For decades, Wal-Mart has held the title of the American retailer (although it is international) where people can get products for the lowest price possible. As the world’s largest retailer, Wal-Mart has been looked at as a role model for many competitors who desired the profits Wal-Mart has received in past periods. The founder, Sam Walton, began to design his stores in 1962 to the have everyday low pricing (EDLP) method, opposed to the popular at the time hi-lo pricing. Lucky for Walton, throughout the late 1900s there was a great trend in discount retailing—buying in bulk at a lower price, which EDLP catered to, making Wal-Mart the leading retailer. The firm also strides itself on its efficient strategies in its supply chain, especially within the distribution system.
Throughout the past decade, however, there have been other trends, like online shopping, which have resulted in Wal-Mart’s decline. The firm’s stock price had been growing significantly, except in the past 10 years it has been flat—ranging from $45-$55, whereas its competitors’ stocks have kept increasing. This has made many shareholders, including James Neuhausen, a stock analyst, question the firm’s worth and its potential in years to come.
When looking at Wal-Mart and its worth, it is important to have an entire overview of the firm, and really analyze the supply chain management installed at the company. First, the EDLP strategy has worked to put Wal-Mart at a competitive advantage over others in the retail industry. EDLP makes the operational costs as low as possible, increasing volumes of items sold, which generate higher aggregate gross profit. After competitors noticed the discount retailing trend and Wal-Mart’s success, they started copying Wal-Mart’s pricing strategy. Wal-Mart still led the industry in efficiency, however.
The firm had competitive advantage because of its