Fascinated by retail. Avid follower of Retail news. Keen observer as a customer.

(IMP: All comments and opinions voiced in this blog are purely based on my understanding of things. I do not intend promote or defame any particular brand/company.)

Tuesday, October 26, 2010

FDI- Walmart the other side

This post is a interesting article I found on bizopedia. It talks about the negative aspect of Wal-Mart. How it affects the suppliers. Very funny use of language. I am not editing it. Just sharing it here:

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How Wal-Mart does its business

Wal-Mart is more than just the world's largest retailer. It is an economic force, a cultural phenomenon and a lightning rod for controversy. It all started with a simple philosophy from founder Sam Walton: Offer shoppers lower prices than they get anywhere else. That basic strategy has shaped Wal-Mart's culture and driven the company's growth.

The distinctive strategies adopted by the companies are given as follows:

1. Wal Mart's position starts at two ends of the spectrum - make as many things as widely available to as many people as possible with small margins. So big turn over nets big profits but lots of sales need to be made to get that profit.

2. because you have so many customers, SQUEEZE the life out of your suppliers - get them to give you even cheaper wholesale rates and advertising support - make them carry the cost of distribution and warehousing, force them to meet your IT needs. This reduces your own costs whilst forcing your suppliers to carry the can - the end result - greater margins for you.

3. Deny access to new suppliers who don't give you an even better wholesale rate. But keep them interested enough so that when one of your current suppliers goes out of business because you have milked them dry and they go bankrupt, you'll have a new supplier ready to step into the grave
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So now we know why the Indian Govt. had been dragging FDI in retail all this while. 

1 comments:

Shrinidhi hande March 18, 2011 at 11:07 PM  

Do you think India's Future group doing similar?

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