger operations.

It is possible that Walmat opened at the right time historically. Walmart, Kmart, and Target all opened their doors in 1962, suggesting that the barriers to entry may have been lower then. When an industry is dominated by small businesses, it is usually ripe for one or two companies to grow and dominate the market. After that, expansion is much harder. You can still find expanding retail stores, but it is much rarer in a category with a dominant national market leader. Either very small companies or very large ones can flourish, but to grow you have to become mid-sized and suffer the worst of both worlds. It's what drove Studebaker, Burger Chef, and countless other businesses down the drain.

Walmart had another advantage in that they started in small cities in Arkansas with limited competition. Opening in a major city might have subjected them to richer and more sophisticated competitors and lower profit margins, making it difficult to save the money required for expansion.

The third thing that Walmart had going for it was the strategy of starting with discount stores, which already existed, and adding a wider variety of merchandise in larger, more modern locations. Enough customers preferred shopping at Walmart that they were able to more than make up in volume what they lost by discounting prices.

That's not a judgment either way on their business strategy, but it does seem to have worked for them.

[FarCenter]

7. Sam built small discount stores in towns that didn't have them

Walmart would go into a town of a few thousand to a few tens of thousands populaiton and put up a small to medium sized discount store on the highway just out of town.

Goods would be priced below what the downtown merchants were charging due to an efficient buying, warehousing and distribution system.

Once the company grew, it put bigger stores in bigger metro areas, and it pioneered the application of information technology to control warehousing and distribution better than others. It also became big enough so that it could force suppliers to provide goods at lower prices and conform to Walmarts requirements for packaging and identification.

[MisterP]

8. tl,dr version: there wasn't a WalMart around back then

[JDPriestly]

9. Made in America labels sold in rural America. Everybody agrees with me.

Sam Walton's children bastardized the Sam's business. It is no longer a child of Sam Walton.

Sad, sad Sam.

[A HERETIC I AM]

10. Though I've never read this anywhere, it is my opinion they took advantage of the farming crisis of

the 70's - 80's.

Remember "Farm Aid" of 1985?

It seems to me their rapid expansion completely paralleled the crash of the farm economy in those days. It is my opinion (again, I have no sources, just remember those days) that they would swoop in to farming/rural communities and buy a farm that was going under that just so happened to be equidistant to 2 or 3 small towns. They got that land dirt cheap, built a large store and drew customers from the surrounding area. That's one reason you hear about them ruining small town America.

I remember hearing an interview with the owner of a Western Auto Store (remember those? There was one in every small town in this country, just about) who said that he couldn't BUY bicycles for what the local Wal-Mart was selling them for.

They took advantage of a soft land market at exactly the right time and the company exploded.

[HiPointDem]

14. +1

[A HERETIC I AM]

15. Wow.....talk about searching the archives!

Thanks for the plus one, but damn! This thread is almost 11 months old!

[HiPointDem]

16. i actually don't know how i got to this. i'd thought i was in a different walmart thread --

it was very weird.

[blm]

13. GHWBush's pal/crony, Jackson Stephens (of Arkansas), set up deal with Chinese industrialists

and WalMart in the late 70s. The first major test for the global fascists to fool the American people into accepting New World Order.

Jackson Stephens also brought BCCI bank into this country around the same time, the late 70s. When his longtime crony, Poppy Bush, expected to be impeached after the release of the BCCI report - he had the release of report delayed to Dec 1992 - Jackson Stephens had his Arkansas boy ready in the wings with a late entry into the Dem primary - Stephens bankrolled that primary race to the tune of 1 million dollars. GHWBush went on to run the most detached campaign by a sitting president ever. Dem won, and BCCI report came out in Dec, and.............was pretty much deepsixed over the next few years, with only minor, peripheral issues surfacing and all the deeper, treasonous issues (including the funding of global terrorism) being passed over by a lazy press and a WH protective of both GHWBush and Jackson Stephens.

BTW...Jackson Stephens was also the Rose Law Firms biggest client - and though he was a named figure in BCCI scandal, apparently GOP legal team supposedly 'investigating' the firm to find wrong by Clinton (nice distraction, eh), never managed to find any wrongdoing by any lawyer working for Stephens....imagine that. In other words, that 'legal team' was a pack of scrubbers who went into Rose knowing full well that Clinton was never really the target - they were there to spend the next two years scrubbing Stephens' mountains of files.....and probably his WalMart-Chinese deals, too.