walmart hrm case study

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Walmart’s HRM: HR Planning, Job Analysis & Design

Walmart human resource management, planning, job analysis, design, description, specification, forecasting

Walmart’s human resource management is a critical success factor for the business. The company’s retail service offers goods in a way that is convenient and efficient for shoppers. In this service context, Walmart’s human resources directly determine business output. The company’s human resource management aims to maximize employee performance to correspondingly maximize capacity for sales. Human resource planning and job analysis and design are some of the major components of Walmart’s human resource management strategy. Through human resource planning, the firm develops an adequate workforce. Through effective job analysis and design, Walmart ensures that job descriptions and specifications relate with the HR needs of the organization. These components of human resource management influence how Walmart maintains its more than 2 million employees to provide adequate service to an expanding population of target consumers.

This article is part of a series on Walmart’s Human Resource Management:

Walmart ’s HRM: HR Planning, Job Analysis & Design
Walmart’s HRM: Recruitment, Selection, Employee Retention
Walmart’s HRM: Training, Performance Management
Walmart’s HRM: Compensation, Career Development

Walmart’s Human Resource Planning

Forecasting . Walmart’s human resource management forecasts its workforce needs to ensure capacity to address changes in consumer demand. While other forecasting methods and techniques are also used, these three are the most notable at Walmart:

Bottom-up approach
Trend analysis
Delphi method

The bottom-up approach analyzes human resource needs starting at the lowest level of the organizational structure. Walmart’s human resource management objective for this approach is to ensure that all levels of the organization have adequate employees based on HR needs at the frontline (e.g., hourly sales employees). The company starts forecasting the HR needs of frontline employees. Walmart’s HR managers then proceed to analyze HR needs at the next higher level of the organizational structure. This human resource management approach ensures that all human resource needs at the lowest levels of Walmart’s organizational structure are supported through an adequate number of employees at the upper levels of the organizational structure. On the other hand, trend analysis is used in human resource management to predict future HR needs based on current needs. For example, Walmart analyzes the series of recent HR changes and uses this information to extrapolate future HR needs. A current trend that shows an increasing demand for human resources indicates a larger workforce requirement in the future. Walmart’s human resource management uses trend analysis to determine HR needs along with the company’s global expansion. In addition, the Delphi method forecasts future HR needs based on expert opinion. Walmart’s human resource management uses the Delphi method to ensure adequate human resources in establishing new brands, stores, or other facilities. For example, HR experts can opine about the HR needs in opening a new Walmart store of a certain size. The company’s human resource management applies the Delphi method to estimate the number of employees needed in each type of job, such as supply chain jobs, inventory jobs, and sales jobs.

Surplus & Shortage of Employees . Walmart faces minimal concerns about the shortage of employees, especially sales personnel. The company receives a continuous influx of applicants for sales positions. However, Walmart experiences HR surplus when aggregate consumption declines. Such a surplus is a challenge to human resource management because it translates to lower HR cost-effectiveness. Walmart uses the following approaches to determine HR needs and prevent surpluses or shortages:

Sales performance analysis
Turnover rate analysis
Gap analysis

Walmart’s human resource management changes recruitment efforts based on changes in sales performance, which is an indicator of HR needs. Turnover is the rate at which Walmart’s human resources leave and/or are replaced. Turnover, together with the rate of recruitment, is an indicator of changes in the size of the company’s workforce. Walmart’s human resource management ensures that the recruitment rate is commensurate to the turnover rate. If the turnover rate is lower than the recruitment rate, Walmart’s workforce increases in size. An increase in workforce size usually happens when the company expands or opens new stores. In addition, Walmart’s human resource management uses gap analysis to determine the gap between HR needs and actual HR capacity. A significant gap means reduced HR cost-effectiveness or inadequacy in meeting organizational needs. Walmart uses gap analysis to decide on changing recruitment efforts. The company has a gap allowance or threshold. When the HR gap exceeds the threshold, Walmart’s human resource management increases or decreases recruitment efforts.

Balancing Supply and Demand . Walmart balances HR supply and demand by adjusting the compensation strategy and recruitment efforts. These adjustments are based on trends in internal human resource demand and the rate of applicant entry. Thus, the firm’s human resource management uses the following approaches to balance HR supply and demand:

Changes in recruitment
Changes in compensation

Changes in recruitment are Walmart’s main approach to balance HR supply and demand. The company’s human resource management changes the recruitment rate to address workforce requirements. Walmart can easily adjust its recruitment efforts without significantly impacting financial performance. In prioritizing changes in recruitment to balance HR supply and demand, Walmart’s human resource management minimizes changes in the firm’s compensation strategy. On the other hand, changes in compensation are also used to prevent an imbalance in HR supply and demand. Walmart’s compensation strategy is designed to minimize HR expenditure. This strategy agrees with the company’s cost leadership generic strategy . When HR supply becomes inadequate, Walmart’s last resort is to increase wages. Theoretically, higher wages attract more applicants. Walmart’s human resource management uses this second approach to effectively compete in the labor market.

Job Analysis and Design at Walmart

Organizational Design . Job analysis and design are successfully implemented in Walmart’s human resource management through the company’s organizational structure, which is a hierarchical functional structure . This organizational structure makes it easy to specify distinct characteristics for each job. The structure has clear lines of authority, lines of communication, and lines of command. Walmart has clear and distinct definitions for every job position and level of the structure. In effect, the firm’s human resource management minimizes uncertainty in job analysis and design.

Methods of Job Analysis . Walmart uses work-oriented job analysis and worker-oriented job analysis. The company applies work-oriented job analysis for sales positions. The purpose of this method is to provide information about tasks and outcomes. Walmart applies this method in the form of interviews and direct observations. The company’s human resource management uses direct observation of sales personnel’s activities. Interviews are conducted to analyze the jobs of team leaders and supervisors. This method enables Walmart’s human resource management to establish expectable job outcomes. On the other hand, the worker-oriented job analysis method provides information on interpersonal, cognitive, and perceptual abilities. Walmart uses this method to analyze managerial jobs. A specific application of this method is through the Work Profiling System (WPS), which is designed for managerial positions. This method enables Walmart’s human resource management to pinpoint the necessary capabilities of managers, such as store managers and corporate managers.

Job descriptions . As one of the largest retailers in the world, Walmart has a wide variety of job descriptions. Nonetheless, the firm’s human resource management uses the following variables as criteria for job descriptions:

Performance standards
Job factors
Job knowledge

For managerial positions, Walmart emphasizes analytical and problem-solving knowledge, skills, and abilities (KSAs). In contrast, for sales personnel, the company emphasizes job knowledge and interpersonal skills. Walmart’s human resource management considers interpersonal skills essential in sales personnel, who directly communicate with customers.

Job specification . The company has a wide array of job specifications. However, in general, there are essential attributes and desirable attributes included in all job descriptions. For sales positions, Walmart’s human resource management specifies essential attributes as follows:

Communication skills
Knowledge of the business
Knowledge of products

These essential attributes are expected of all sales employees throughout the organization. However, there are also some attributes classified as desirable . These attributes are preferred but not necessary for a sales employee to effectively fulfill his job. Walmart’s human resource management specifies desirable attributes as follows:

Likeable and sociable qualities
Multi-tasking skills
Armstrong, M., & Taylor, S. (2023). Armstrong’s Handbook of Human Resource Management Practice: A Guide to the Theory and Practice of People Management . Kogan Page Publishers.
Gu, M., Zhang, Y., Li, D., & Huo, B. (2023). The effect of high-involvement human resource management practices on supply chain resilience and operational performance. Journal of Management Science and Engineering, 8 (2), 176-190.
U.S. Department of Commerce – International Trade Administration – Retail Trade Industry .
Walmart Inc. – Form 10-K .
Walmart Inc. – Policies and Guidelines .
Walmart Inc. – Working at Walmart .
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Organization Culture at Wal-Mart

January 8, 2010

Case Study Contents

Introduction.

Wal-Mart – Company Background
Sam Walton and Wal-Mart’s culture
Exhibit: Unique values that support Wal-Mart’s three basic beliefs
The 10-Foot Rule – Wal-Mart’s secret to customer service
The Sundown Rule
Open-Door Policy
Servant Leadership
Rank-and-file profit sharing
Grass Roots Process – Associate Opinion Survey
The Wal-Mart Cheer
Wal-Mart’s efforts to make the company an even better place to work
Employee Development programs
Combining Technology and empowerment
Awards and Recognitions received by Wal-Mart
Wal-Mart – Timeline
Wal-Mart – Quick Facts
Wal-Mart – Various Store Formats
Wal-Mart – International operating formats
Sam Walton’s ten rules for building a business

“ Wal-Mart continues to execute well and deliver solid results in a challenging economic environment “- A Goldman Sachs analyst

“ What makes ordinary people do extraordinary things?” Sam Walton once asked. “Aren’t we a group of ordinary folks? We really are. And I think we, together as a team, have done extraordinary things. We’ve all grown, we’ve all accomplished much more than any of us ever thought that we could. “- Sam Walton, founder of Wal-Mart

“ We are a people association supported by one million associates. Much of what we do centers around individual stores. We’re in a labor-intensive customer service business. Associates can’t treat customers as number one if they are not treated that way. ” – Susan Oliver, Wal-Mart’s SVP of human resources in 2005

In August 2008, Wal-Mart Stores announced that its profit rose 17 percent in the second quarter and that it is raising its full-year forecast. In a challenging economy, the world’s largest retailer benefited from low prices and its moves to cut costs. Wal-Mart’s President and Chief Executive Lee Scott said that, “While inflation and higher fuel costs are pressuring suppliers, retailers and customers worldwide, we’re confident that Wal-Mart is well positioned for this economy.” Chief Financial Officer Tom Schoewe attributed the better second-quarter profits to tighter inventory controls, which led to fewer markdowns on merchandise. One of Wal-Mart’s goals – which it successfully met – was keeping inventory growth at half the rate of its sales growth which it successfully met. In contrast, sales at department stores and specialty retailers were lagging behind.

What is the key to such good results? Wal-Mart overhauled its strategy. Instead of announcing any price increases to cope with the tough economy, the company slashed its expansion plans. It refocused on lower prices, improved the mix of merchandise offered, cleaned up its stores and provided friendlier and faster customer service. But there is more to Wal-Mart’s success over the years than just tighter inventory controls and lower prices.

Wal-Mart is truly a great company. A strong organizational culture is the foundation for making a good company a great one. The secret to Wal-Mart’s success has long been attributed to its strong culture. Analysts like Jim Collins believe that Wal-Mart had the kind of ‘cult-like’ culture that is shared by all great companies. Wal-Mart employees are referred to as ‘Walmartians’ which is a sign of a unique culture shared by them. This culture is responsible for a company of this magnitude to be able to sustain its entrepreneurial spirit decade after decade.

Since its early days, Wal-Mart achieved remarkable growth rates and was the first trillion dollar company in the world. In 1999, Wal-Mart became the largest private employer in the US with 1,140,000 Associates. But with amazing success also came criticism. Wal-Mart was sued many times and even held the record for being sued the maximum at one time. Its practices and culture were held responsible for killing small local retailers. It was also criticized for gender-based discrimination, its overtime policies and using sweatshop products. Download case study PDF file to read more…

Walmart's Workforce of the Future

Any discussion of the future of retail—or how we work—has to include Walmart. As of 2017, 90 percent of the US population lived within 10 miles of a Walmart store; with 11,766 locations worldwide and $514 billion in annual revenues, the discount store also has the distinction of being the largest private employer in the United States, with 1.5 million workers (2.2 million worldwide).

But that size and dominance doesn’t make Walmart immune to pressures faced by any other retail operation. In the second-year Harvard Business School course Managing the Future of Work , Professor William Kerr explores how technology and demographics are changing the way companies like Walmart, and their workers, operate.

“The pace of change in the retail sector is truly extraordinary,” says Kerr, the D’Arbeloff Professor of Business Administration and co-director of Harvard’s Managing the Future of Work initiative . “That requires a lot of reskilling of employees and hard choices, in an uncertain environment, in terms of how to deploy capital.”

“This digital transformation creates new jobs, but, more important, it changes the nature of jobs, even entry-level ones.”

Kerr captures that dilemma by detailing the scope of Walmart’s operations and current strategies in the case “Walmart’s Workforce of the Future.” Published in April, it offers an overview of the considerable investments the retail giant is making in its e-commerce infrastructure, in its employee training and support, and in technological innovations such as robot workers and in-house incubators.

Walmart fights a revenue drop

The case details how the rise of ecommerce (and the success of Amazon in particular) affected Walmart’s discount stores (which sell general merchandise but limited grocery items), resulting in a decrease in annual revenue at those stores from $142.5 billion in 2009 to 97.7 billion in 2018. During the same time period, revenue at Walmart’s “supercenters” (larger stores that also sell groceries and often include services such as eye care, beauty salons, and photo studios) increased by 16 percent, from $409.9 billion to $476.2 billion. (Walmart closed 2,214 discount stores or converted them into other formats from 1993 to 2018, with 2,576 supercenters opening during that time.)

In addition to increasing Walmart’s supercenter footprint, CEO Doug McMillon’s omnichannel strategy focuses on a seamless approach to the customer experience, with an emphasis on employee training and improved ecommerce and automation technology, both on the floor and in back office roles.

One foundational move to beef up its technology was Walmart’s $3.3 billion acquisition of online retailer Jet.com in 2016, an investment that immediately improved its ecommerce infrastructure. Walmart has also piloted and invested in robots to perform a variety of functions, from unloading trucks to scrubbing floors to scanning shelves and bringing items out of storage for curbside delivery orders. But public statements by senior executives made it clear that Walmart was equally committed to the complex, costly effort required to train its human workers.

“I want to be clear that we don’t believe technology is the answer to everything,” McMillon stated in a 2017 annual shareholder meeting. “The secret to success will always be our people. … It will be our humanity that drives our creativity, powers our competitive spirit, and keeps us out in front.”

Technology changes the nature of work

But at the same meeting, McMillon also acknowledged how technology changes the nature of work itself, a perspective echoed by Walmart Chief Sustainability Officer and Walmart Foundation President Kathleen McLaughlin. “…we’re now a tech company as much as a retail company,” Mc Laughlin said. “This digital transformation creates new jobs, but, more important, it changes the nature of jobs, even entry-level ones.”

Those demands require more of workers—and an equivalent commitment to re-skilling and compensation. In the case, Kerr cites Walmart’s investments in wages and training for employees of $1.2 billion and $1.5 billion in 2015 and 2016—part of a move that boosted starting pay for frontline associates from $9 per hour in 2015 to $10 in 2016 (it hit $11 per hour in early 2018). Yet in 2015, announcement of a wage increase resulted in a share price drop the following day of 10 percent, on news that the increase would cut earnings per share by 6 to 12 percent in 2016. It’s a dynamic that lays bare for MBA students the consequences of senior leadership’s choices, says Kerr.

“It’s easy to be critical and say that Walmart should be doing more, but when students review the company’s actions over the past five years, they have to confront the fact that every time the minimum wage went up, the stock price went down—and meanwhile, competitors have better margins.”

The case also outlines Walmart’s approach to training its workers, including its focus on building long-term, transferable skills through efforts such as Pathways, a program that teaches associates about the retail business model, explains the “why” behind the work they’re asked to do, and helps develop the soft skills that are useful in any field. Workers who completed the program received a raise and had increased job opportunities; however, many complained that it lacked clarity and that it took too long to move through the various modules. While Walmart planned for 500,000 employees to go through Pathways in 2016, the initial rollout was considerably lower; as a result, Walmart needed to revamp some parts of the program to speed up its completion rate. (Its Academies program, focused on training and empowering hourly supervisors to directly manage team members, faced similar challenges.)

In another move to build a more skilled, educated workforce, Walmart introduced a program in 2018 that offered workers the opportunity to enroll in online degree programs for $1 a day in business, technology, and supply chain management at three different universities; in June 2019, the program expanded to six universities and 14 areas of study, including cybersecurity and computer science. Widely hailed in the press for the opportunity it offers workers to graduate from college debt-free, the program has seen 7,500 employee enrollments in its first year.

“There’s so much to unpack in the choices that Walmart is making,” Kerr says, remarking that management has also introduced virtual reality goggles to train employees as well as an app, Spark City, that uses a game-type simulation to teach workers about store processes and customer service. Walmart has even crossed over with the gig economy by partnering with platforms including DoorDash, Postmates, Uber, and Lyft for package and grocery delivery.

‘You’re the CEO of Walmart’

So, is Walmart making the right investments for its future? “We spend a lot of time in conversation in this class,” says Kerr. “I’ll say, ‘You’re the CEO of Walmart. What would you have done differently? In 2030, what will your workforce look like? How much of your sales will be in-store, and how much online?

“An early indication of the uncertainty of the future is that, with a bunch of smart MBAs, we had a wide, wide range of opinions as to what the future looks like. From some putting all their chips on ecommerce to others who see Walmart as having a powerful position, particularly in more rural areas, where it can be the one place you go to get your prescriptions, do your shopping, and pick up your ecommerce packages—so building on that, rather than trying to become Amazon.”

Analysts generally give Walmart strong marks for how its investments in technology and training have set it up to compete.

“The progress that they’ve made and the strength they still possess has been working out for them to a good degree,” says Kerr. But it’s too soon to tell whether they have established themselves in a way that will allow them to truly excel. “That’s where the jury is still out. They are still defining the Walmart of the future.”

About the Author

Julia Hanna is an associate editor of the HBS Alumni Bulletin [Image: artran]

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Case study on human resource management of Walmart

Task: Human Resource Management Assignment: Challenges Encounter by Walmart 1. Choose an organisation in the retail sector. Provide a brief introduction about the selected company e.g., its core key businesses, market size, geographical operations etc. 2. Highlight the external and internal challenges the organisation is currently facing and will be facing in the future. 3. Discuss TWO (2) key HR functions that will be impacted by these challenges. You should provide reasons why these functions are affected. 4. Provide specific strategic HR recommendations to address these challenges. These recommendations must support the organisation’s objective. 5. Relevant theories, concepts and models must be applied to support your arguments

Introduction This study developed in the human resource management assignment aims to evaluate the strategic function of human resource management of the U.S. largest and fast-growing global retailer store named Walmart. Before determining the issues, analyzing the background is essential that is also described in this study. Both types of challenges such as internal as well as external are also defined with suitable strategies that help to overcome the issues as well through the function of human resource management (HRM). The key factors and a set of recommendations are also defined in this study. The main purpose of this study is to determine the challenges faced by the retail store and suggest suitable solutions as needed.

Company background The U.S based company, Walmart is known as a rapidly growing company as it sells a wide variation of merchandise at a very low and affordable price. According to the financial records, between the years 2005 to 2014, Walmart collected over 3.9 trillion dollars from net sales (Statista 2021). In the year 1962, on 2nd July this retailer company was founded in Arkansas of the U.S. and from then it has spread its span in a well-being manner. As a result, now the company has more than 10,500 stores along with e-commercial websites (Walmart.com 2021). Over the 50 years, it has built a loyal and strong customer base by stayed strong to the purpose and offers daily-based needs at low price with consistency. Surprisingly, according to McMillion the most selling item for Walmart is ‘banana’ in the year 2020. The fact is that the bananas of this store are totally organic and come from Central America or Mexico. The merchandise of Walmart is using approx 70-80% of the Chinese product along with 20% of America-based products (Son et al., 2018). The Walmart store in the Crossgate Commons is considered as the biggest Walmart as it occupying in two floors with a large area of 260,000 sqft.

Figure1: economic growth graph of Walmart by net sales (Source: Statista 2021)

Evaluation of the internal and external challenges External:Although Walmart is known as the most popular retailer, it also faced some challenges such as joint venture, negative reputation, stiff competition along with business acquisitions constantly in the markets of foreign (Colacicco 2018). It struggled from the competition in the market of North America as well as in South Korea. It dominates about 2% of the food market of Germany but still, a number of stiff competitors are there who raise issues. In the market of Mexico and Canada, it has tough competitors like Giant tiger, Soriana, Kmart, ShopKo, Costco whose create barriers in the path of well-establishing. Also, various cases were reported against Walmart related to exploitation of the employee such as low price and wages, sexual harassment issues (Leighton 2018). These issues create barriers to the expansion as well as ruin the cultural tradition and values for the company. In the future, it creates issues in the path of expansion also.

Internal:Besides this, the main problem that arises most from the employee is low wages. Walmart recruited a large number of employees but not paying the appropriate wages that cause problems for the employees to bear family costs as well (Pandey et al. 2021). This internal problem of low wages affects the brand reputation. The management of the corporation was reluctant many times for increasing the wages but this is not solved yet. In the future, it creates issues in employee recruitment that affects the productivity of the organization as well.

The impact on the key factors of the HR function For overcoming the key challenges faced by this largest retailer, it has to be identified the key factors from the management that impact the most.

Human Resource Planning (HRP): The planning procedure of human resource management is the key factor as it defines the statistics for the employee management as well. According to the Transaction cost theory by Williamson in the year 1986, states that the optimum infrastructure of the organization is the factor that helps to attain the efficiency of the economic structure by reducing the exchange of the cost (Rindfleisch 2020). It also considers as the economic theory that gives a framework structure by analysis for obtaining the contractual relations for the governance structure across the supply chain. For improving economic efficiency a proper human resource planning is needed (Mishra 2017). In this case, the infrastructure of the HRP of Walmart faces the problem like stiff competitors in the path of establishing their brand value due to the lack of a proper HRP. The organization fails to maintain strategic planning in a well-being manner which is effective for creating pressure on the competitors.

Selection and Recruiting: The process of selecting and recruiting suitable employees is the key responsibility of an HRM. For maintaining sustainable growth along with the brand reputation it is important to select and recruit the appropriate employee by the HRM (Azam, and Qureshi 2021). Without a suitable employee, an organization is lead forward to the loss and also has lost its reputation as well.

According to the theory of ‘strategic contingency’, that represents the organizational theory with suggesting the effective order. It states that HRM needs to attach well to the organizational aspects in both internal and external environments as well (Shah, and Khan 2019). It assumes that departments within an organization need experts who are able to manage the labor division and creates contingencies that are strategic well. By controlling the contingencies, a good HRM can serve the base of the Intra organizational power as well. For Walmart, the facts of human resource theory are not working well as they are failed to managing the wages and sexual issues raised by the employees. It leads to arises challenges like employee exploitation.

Strategic Recommendation The human resource strategy needs to focus more on the employees by doing everything possible for their satisfaction by reducing the expenses that result in the ability to offer the lowest cost that creates pressure on the competitors as well. They need to assess the workforce capabilities by using various parameters and go ahead proactively to face the competitors.

For overcoming the problem of low wages for the employees they should follow the theory of ‘Wages Fund Theory’ as it states that wages vary on the relevant capital amounts for the labor force’s size and worker’s payment. According to this theory, wages vary on the number of employees with the fund (Di Pietro, Monaghan, and O'HaganLuff 2021).

Walmart needs to determine the fund first then occupy the recruiting process instead of recruit a large number.

The HRM function needs to be more focused to create synergistic teamwork that makes the employees highly productive as well as creates pressure on the competitors by maintaining a high level of standard in the supply chain management. They need to develop some development and training programs that help to improve productivity as well.

Another theory of management named ‘Systems management theory’ states that the type of large business needs to work harmoniously so that the system function can be regulated optimally (Dundon, and Rafferty 2020). Based on this theory Walmart needs to be more focused on promoting the appropriate employee instead of recruiting new as well.

Conclusion Walmart is a brand that has a large expansion globally but faces issues in the path of establishing its significance as well. This study clarifies that most of the issues arise mainly due to the lack of managing power of the existing management. By implementing the recommendations and overlooking the key factors they can easily improve the barriers for overcoming the challenges that they faced. From the above study, it can be concluded that the Arkansas-based retailer Walmart has a good infrastructure but needs some strategic changes in human resource management that improve the enhancing factors for the expansion.

Reference list Azam, M.U.H.A.M.M.A.D. and Qureshi, J.A., 2021. Building employer brand image for accumulating intellectual capital: Exploring employees' perspective in higher educational institutes. Estudios De EconomiaAplicada, 39(2), pp.1-15. [Avaialble at: https://www.researchgate.net/profile/Jawaid-Qureshi/publication/349167953_Building_Employer_Brand_Image_for_accumulating_Intellectual_Capital/ links/6101805e1e95fe241a95a905/Building-Employer-Brand-Image-for-accumulating-Intellectual-Capital.pdf] Colacicco, G., 2018. Internationalization decisions in the retailing sector: Walmart in South Korea. [Available at: http://tesi.luiss.it/22478/1/680911_COLACICCO_GIANLUCA_LUISS_THESIS_% 20Gianluca%20Colacicco_680911.pdf]

Di Pietro, F., Monaghan, S. and O'Hagan Luff, M., 2021.Entrepreneurial finance and HRM practices in small firms.British Journal of Management. [Available at: https://onlinelibrary.wiley.com/doi/abs/10.1111/1467-8551.12493] Dundon, T. and Rafferty, A., 2018. The (potential) demise of HRM.Human Resource Management Journal, 28(3), pp.377-391. [Available at: https://www.sciencedirect.com/science/article/pii/S0148296320304112]

Leighton, P., 2018. No criminology of wage theft: Revisiting “workplace theft” to expose capitalist exploitation.Human resource management assignment In Revisiting Crimes of the Powerful (pp. 188-201).Routledge. [Avaialble at: https://www.taylorfrancis.com/chapters/edit/10.4324/9781315212333-16/criminology-wage-theft-paul-leighton]

Mishra, P., 2017. Green human resource management: A framework for sustainable organizational development in an emerging economy. International Journal of Organizational Analysis. [Available at: https://www.emerald.com/insight/content/doi/10.1108/IJOA-11-2016-1079/full/html]

Pandey, R., Dillip, D., Jayant, J., Vashishth, K., Nikhil, N., Qi, T.J., Kee, D.M.H., Mei, T.C., Xin, R.Y.K. and Qhi, L.Y., 2021. Factors Influencing Organization Success: A Case Study of Walmart. International journal of Tourism and hospitality in Asia Pasific (IJTHAP), 4(2), pp.112-123. [Available at: http://ejournal.aibpm.org/index.php/IJTHAP/article/view/1059]

Rindfleisch, A., 2020. Transaction cost theory: past, present and future. AMS Review, 10(1), pp.85-97. [Available at: https://link.springer.com/article/10.1007/s13162-019-00151-x]

Shah, A.U. and Khan, M.I., 2019. HRM-Performance Perspectives: An overview of Theoratical Challenges and Prospects. Engineering Economics, 30(3), pp.382-393. [Available at: https://www.inzeko.ktu.lt/index.php/EE/article/view/9550]

Son, J., Baek, J., Park, H. and Kim, C., 2018. The localized merchandising for international retailers: A study of Tesco’s failure in Japan. Ritsumeikan Business Review, 56(5), pp.1-20. [Available at: https://ritsumei.repo.nii.ac.jp/action=repository_action_common_download& item_id=1291&item_no=1&attribute_id=22&file_no=1]

Statista. 2021. Walmart U.S. sales growth 2021 | Statista. [online] Available at: [Accessed 1 October 2021]. Walmart.com. 2021.Store Finder - Walmart.com. [online] Available at: [Accessed 1 October 2021].

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Case study of strategic human resource management in Walmart stores

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Strategic Human Resource Management at Wal-Mart Stores Report

Introduction, overview of wal-mart, the organizational chart of wall-mart, local and foreign suppliers, the assessment of shrm in wal-mart, recommendations for the improvement of shrm in wal-mart, reference list.

Strategic Human Resource Management (SHRM) is an indispensable element for the performance of the enterprise since it supports the activities of each departments or business division and helps the organization achieve its long-term objectives. The tasks of the human resource manager are focused on the continuous improvement of the labour force. His/her strategies should be in line with the needs of the organization, its mission, and vision.

Their responsibilities of the professionals include selection and recruitment, recognition and rewarding, appraisal, employee development, and succession planning. This paper is aimed at analyzing SHRM in such a company as Wal-Mart Stores, Inc. In particular, it is necessary to determine whether SHRM in this company is consistent with its overall business strategy and with its current needs. This paper will also discuss the impact of internal and external environment on HR polices, pursued by the management of Wal-Mart.

By doing that we will be able to single out strengths and weaknesses of SHRM and make recommendations that could improve it. Yet, at first it is vital to understand the overall business strategies at Wal-Mart, the structure of this company, its organizational culture, and most importantly the role of SHRM.

Wal-Mart is one of the largest retailers in United States and all over the world: the company handles operations through super centres, and discount stores. Currently it operates such as China, Canada, Brazil, Japan, and United Kingdom. Among its major strengths, we can single out effective distribution system, satellite information system, and effective inventory management (Cravens et al, 1998).

They enable the company to reduce operational expenses and subsequently pursue the policy of cost leadership. Overall, the current mission of the enterprise is to retain the status of the world’s leading chain store by “helping people save money so that they could leave better” (Wal-Mart, 2010, unpaged). SHRM is instrumental for the achievement of these objectives. One of the major characteristics of Wal-Mart is decentralized structure.

Overall, HR managers serve the needs of every division of the organization; the only exceptions are suppliers. It is an inherent part of every department. At the given moment, the company employs more than two million employees (Wal-Mart, 2010, unpaged), and it would not be an exaggeration to say that the role of SHRM becomes crucial.

We need to mention that the organizational Wal-Mart can be described as role culture, which means that each of the employees has clearly delineated duties and authorities. More importantly, there is a very distinct and complex hierarchy, for example, there are heads of departments, location managers, facility managers, technology managers, and so forth (Peterson, 2005).

To some extent, this complex hierarchy makes employees believe that they will be able to climb career ladder. As Coleman Peterson argues, this structure makes people believe that “true opportunity exists” (2005, 88). This argument can be better elaborated by means of chart.

Strategic Human Resource Management at Wal-mart stores.

As we can see, Wal-Mart cannot be called a flat organizations since there are many layers between top-management and front-line personnel. On the hand, the culture and structure of the company helps to retain employees; thus, Wal-Mart does not have to spend extra money on hiring and recruitment; however, this hierarchical culture may slow down the decision-making within the company.

Therefore, it can be viewed as both advantage and disadvantage. These are the key issues that a person should take into account while assessing strategic human resource management in the company.

The Influence of External and External Factors

At this point, we need to describe those factors, which drive SHRM in this organization. At first, we need to speak about legal, political, and economic environment and their impact on HR policies in Wal-Mart. Over recent years, this company has recent years, this company has been often criticized by political activists, who believe that it does the company does not want to raise the wages of its employees, and does not offer health insurance to them (Spotts. 2005).

To some degree, it forced the company to increase the remuneration, offered by employees. More importantly, one should not overlook the increasing legal pressure, since the company has faced numerous lawsuits that were caused by poor working conditions and discriminatory policies toward the employees, supporting unionization (Spotts, 2005, p 87). This pressure induced the management to focus more in the needs of the workers.

It is possible to argue that the SHRM in the company is affected by two opposing forces: 1) willingness to be or at least to appear a responsible corporate citizen, and 2) the willingness to remain profitable. Yet, one should not overlook the importance of competition : the thing is that Wal-Mart’s major rivals, for example, Costco offers better health insurances to the workers. In turn, the management of Wal-Mart attempts to improve its work practices.

The objectives of SHRM in Wal-Mart

The importance of an active, healthy human resource management system is recognized throughout Wal-mart. At the business level the key human resource staff working to promote a culture supportive of the business strategy is the human resource director, although there are other staff groups that address particular aspects of the issue for example quality and management development. The human resources managers serves as internal consultants to the various operations within Wal-Mart.

The people perform the following functions: 1) raise awareness on issues of productivity, quality, and a quality work life; 2) facilitate information transfer among Wal-Mart’s operations; 3) conduct practical research related to productivity, a quality of work life, and team issues; and develop team and human resource management processes useful to line managers.

Other staff groups, which contribute to the effort, include quality centre, which promotes improved productivity through the organized teams. The corporate human resource staff has grown in recent years and its range of operations has broadened. The challenge is to tie together a large array of activities into a coherent well-aimed strategy (Anon, 2009, unpaged).

If we are speaking about the relation between SHRM and the strategic objectives of this enterprise, we may say it is aimed at recruitment and retention of the best candidates, which will subsequently enable the company to reduce operational costs, that inevitably arise when the company has a high turnover (Peterson, 2005).

The human resource practices in the organization, for example, development and training, selection and recruitment, performance appraisal, performance contracts among others improve HR efficiency. These traditions are not only used by Human Resource Managers but also used by line managers.

The use of HR practices by line managers has been increasing over years due to the complexity involved in HRM. They play a very crucial role in the development of the workforce since they contact directly with employees (Daft, 2009). Their work is to serve as a bridge between the HR managers and the work force. They are better placed to understand the employee’s performance and frequently experienced problems such as turnover rates and absenteeism which can be used by the HR managers.

At Wal-Mart it is the duty of line managers to introduce any new member of staff into the corporate organization. Shortly after the line managers are informed about the arrival of a new member of staff, they should ensure that the work place is suitable, fully effective and well equipped, notify team members about the new employee, assign one member to act as the employee’s adviser and inform him of the new employee’s duties.

On the whole, it is possible to single out the following areas of HRM to which Wal-Mart pays close attention:

Recruitment of the personnel . Prior to hiring the person, the HR managers of Wal-Mart scrutinize the background of the candidate. They focus on his/her education, references, previous work experience, especially, if we are speaking about those applicants, who have already been selected among many others. The HR managers may focus on such issues as the reason why the person left the previous job. They do not rely solely on interview, since they believe that this form of selection process can be invalid (Peterson, 2005, p 87).
Retention of the Employees. In order to retain new hires, the company usually undertakes the following steps: 1) it offers regular orientation programs to the new members of the personnel; 2) the HR managers clearly explain the employee’s opportunities for career growth. It should be noted that approximately 70 percent of the managerial staff in Wal-Mart were hourly workers at the beginning of their career in Wal-Mart (Peterson, 2005, p 88).In the previous section of this paper, we have noted that complex hierarchical structure of this company and it role culture enable the hourly workers to climb the career ladder.
Training and development of the employees. Unfortunately, training and development of the personnel is one of those areas where Wal-Mart is not very successful. The company focuses on the so-called “orientation training” given to the employees at the initial stages of their career. However, scholars believe that such courses should be offered on a regular basis (Ollek, 2009).
Remuneration. Wal-Mart workers have a fixed hourly wages, for example, 10 or 12 dollar per hour. In the majority of cases, such approach to the assessment and remuneration of performance overlooks the individual contribution of the front-line personnel.

This discussion shows that certain areas of SHRM in Wall-Mart do not fully contribute to the achievement of strategic objectives, set by this corporation. Namely we may mention the training, offered to the employees. It cannot be limited only to the orientation programs. In the next section of the paper we will try to single out ways of improving HRM in the company.

One of the first measures that we can suggest to this company is to simplify its managerial hierarchy, and now it is very complex and there are too many barriers between the front-line personnel and the top-management. There are several rationales for this change: first, the duties of middle managers frequently overlap and essentially these people do the same work. Secondly, the complex hierarchy may lead to excessive supervision of the employees, malpractices, and abuse of power. For instance, one may mention those scandals which broke out to the facts that many employees, who supported unionization of labour force were dismissed (Spotts, 2005). Overall, such incident pose a great threat to the public image of the company and they may prevent it from remaining the world leading retailer.
Secondly, it is vital that the company introduced different methods of performance assessment. As it has been mentioned before, the majority of employees have fixed salaries. This is the most inadequate way of performance remuneration. The management of this organization should focus on both quantitative and qualitative aspects of performance, and there are ways in which they can be measured. Overall, such compensational policies can be the leading factor that forces the employees leave Wal-Mart because they feel they are not valued by the company.
Thirdly, Wal-Mart should pay more attention to the regular training of the personnel. Every representative of the service sector makes sure that their employees are able to use new technologies, especially solutions. Additionally, it is vital that they can find an approach to each of the customers and assist him in every possible way. These are one of those skills that should be continuously elaborated.

In this ways, SHRM will help Wal-Mart achieve three objectives:

customer satisfaction;
employee satisfaction;
increased competitiveness.

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Home » Management Case Studies » Case Study: Business Strategy Analysis of Wal-Mart

Case Study: Business Strategy Analysis of Wal-Mart

Sam Walton, a leader with an innovative vision, started his own company and made it into the leader in discount retailing that it is today. Through his savvy, and sometimes unusual, business practices, he and his associates led the company forward for thirty years. Today, four years after his death, the company is still growing steadily. Wal-Mart executives continue to rely on many of the traditional goals and philosophies that Sam’s legacy left behind, while simultaneously keeping one step ahead of the ever-changing technology and methods of today’s fast-paced business environment . The organization has faced, and is still facing, a significant amount of controversy over several different issues; however, none of these have done much more than scrape the exterior of this gigantic operation. The future also looks bright for Wal-Mart, especially if it is able to strike a comfortable balance between increasing its profits and recognizing its social and ethical responsibilities .

Why is Wal-Mart so Successful ? Is it Good Strategy or Good Strategy Implementation ? In 1962, when Sam Walton opened the first Wal-Mart store in Rogers, Arkansas, no one could have ever predicted the enormous success this small-town merchant would have. Sam Walton’s talent for discount retailing not only made Wal-Mart the world’s largest retailer, but also the world’s number one retailer in sales. Indeed, Wal-Mart was named “Retailer of the Decade” by Discount Store News in 1989, and on several occasions has been included in Fortune’s list of the “10 most admired corporations.” Even with Walton’s death (after a two-year battle with bone cancer) in 1992, Wal-Mart’s sales continue to grow significantly.

Regarded by many as the entrepreneur of the century, Walton had a reputation for caring about his customers, his employees (or “associates” as he referred to them), and the community. In order to maintain its market position in the discount retail business, Wal-Mart executives continue to adhere to the management guidelines Sam developed. Walton was a man of simple tastes and took a keen interest in people. He believed in three guiding principles: 1. Customer value and service; 2. Partnership with its associates; 3. Community involvement.

The Customer — The word “always” can be seen in virtually all of Wal-Mart’s literature. One of Walton’s deepest beliefs was that the customer is always right, and his stores are still driven by this philosophy. When questioned about Wal-Mart’s secrets of success , Walton has been quoted as saying, “It has to do with our desire to exceed our customers’ expectations every hour of every day”.
The Associates — Walton’s greatest accomplishment was his ability to empower, enrich, and train his employees. He believed in listening to employees and challenging them to come up with ideas and suggestions to make the company better. At each of the Wal-Mart stores, signs are displayed which read, “Our People Make the Difference.” Associates regularly make suggestions for cutting costs through their “Yes We Can Sam” program. The sum of the savings generated by the associates actually paid for the construction of a new store in Texas. One of Wal-Mart’s goals was to provide its employees with the appropriate tools to do their jobs efficiently. The technology was not used as a means of replacing existing employees, but to provide them with a means to succeed in the retail market.
The Community — Wal-Mart’s popularity can be linked to its hometown identity. Walton believed that every customer should be greeted upon entering a store, and that each store should be a reflection of the values of its customers and its community. Wal-Mart is involved in many community outreach programs and has launched several national efforts through industrial development grants.

What are the Key Features of Wal-Mart’s Approach to Implementing the Strategy Put Together by Sam Walton — The key features of Wal-Mart’s approach to implementing the strategy put together by Sam Walton emphasizes building solid working relationships with both suppliers and employees, being aware and taking notice of the most intricate details in store layouts and merchandising techniques, capitalizing on every cost saving opportunity, and creating a high performance spirit. This strategic formula is used to provide customers access to quality goods, to make these goods available when and where customers want them, to develop a cost structure that enables competitive pricing , and to build and maintain a reputation for absolute trustworthiness.

Wal-Mart stores operate according to their “Everyday Low Price” philosophy. Wal-Mart has emerged as the industry leader because it has been better at containing its costs which has allowed it to pass on the savings to its customers. Wal-Mart has become a capabilities competitor. It continues to improve upon its key business processes, managing them centrally and investing in them heavily for the long term payback. Wal-Mart has been regarded as an industry leader in testing, adapting, and applying a wide range of cutting-edge merchandising approaches. Walton proved to be a visionary leader and was known for his ability to quickly learn from his competitors’ successes and failures. In fact, the founder of Kmart once claimed that Walton not only copied our concepts, he strengthened them. Sam just took the ball and ran with it.

Wal-Mart has invested heavily in its unique cross-docking inventory system . Cross docking has enabled Wal-Mart to achieve economies of scale which reduces its costs of sales. With this system, goods are continuously delivered to stores within 48 hours and often without having to inventory them. Lower prices also eliminate the expense of frequent sales promotions and sales are more predictable. Cross docking gives the individual managers more control at the store level.

A company owned transportation system also assists Wal-Mart in shipping goods from warehouse to store in less than 48 hours. This allows Wal-Mart to replenish the shelves 4 times faster than its competition. Wal-Mart owns the largest and most sophisticated computer system in the private sector. It uses a MPP (massively parallel processor) computer system to track stock and movement which keeps it abreast of fast changes in the market. Information related to sales and inventory is disseminated via its advanced satellite communications system.

Wal-Mart has leveraged its volume buying power with its suppliers. It negotiates the best prices from its vendors and expects commitments of quality merchandise. The purchasing agents of Wal-Mart are very focused people. Their highest priority is making sure everybody at all times in all cases knows who’s in charge, and it’s Wal-Mart. Even though Wal-Mart was tough in negotiating for absolute rock-bottom prices, the company worked closely with suppliers to develop mutual respect and to forge long-term partnerships that benefited both parties. Wal-Mart built an automated reordering system linking computers between Procter & Gamble (P&G) and its stores and distribution centers. The computer system sends a signal from a store to P&G identifying an item low in stock. It then sends a resupply order, via satellite, to the nearest P&G factory, which then ships the item to a Wal-Mart distribution center or directly to the store. This interaction between Wal-Mart and P&G is a win-win proposition because with better coordination, P&G can lower its costs and pass some of the savings on to Wal-Mart.

Sam Walton received national attention through his “Buy America” policy. Through this plan, Wal-Mart encourages its buyers and merchandise managers to stock stores with American-made products. In a 1993 annual report management stated the program demonstrates a long-standing Wal-Mart commitment to our customers that we will buy American-made products whenever we can if those products deliver the same quality and affordability as their foreign-made counterparts.

Environmental concerns are important to Wal-Mart. A prototype store was opened in Lawrence, Kansas, which was designed to be environmentally friendly. The store contains environmental education and recycling centers. Wal-Mart has also adopted the low cost theme for its facilities. All offices, including the corporate headquarters, are built economically and furnished simply. To conserve energy, temperature controls are connected via computer to headquarters. Through these programs, Wal-Mart shows its concern for the community.

Wal-Mart has been led from the top but run from the bottom, a strategy developed by Sam Walton and carried on by a small group of senior executives led by CEO David Glass. Although recent growth has led Wal-Mart to add more management layers, senior executives strive to maintain its unique culture. This culture, described as “one part Southern Baptist evangelism, one part University of Arkansas Razorback teamwork, and one part IBM hardware” has worked to Wal-Mart’s advantage.

Just how Successful is Wal-Mart? — A forecast of Wal-Mart’s income for the period 1995-2000, considering increases of 30.6% in Net Sales, 27.7% in Operating Expenses, and 52.3% in Interest Debt (a level which is below Wal-Mart’s historically compounded growth rate of 55.6%) indicates that the company should continue to report gains each year until 2000.

Growth on Sales — According to most analysts and company projections, sales should approximate $115 billion by 1996, representing an increase of 30.6% as compared to 1995. If the company continues at this pace, sales should reach $334 billion by the year 2000. The growth on sales that Wal-Mart reported during the 1980s and the beginning of the 1990s will be difficult to repeat, especially considering the ever-changing marketplace in which it competes. In an interview, Bill Fields, President of the Stores Division, said “Wal-Mart is now seeing price pressure from companies that once assiduously avoided taking it on. These include specialty retailers such as Limited, category killers like Home Depot and Circuit City, and catalog companies like Spiegel. I think everybody prices off of Wal-Mart. You’ve got Limited reaching levels we’d thought they’d never get to. The result is that everyday low prices are getting lower”.

In addition, the baby-boomers are reaching their peak earnings years, when financial and personal priorities change. Thus, savings, not spending, will likely take precedence because most baby-boomers are approaching retirement.

Debt Position — Based on Wal-Mart’s position in 1994, which was considered a year of expansion for the company, (Wal-Mart added 103 new discount stores, 38 “Supercenters”, 163 warehouse clubs, and 94,000 new associates) interest debt increased 52.3%. The cost paid by Wal-Mart to finance property plants and equipment forced the company to increase long term debt by 4.6 times during the period 1991-1995. Long term debt for 1995 is $7.9 billion. If Wal-Mart continues its expansion plans based on more debt acquisition at 1994 levels, the company may not attain forecasted gains by as early as 1998.

Operating Expenses — Operating expenses will be a key strategic issue for Wal-Mart in order to maintain its position in the market. The challenge is how to run more stores with less operating expenses. According to Bill Fields, “. . . the goal is to increase sales per square foot and drive operating costs down yet another notch”. Trends indicate that operating expenses have been growing at a rate of 27.7% in recent years. However, Wal-Mart should reap the benefits of its investments in high technology, and be able to operate more stores without increasing its expenses.

Cost of Sales — Cost of sales historically has been equal to the level of sales. If the company continues to take advantage of its buying power, Wal-Mart can expect to lower its cost of sales.

Wal-Mart’s future will depend on how well the company manages its expansion plans. For the coming years, the company will need to justify its expansion plans with consistent growth in sales, in order to offset the increases in debt interest and operating expenses.

What Problems are Ahead for Wal-Mart? What Risks? — Throughout the 1980s, Wal-Mart’s strategic intent was to unseat industry leaders Sears and Kmart, and become the largest retailer in the U.S. Wal-Mart accomplished this goal in 1991. But Wal-Mart’s current strong competitive position and its past rapid growth performance can’t guarantee that the company will remain as the industry leader or maintain its strong business position in the future. Carol Farmer, a retail consultant, told the Wall Street Journal that, “One little bad thing can wipe out lots of good things”. Every move in its business operation ought to be well thought-out and executed.

Wal-Mart needs to address two major areas in order to maintain or to capture an even stronger long term business position: 1) Single-business strategy — Wal-Mart’s success is mainly based on its concentration of a single-business strategy. This strategy has achieved enviable success over the last three decades without relying upon diversification to sustain its growth and competitive advantages . Given its current position in the industry, Wal-Mart may want to continue its single-business strategy and to push hard to maintain and increase market share. However, there is risk in this strategy, because concentration on a single-business strategy is similar to “putting all of a firm’s eggs in one industry basket”. In other words, if the retail industry stagnates due to an economic downturn, Wal-Mart might have difficulty achieving past profit performance.

Also, if Wal-Mart continues to follow Sam Walton’s vision of expansion, Wal-Mart will reach its peak in the very near future. When it does, its growth will start to slow down and the company will need to turn its strategic attention to diversification for future growth .

2) Social responsibility — Retail stores can compete on several bases: service, price, exclusivity, quality, and fashion. Wal-Mart has been extremely successful in competing in the retail industry by combining service, price, and quality. However, other merchants may object to Wal-Mart’s entry into their community. Because of its ability to out-price smaller competitors, Wal-Mart’s stores threaten smaller neighborhood stores which can only survive if they offer merchandise or services unavailable anywhere else. This makes it very hard for small businesses, such as “mom-and-pop” enterprises, to survive. They, therefore, fight to keep Wal-Mart from entering their locales. Numerous studies conducted in different states both support and criticize Wal-Mart. Nevertheless, Wal-Mart did drive local merchants out of business when it opened up stores in the same neighborhood. As a result, more and more rural communities are waging war against Wal-Mart’s entrance into their market. Besides protesting and signing petitions to attempt to stop Wal-Mart’s entry into their community, the opposition’s efforts can even be found on The Internet. Gig Harbor, a small town in Washington, recently started a World Wide Web page entitled “Us Against the Wal.” The town’s neighborhood association promised that they “will fight them [Wal-Mart] tooth and nail”.

The increasing opposition indicates that the road ahead for Wal-Mart may not be as smooth as Wal-Mart’s annual report would entail. This requires Wal-Mart to rethink its expansion strategy since it would not be profitable to operate in an unfriendly community.

How Big Will Wal-Mart be in Five Years if all Continues to go Well? — Before he died, Sam Walton expressed his belief that by the year 2000 Wal-Mart should be able to double the number of stores to about 3,000 and to reach sales of $125 billion annually. Walton predicted that the four biggest sources of growth potential would be the following: 1. expanding into states where it had no stores; 2. continuing to saturate its current markets with new stores; 3. perfecting the Supercenter format to expand Wal-Mart’s retailing reach into the grocery and supermarket arena — a market with annual sales of about $375 billion; 4. moving into international markets.

Wal-Mart Supercenters represent leveraging on customer loyalty and procurement muscle in order to create a new domestic growth vehicle for the company. With few locations left in the U.S. to put a new Sam’s Club or traditional Wal-Mart, the Supercenter division has emerged as the domestic vehicle for taking Wal-Mart to $100 billion in sales. Before the Supercenter, Walton experimented with a massive “Hypermart”, encompassing more than 230,000 square feet in size. The idea failed. Customers complained that the produce was not fresh or well-presented and that it was difficult to find things in a store so big that inventory clerks had to wear roller skates. One of Walton’s philosophies was that traveling on the road to success required failing at times.

As a result of the unsuccessful experiment, Walton launched a revised concept: the Supercenter, a combination discount and grocery store that was smaller than the Hypermart. The Supercenter was intended to give Wal-Mart improved drawing power in its existing markets by providing a one-stop shopping destination. Supercenters would have the full array of general merchandise found in traditional Wal-Mart stores, as well as a full-scale supermarket, delicatessen, fresh bakery, and other specialty shops like hair salons, portrait studios, dry cleaners, and optical wear departments. Supercenters would measure 125,000 to 150,000 square feet, and target locations where sales per store of $30 to $50 million annually were feasible.

Walton’s prediction was right on target. The Supercenter division more than doubled in size during 1993, then doubled again in 1994. Supercenters, once thought of as risky because of slim profit margins on the food side, will most likely make Wal-Mart the nation’s largest grocery retailer within the next five to seven years.

Expanding overseas, Wal-Mart moved into the international market in 1991 through a joint-venture partnership with CIFRA S.A. de C.V., Mexico’s leading retailer. Since then the company has entered Canada, Hong Kong, mainland China, Puerto Rico, Argentina, and Brazil. The Wal-Mart International Division was officially formed in 1994 to manage the company’s international growth. By the year 2000, analysts expect Wal-Mart to be a huge international retailer, with numerous locations in South America, Europe, and Asia.

Conclusion — The ever-changing market presents continuing challenges to retailers. First and foremost, retailers must recognize the strong implications of a “buyers’ market”. Customers are being offered a wide choice of shopping experiences, but no one operation can capture them all. Therefore, it is incumbent upon management to define their target market and direct their energies toward solving that specific market’s problems. Technology, demographics, consumer attitudes, and the advent of a global economy are all conspiring to rewrite the rules for success. Success in the next decade will depend upon the level of understanding retailers have about the new values, expectations, and needs of the customer. If Wal-Mart continues its customer-driven culture, it should remain a retail industry leader well into the next century.

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