Attending college as a first year means making certain adjustments. For many students, this is the first time they will be wrestling with the constraints of a budget. This entails sacrifices; for instance, no more two-ply toilet tissue and only two kinds of soda in the refrigerator.
It is difficult to fit both Q-Tips and the latest designer handbag into a limited budget. The more cash-conscious student must consider shopping options carefully. One of the obvious choices is the mass merchandiser Wal-Mart, which leads the corporate pack at the top of this year's Fortune 500 list.
Once a peddler of fishing rods in rural Arkansas, Wal-Mart is now one of the most powerful corporations in the world. Wal-Mart's success could be due entirely to the fact that it sells people what they want at prices they can afford. However, as Kmart's recent filing for Chapter 11 bankruptcy showed, there must be more to the equation than that. Low prices are no longer enough of a draw.
As Americans become wealthier, they are more willing to spend extra for customer service. In the 1950s, companies such as Corn Products Refining dominated the Fortune 500. Today, more than 64 of the top 100 companies are service industries, including movie and travel corporations as well as luxury hotels.
The answer lies in what economists call "a shift in the demand pattern." In harder times, people are willing to pay only for essentials -_ for example, corn products. Now, however, consumers are ready to be pampered, as seen by the increased popularity of luxury goods, ranging from cars to ice cream.
Wal-Mart capitalized on this inclination, along with other companies such as Starbucks, by instituting a paradoxical business model - an amalgamation of atmosphere and shrewd corporate strategy that quickly become a formula for riches.
Where once the average consumer was content to pay $0.90 at a grimy 7-11 for a cup of "decaf," he now wants to sip a cafe mocha on a plush velour couch. Likewise, where once a customer was content to get low prices and nothing else from a discounter, he now wants to partake of a down-home image and "service with a smile."
|
Wal-Mart's success lies in the fact that Sam Walton, Wal-Mart's founder, understood that a holistic approach should be taken when running a company. Information about markets undoubtedly is an essential component to running a successful corporation. However, there are always going to be other places where a customer can get what he wants. Wal-Mart's atmosphere is a great attraction.
"People who go to Wal-Mart are loyal shoppers," Commerce Prof. James Maxham said. "That's because Wal-mart has a folksy feel, with friendly staff and low prices."
Behind Wal-Mart's homespun attitude, however, is a clever understanding of marketing and management techniques.
"Wal-Mart is a well-managed business," Commerce Prof. William Kehoe said. "They are very good at matching what customers desire with what's in their stores."
"Wal-Mart's business model is based on an understanding of the supply chain," Kehoe said. "They have control over the entire chain - whole distribution, manufacturers, distributors. It's a very well-managed supply chain. And they know each individual market."
"Wal-Mart is an information and technology business disguised as a retailer," Darden Prof. Robert Spekman said. "They use information better than anyone else in the industry. Wal-Mart is a well-oiled machine."
In addition, Wal-Mart has shown the business world a determination to stay on top of the game. They were one of the earliest adopters of the radio frequency identification tags, or RFID system, in which a radio tag is attached to every item, making tracking store inventory much easier.
"They are able to track merchandise as it moves through the supply chain. They are at the cutting edge. They are a retailer at the top of the line," Kehoe said.
The finishing touch to Wal-Mart's strategy was its customer service.
"Customers who want service usually go to a specialty store," Maxham said. "But Wal-Mart was able to create an environment where, despite its size, you could get advice from friendly, knowledgeable staff members. They did that very well."
An element of chance was also perhaps part of Wal-Mart's success. The recent recession might have played a role in the fact that a discount merchandiser was able to claim the top spot on the Fortune 500 list.
"A place like Wal-Mart is more recession-proof. Whether it's a great economy or a bad economy, everyone is going to want a better deal. It transcends economic downturns," Maxham said.
"Certainly I think there is a relation. In a recession, there are going to be a bunch of people shopping at Wal-Mart who might have formerly looked down their noses at it ... but there's more to it than that," Spekman said.
The success of Wal-Mart's business model may have been highlighted by the fact that Kmart recently filed for bankruptcy. Wal-Mart is now in a position to gain customers from one of its main rivals.
"Kmart attempted to model itself after Wal-Mart, but they lacked the culture of the organization. By culture, I mean the underlying norms and value ... It's a combination of the system, the culture, strong customer service and low prices," Kehoe added.
Although Wal-Mart may have its critics, no one can deny the fact that it is at the top of the list - and continuing the process of making the lives of penniless college students that much easier.
Read More
Dean Rucker honored with Z Society’s highest honor, Pale Z Award
By Brendon Bordwine | 15 hours agoThe Society has a storied history of honoring University leaders with the Pale Z.
Students receive free STI testing through U.Va. Health and Wellness
By Jackie Bond | YesterdayThrough funding from Student Council, students are now able to receive free STI testing with SHW which includes tests for HIV, Syphilis, Gonorrhea, Chlamydia and Hepatitis C.
President Ryan signs collective statement condemning Trump administration
By Cecilia Mould | YesterdayWhile the statement claims that signees are willing to enact reforms and cooperate with government supervision, it disagrees with the current administration’s decision to withdraw funding from institutions.
