4. Case Studies Global Top 3 retailers: Wal-Mart, Carrefour, Tesco Indian Retailers: Future Group (Big Bazar), More, Reliance Fresh,Spencers and Vishal Mega Mart Chapter 4 W a l - M a r t "The secret of successful retailing is to give your customers what they want. And really, if you think about it from your point of view as a customer, you want everything: a wide assortment of good quality merchandise; the lowest possible prices; guaranteed satisfaction with what you buy; friendly, knowledgeable service; convenient hours; free parking; a pleasant shopping experience. ” - Sam Walton, founder of Wal-Mart. ''Exceed your customer’s expectations. If you do they’ll come back over and over. Give them what they want - and a little more. Let them know you appreciate them. - Sam Walton, founder of Wal-Mart Brief about Retailer; In July 1962, Walton - an economics graduate from the University of Missouri, established the first Wal-Mart Discount City in Rogers, a small town in the state of Arkansas, USA. Wal-Mart expanded rapidly by adopting acquisition and joint venture routes. Today Wal-Mart is the world’s number one retailer having operations spread in 14 countries with an employee base of 6, 80,000. Apart from USA, it operates mainly in Canada, South America, UK, Japan, China and India. In 2009, Wal-Mart distributed $423 million for charities in cash and in kind. Wal-Mart environmental friendly goals are: merchandise having 100 percent renewable energy, creation of zero landfill waste and products sell maintaining sustained environment. In India, Wal-Mart has joined hands with Bharati Enterprise and started B2B retail operations. YEAR SALES (In US Dollars) NET INCOME STORES 1970 31 m nU S$ 1.2 mn 32 1980 1.2 bnUS$ 41 mn 276 1990 26 bnUS$ 1 bn 1528 2000 165 bn US$ 5 bn 2 9 6 0 2003 244.5 bn US $ 8 bn 3400 2009 4 0 5 .0 bn US $ 22 bn 4 3 0 0 Table 4.01: Title: Wal-Mart's Performance Milestones Source: Wal-Mart Annual Business Report, 2009 93 Chapter 4 Three Basic Beliefs and Values: Wal- Mart follows three Simple Things which makes them great. 1. Respect the Individual 2. Service to our Customers 3. Striving for Excellence Custom er Focused Philosophy: Each week, about 100 million customers’ i.e. nearly one-third of the U.S. population, visit Wal-Mart's U.S. stores. Since its inception, Sam Walton had cultivated a customer-focused culture at Wal-Mart. The customers are being viewed and treated as guests at Wal-Mart. The company is known for its ‘greeters’ who greets the customers with a warm welcome and a friendly smile, the moment they enter a store. They offer shopping carts to the customers and convey to them that Wal-Mart is glad to have them at their store. Customer Centric Culture, Policies and Practices: Save Money. Live Better. Wal-Mart does not have loyalty card schemes. Sundown rule: For the benefit of customers “Sundown rule” is laid. “According to the Sundown rule, associates (Wal-Mart employees) have to resolve all service- related requests made by customers before the sunset. The rule aims at inducing a sense of urgency in meeting customer service requests. Quick response to customer demonstrates Wal-Mart’s dedication towards better customer service. The 10 Foot Rule: It states that if a Wal-Mart associate gets within 10 feet of a customer’ he is supposed to look into the customer’s eyes, greet that customer and offer friendly assistance. Grass Roots Process: Listen to your associates. They are the best idea creators. 94 Chapter 4 EDLP Pricing: Wal-Mart follows Every Day Low Price (EDLP) policy. Under EDLP Wal-Mart would always provide a wide variety of high quality, branded and unbranded products at the lowest possible prices, offering better value for the customer’s money. A Wal-Mart advertisement makes a point: “Because you work hard for every dollar, you deserve the lowest price we can offer every time you make a purchase”. EDLP is extremely attractive to customers and over the years it has emerged as the key contributor to Wal-Mart’s success. Rollback of Prices Scheme: To enhance* customer satisfaction, this scheme is introduced. Under the “rollback” program, Wal-Mart has made a commitment to its customers to reduce prices, whenever and wherever it could, and pass on the maximum savings to them. Whenever the company is able to reduce the procurement costs of products due to greater efficiency in its operations and supply chain management practices, it cuts prices and passes the benefits to the customers. Smiley logo appeares on the products in the store racks once prices are rolled back, a yellow rollback. Purchasing Policies: Wal-Mart sources merchandise directly from manufacturers. By eliminating the middlemen, Wal-Mart is able to sell to customers at lower prices, and in turn benefites from the large volumes of generated business. Information Technology (IT) for Customer Delight: Wal-Mart has made a heavy investment in IT, such as Electronic Data Interchange (EDI), Data Mining, and Radio Frequency Indentification (RFID). In 1989, Wal-Mart started building a huge database of customer information in its data warehouse systems located at its headquarters at Bentonville, Arkansas. The company collects sales and customer related information from each store and feeds this information into the database system. Wal-Mart’s IT experts use 3-D visualization tool to make accurate estimates of products most likely to be bought by customers on the basis 95 Chapter 4 of parameters such as ethnicity, geographic location, weather patterns, local sports affiliations, and around 10,000 other varied parameters. To make shopping at Wal- Mart a pleasant experience, Wal-Mart has installed customer information kiosks in its stores since 1996. The kiosks help customers to find out the price of any product and get a brief description of it. Private Label: Wal-Mart views Private label as a value proposition. About 40% of the products sold in Wal-Mart are private labels. “Wal-Mart does not use specific customer information, by customer name or profile. We use market basket information; by individual store. That gives us the ability to do what we think that we need to do, to understand what customers do or don’t buy from us, what percentage of customers are coming in. Wal-Mart surveys hundreds of thousands of customers monthly, asking them to rate their shopping experience”. Lee Scott-CEO: Wal-Mart THE WAL-MART CHEER; Wal-Mart associates cheer customers enthusiastically with cheer. They take cheer seriously — it is one way to show pride in company and how they value customers. Employees cheer customers with different words and languages, around the world. WAL-MART CHEER Give me a W! Give me an A! Give me an L! Give me a Squiggly! Give me an M! Give me an A! Give me an R! Give me a T! What’s that spell? W al-M art! What’s that spell? W al-M art! Who’s number one? THE CUSTOMER 96 Chapter 4 References Book SAM WALTON with JOHN HUEY, Made in America -My story Web Sites www.wikipedia.com www.walmart.com www.walmartstores.com Report Wal-Mart Annual business report 2009 Article Zimmerman, Ann; Hudson, kris 'Managing Wal-Mart’, April, 2006 Journal K.Prashanth, Vivek Gupta ‘Lessons in Customer Service from WAL-MART’ Icfai Center for Management Research, Mktg/080. Lee Scott, Wal-Mart; Living up to New Expectations, ECR Journal, V01.6, No. L Spring 2006 97 Chapter 4 C arrefour “To succeed, we have identified three strategic levers. First is ‘Client-Oriented culture’, second is ‘Transformation’ followed by ‘Innovation”. LARS- OLOFSSON (CEO-Carrefour) “Carrefour believes that customer loyalty is the result of the sum of customer’s positive experiences and not only the loyalty programs. ” Brief about Retailer: Carrefour is Europe’s number One and World’s second largest retailer having headquarters in Levallois-Perret, France. Carrefour was founded in 1957 by Fournier and Difforey families. It started first retail store in France. Carrefour means “crossroads” in French. Carrefour has achieved phenomenal growth through expansion, tactical acquisitions and franchise operations. Today it operates in 31 countries in Europe, Latin America, Middle East and South East Asia with more than 15,430 stores. In 2009, the group has achieved a revenue base of 108.62 Billion Euros with 4, 95,000 employees and 17.90 million square feet sales area. Their retail store formats include Hypermarkets (1300), Supermarkets (2919), hard discount stores (6252) and Convenience shoppees (4813). They launched Carrefour.fr website which offers services in food and non-food items in France. Carrefour group supports surrounding communities (social responsibility) to create a process of civic engagement everywhere it operates. The Carrefour group strives to limit the environmental impact of its activities. Carrefour has tie-ups with social and environment protection organizations like WWF, UNESCO and EU commission for energy and other well-known agencies. The French retailer is likely to announce its Indian franchise partner and open its first cash-and-carry store by December 2010. 98 Chapter 4 CARREFOUR VALUES Dream: To make Carrefour a business that is recognized and loved for helping its customers and consumers enjoy a better quality of life, each and every day. To achieve this dream, as we go about our business, we ensure that every day we are- Committed, Caring and Positive: These three values bring us closer to our customers and consumers and reflect our personality. Committed: We are committed. We constantly strive to exceed everyone’s expectations by providing better value and finding new solutions for a better quality of life.