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Core consumers key to Wal Mart business mechanism

NEW DELHI: The summit is seeing some interesting presentations from the speakers, which have become topics of discussion. Kurf Salmon Associates USA (KSA Technopak is the Indian subsidiary) CEO William Pace, for example, spoke on competing successfully in a competitive world by highlighting the success story of Wal Mart.

 

 

Pace pointed out that Wal Mart had risen from being "nothing" in the 1980s to being Number 1 right now. "Dense coverage, low prices and effective supply chains is the success behind Wal Mart today, which forced rival stores to bring down their prices by almost 13 per cent," he said.

Today, Wal Mart contributed to almost 28 per cent of sales for manufacturers like Dial, 26 per cent for Payovac and 25 per cent for Hersheys. The store began its first operations in Oklahoma City in 1975 with a suburban store and by 1991, it had 14 stores with almost six per cent share of the grocery market, Pace revealed.

 

 

From a six per cent market share, Wal Mart now has a share of almost 35 per cent in Oklahoma City with 36 stores in the city itself. Talking about hyper-competing, Pace said that India is a huge market and at present everyone was eyeing the retail and supply chains in the country. "One should understand their own economics and impact of possible price and volume reductions on their profits to create a distinctive position around one or more of the four strategic levers of price, location, assortment and service," he stressed.

Zeroing on some successful competitors in the traditional grocery, non-traditional grocery and other product categories, Pace said that companies like Pay and Pak, Save a Lot, Albertson's Kroger Safeway, Wegman's Publix Gelsons, Family Dollar stores, 7-Eleven, Wild Oats, Whole Foods, Central Malls, Trader Joe's, Home Depot, Body Shop, Nordstrom, REI, Best Buy, Barnes and Noble, Bed, Bath and Beyond, Gap and Nike, were some examples of companies that were now beginning to understand the competition and acting according to the demands of the consumers.

 

 

He also stressed that companies must use scale, technology and other levers to bring their cost structure down and innovate consistently to keep their products fresh that would appeal directly to the consumers. "One must also develop different strategies for success with the hyper competitors and adapt a novel strategy to each of the others'. Companies must find ways to link directly with their core consumers and not rely on the retailers to be the link to the consumers," he said.

Plaza 66 China general manager Roy Ho, on the other hand, spoke on celebrating shopping experience in malls and started by saying that the Indian and the Chinese markets were quite similar in the development requirements of shopping centers in many aspects like the urban situation requirements, economic requirements, traffic and infrastructure requirements, space requirements and investment and operation requirements. "Shopping malls, as a dominant force of retail real estate is a integrated commercial place of multi-types, multi-functions and multi-forms, offering comprehensive service for shopping, amusement, catering, leisure and culture. A mall is not a retail place, it is for the community," he said.

He said that in emerging markets, there was no shortage of money and hence people should evaluate the situation and decide whether the economy could support more malls. China and India were similar to an extent as far as developing more malls was concerned. "USA took 50 years to reach where it is today as far as its mall culture is concerned. China on the other hand, has taken 15 years and in India too the situation is similar," He concluded, thus stressing that India should first evaluate the situation and then take the plunge.

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