Caso wallmart

9-707-517
REV: JUNE 25, 2007

DAVID B. YOFFIE MICHAEL SLIND

Wal-Mart, 2007
In early 2007, Wal-Mart was the second-largest company in the world. It boasted net sales of nearly $345 billion, managed more than 6,700 stores in 14 countries, and employed more than 1.8 million people worldwide from its headquarters in Bentonville, Arkansas. (See Exhibit 1—Wal-Mart: Selected FinancialInformation.) In addition to offering general discount merchandise as well as food, Wal-Mart had ventured into digital photo service, vacation planning, Internet access, flower delivery, DVD rentals, and financial services. Now in its 46th year of operation, the company continued to draw price-conscious shoppers with “everyday low prices” and convenient store hours. By 2007, more than 175 million customerswere visiting Wal-Mart stores each week.1 Nonetheless, Wal-Mart faced challenges that had led to mediocre stock performance, with its share price hovering below 50 throughout 2005 and 2006. (See Exhibit 2—Wal-Mart: Stock Price Trend.) In particular, its impressive historical rate of growth—the company had routinely increased sales by 10% or more per year—had become harder and harder to sustain. Netsales growth slipped to 9.5% in 2005 before bouncing back to 10.4% in 2006. In November 2006, for only the second time in 27 years, same-store sales at U.S. Wal-Mart units declined from the year-earlier period. Chief rival Target, by contrast, had regularly posted healthy increases in same-store sales, outstripping Wal-Mart in that key retailing metric for 28 of the previous 30 months.Competition from Target had become particularly acute as Wal-Mart expanded from rural markets, which it had long dominated, into relatively urban areas, where Target was historically strong. (Almost 45% of Wal-Mart stores were in rural or semirural counties, while 83% of Target stores were in urban and suburban counties.)2 To confront such challenges, Wal-Mart focused on improving operations inmerchandising and store formats and on pursuing major initiatives related to human capital and public relations. The company also continued its aggressive—though occasionally problematic—move into international markets. (See Exhibit 3—Wal-Mart: Performance by Segment.) Meanwhile, competition remained vigorous, both from general discount merchandisers like Target and from specialty discounters.

Wal-Mart’sPriorities
Store Formats and Merchandising Strategies
Wal-Mart’s discount store format, which traced its origins to the company’s founding by Sam Walton in 1962, had long been central to the company’s success. In 2007, the chain operated nearly
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Professor David B. Yoffie andResearch Associate Michael Slind prepared this case. This case was developed from published sources. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2007 President and Fellows of Harvard College. To order copies or request permission toreproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

707-517Wal-Mart, 2007

1,100 discount stores, and they averaged 101,000 square feet in size, employed roughly 225 people per store, and offered about 120,000 items. In 1988, Wal-Mart introduced the “supercenter” format, which added grocery products and various new services to Wal-Mart’s traditional merchandise offerings. Since then, the company had replaced many of its discount stores with...