Walmart business operations and retail strategy

Wal-Mart

Me: As part of this project, I am going to ask about your marketing efforts. We'll start with the target market -- who are you trying to attract to your store?

WMT: If you look around, what you see if a little cross-section of the area. We appeal to consumers who like to save money, which sooner or later is everybody. There's always something people want to save money on, and they know they can do that here. So in a way, our target market consists of every man, woman and child in America.

Me: And you appeal to this market with what sort of product mix?

WMT: Over the years, we have consistently expanded our product mix. Our core is in the basics -- housewares, clothes, things like that. But we want to bring in as many people as possible, and we feel that we can use our buying power to get lower prices on pretty much anything. So we're doing pharmaceuticals now, we're doing groceries. Our product line is very broad. That's how you appeal to everyone.

Me: These tactics point to a strategy build on high levels of market penetration. Is that the case?

WMT: Most definitely. With prices like these, we don't make a lot of money on any given item. We make money by selling a lot of items. It is an essential part of our business model to have high market penetration. And we need people to keep coming back, too. Volume is essential to our ability to continuously offer the lowest prices. But it is a feedback loop, because higher volumes allow us to offer those low prices.

Me: When a new customer walks through the door -- what is the impression you want them to get?

WMT: We want them to notice the prices. We have the best prices -- and the way we lay out the store we want the customer to see the best prices that we have to offer right away. We want to wow people with our prices. And the one thing we want every customer to feel is that if they are looking for a good price, they are in the right place. The last thing we would ever want somebody to feel is that they didn't belong -- they came to use for a good price and we are determined to give that to them.

Me: I wanted to address for a minute the issue of community. Obviously, Wal-Mart has come under fire from some groups for not being a community contributor. How do you see Wal-Mart's role in the community?

WMT: Wal-Mart does a lot of good for the community, for the living standards of the community. We provide hundreds of jobs in this community, for starters. We improve living standards -- people's dollars go further here. And we encourage our employees to donate their time and money to charitable causes throughout the community.

Me: Is community involvement necessary to succeed?

WMT: I don't think it is necessary -- our competitive advantage is in our low prices -- but it is something we want to encourage.

Me: Can you tell me about your Internet presence?

WMT: Absolutely. We came onto the web, as a company that is, perhaps a little later than some of the other major Internet stores. We wanted to do it right. Now, Wal-Mart.com is the number two online retailer.

Me: Who runs the website?

WMT: The company does. I mean, at the local level my role is in this store. The online business is completely separate. They have their own people and their own infrastructure.

Me: Does the website help your business or hurt your business? What do your customers tell you about their impressions of the website?

WMT: They love it. And I really think it helps what we do at the store level. A lot of people don't really want to buy things over the Internet. But they want to shop. That brings them to the store to make their purchase, and this is something you can't do on Amazon or eBay or sites like that. The customers buy their Christmas presents online, and shop for themselves in the store. There's other people who probably shop online exclusively -- we might see them for their groceries but that's it. I think the website offers the same high quality experience you get in store, and it makes a fantastic complement to the in-store shopping experience.

Me: Are you aware of any unwanted or unintended images of your company on the Internet?

WMT: Wal-Mart does a lot of things right, and maybe that earns us some critics. But we don't worry about that. When you consider the traffic we generate from people shopping on Wal-Mart.com, that's far greater than anything else online about Wal-Mart.

Me: Do your competitors have a strong Internet presence? Do you find that competitive pressure is different online?

WMT: Our competitors are all online, but some do it better than others. We're aiming for Amazon on the web, because they're still bigger. But we're coming for them. At the end of the day, merchandising and competing on lower price are things that don't change that much. I'm sure the mechanics are a little bit different online, but I don't work there so I don't know too much about that.

Me: Has the Internet changes the way you do business in the past few years?

WMT: At the store level, no. We have our own business to worry about. Even for the company, it hasn't changed the way the store run. There might be some issues with respect to distribution or the supply chain, but again I would not know much about that. Our Internet presence has not affected me much.