The following are the core points of the article:

▪ 's meticulous cost control builds Walmart Inc's core competitive advantage.

▪ 's price strategy of "daily parity" and "profit promotion" enabled Walmart Inc to successfully expand revenue.

By implementing the expansion strategy of "rural encirclement of cities + regional intensive exhibition stores + cross-regional extension infiltration", Walmart Inc gradually occupied the American market.

▪ is facing the impact of e-commerce platform today, while the omni-channel strategy allows Walmart Inc to transform successfully.

The annual Singles Day holiday is approaching. From 2009 to now, "Singles Day" has reached the 11th year. After 10 years of market education, Singles Day has become not only a carnival promoted by e-commerce, but also a national carnival of online and offline retail.

At the same time, various platforms and manufacturers have designed a variety of complicated promotion means in order to attract users and obtain high-quality traffic.

But it remains the same. A clear understanding of what is the essential core of sales promotion is also a necessary rational thinking in the sales carnival for businessmen and platforms.

As early as 50 years ago, Walmart Inc, a veteran retail giant on the other side of the ocean, became the largest retail enterprise in the world today by grasping the nature of sales promotion and using accurate promotion strategy. Even in the era of e-commerce impact on offline retail, it can hold the strategic core and continue to occupy the top position of the Fortune Global 500 for many years.

• Fifty years ago, how did Walmart Inc's founding team accurately understand the value of promotion, and then through the accurate strategy of purchasing, pricing and channel coordination, succeeded in breaking through the American retail industry by the means of "rural encircling the city"?

• Today, in the face of the impact of new business type, how does Walmart Inc transform all channels and finally advance instead of retreating in the competition, and the stock price continues to rise?

• When online sales is no longer a blue ocean, Walmart Inc, as an established retail enterprise, how to layout to ensure that he can be one step ahead in the fierce competition?

On these issues, this handwritten memoir, "Rich America," written by Sam Walton, founder of Walmart Inc, can give domestic retail practitioners a lot of inspiration. In the book, Walton comprehensively and deeply dismantles his entrepreneurial history, and tells about Walmart Inc's business philosophy, mode of operation and development strategy.

Through this book, you can also understand the mystery of Walmart Inc's standing for more than half a century.

Cost leadership strategy

The experience of childhood can often accompany a person's life and influence many major decisions in a person's growth and development. This observation also applies to Sam Walton, the founder and soul of Walmart Inc.

Born in 1918, Walton spent his childhood in the midst of the worst economic crisis in the United States-his father was unemployed, the family was in distress, and the family had always been industrious and thrifty.

Childhood experience and parents' words and deeds made Walton have a strong respect for every penny, and this idea finally permeated Walmart Inc's value proposition and strategic management:Frugality is Walmart Inc's unchanging tenet.

In his autobiography, Walton mentioned that in addition to providing quality goods and services, Walmart Inc is one step ahead of the competition for every yuan saved by his customers.

And it is not easy to help customers save money and earn their own money.Cost leadership strategy is the secret of Walmart Inc's "saving money".

One of the keys to Walton's "cost leadership strategy" is procurement:Through seamless docking with suppliers, the intermediate cost can be saved and the purchase price can be reduced.

When Walton bought his first grocery store in 1951, he discovered the cost advantage of skipping middlemen to buy directly from manufacturers.

At that time, some manufacturers in Tennessee were willing to supply goods directly to Walton's grocery store at discounted prices. Walton always drives up the windy road to Tennessee as soon as the store closes, stuffing the goods with cars and old trailers behind them, and shipping them back to the store for sale at a low price.

Up to now, the direct mining mode is still popular in Walmart Inc. Excluding sales agents and other intermediate links, not only greatly reduce the cost of procurement, but also bring more efficient replenishment speed, and greatly improve the efficiency of the supply chain. This concept also coincides with the trend of domestic supply chain brand upgrading, factories establishing their own brands and direct sales.

Walton's second trick to save money isThrough low rent and extensive decoration, the fixed cost will be kept to a minimum.

In 1962, the United States was still in the prime time of the postwar economy, the material level of residents was abundant, and mass consumption continued to upgrade, but Walton had a keen sense of smell that the concept of discount sales would become the mainstream in the future. As a result, the first Walmart Inc store officially opened in a small town called Rogers.

The opening ceremony of the first Walmart Inc in 1962

In order to keep the rent at a low level, Walmart Inc is usually built in low-rent suburbs far from downtown. The decoration cost of the supermarket is extremely low, and the cement floor, wooden shelves and low ceilings are very different from the exquisite decoration of the department stores in the city center. Its only advantage is that the price of similar goods is 20% lower than that of competitors.

Walton made a bold judgment at that time: "is it in a town with a population of only 6,000, just because the price is relatively low?" customers will be willing to come to our store, which is, to some extent, just a barn, and buy the same thing. The answer is yes. "

For price-sensitive users, location and store decoration don't matter, but being able to buy goods of the same quality at a low price is the key-even products of lower quality.The so-called "consumer experience" can make concessions in the face of tangible prices.

As a matter of fact, the remote geographical location and extensive decoration did not affect Walmart Inc's performance, but gradually built a cheap and affordable reputation for Walmart Inc.

Walton's third trick to "save money" is to "spend money": in order to reduce transportation costs and expand scale advantage, Walton invested heavily 50 years ago.Build an efficient logistics warehousing system.

Contrary to the usual image of frugality, Walmart Inc never grudges a penny in communications and distribution.The efficiency and economies of scale realized by Walmart Inc's distribution system is one of its greatest competitive advantages.

As early as 1978, Walmart Inc began to establish an automated logistics distribution center.These logistics centers are strategically located in all sales regions, most of which are less than 320 miles from the branches they serve, ensuring that the distance from the logistics center to the store is no more than a day.

Walmart Inc's concept of generous investment in the logistics warehousing system has even continued to this day. Today's Walmart Inc still invests a lot of money in the logistics warehousing system, establishing an efficient computer system to connect branches and suppliers: Walmart Inc's every box of goods is tracked by the computer from storage to exit; the system scans the bar code on the box by laser to guide the goods to be transported rapidly through the conveyor belt to the truck waiting in front of the loading and unloading door. Finally, through Walmart Inc's own fleet, it was vigorously transported to various branches around the world.

Walmart Inc's Logistics Center

With the continuous improvement of the computer system, Walmart Inc can track the inventory and sales of goods throughout the company and send the data back to the headquarters for analysis through the line.

However, the number of branches is increasing, the capacity of the line is limited, and information jams occur from time to time. To this end, Walmart Inc even spent a lot of money to establish a satellite system to ensure the efficiency of information transmission.

Facts have proved that such an investment is worth it.

The upgrade of the communication system gives Walmart Inc a strong competitive advantage, improves the logistics efficiency to a great extent, and saves transportation costs. Nearly 85 per cent of the inventory at the Walmart Inc store is replenished directly through the warehouse, while its competitors can only achieve 50 per cent to 65 per cent. At the same time, Walmart Inc's cost of shipping goods to the branch is less than 3 per cent, better than the 4.5-5 per cent of his peers.

Price marketing strategy

Meticulous cost control not only expands Walmart Inc's profit space, but also constructs its core competitive advantage, so that Walmart Inc has the ability to compete in price.

Low price is Walmart Inc's core development strategy: "low price every day, consistent", and strive to achieve the lowest price among goods of the same quality and brand.And often carry on the profit promotion, attract consumers with the strategy of low price.

Behind this is Walton's deep understanding of the impact of prices on supply and demand.

When he opened his first grocery store, Walton found that he would eventually make more money if he lowered the price tag and profit margin of the goods. In the book, he uses the "women's pants theory" to vividly explain Walmart Inc's classic marketing strategy: "the purchase price of women's pants is 80 cents and the price is 1.20 US dollars. If the price is reduced to $1, I will make half the money less, but I can sell more than three times as much. "the seemingly simple truth is the essence of the low-price strategy.

In addition to the "daily parity" price strategy, Walmart Inc also cooperates with a strong ability to select products, often selecting potential "popular styles" for profit promotion.

Walmart Inc adopts the traditional channel-oriented business model, which gives them strong supplier management ability to buy an amazing number of goods at a very low price for discount sales.

Taking advantage of his own channels, Walmart Inc often stacks goods purchased in bulk at low prices in the most conspicuous position, making use of huge passenger traffic and strong publicity and promotion campaigns.By stimulating consumer demand at prices much lower than those of similar goods in the market, goods such as lawnmowers, which do not seem to have become hot-selling goods, are snapped up in discount sales.

At the same time, the discounts consumers get from promotional goods will strengthen their impression of Walmart Inc's "affordable" brand, then increase the flow of customers in the store, and stimulate consumers' consumption of other goods in the store, eventually driving the growth of business income.

Walmart Inc uses the price strategy of "small profit and quick turnover" to expand the total income, and the cost-leading strategy reduces the total cost, so as to make excess profits in the monopolistic competitive market of chain retail.

Differentiation expansion strategy

Through a series of effective cost control and trade-in marketing strategies, Walmart Inc quickly became a rookie in the retail industry and was successfully listed on the New York Stock Exchange in 1972.

At that time, chain retail in the United States has been a fierce competition in the Red Sea market, Kmart, Target Corp and other retail giants occupy a huge market share. Kmart, for example, already had 500 stores and annual sales of more than $3 billion. Walmart Inc, by contrast, has only more than 50 branches and 11 department stores, with annual sales of about $8 million.

In the face of strong competitors, Walmart Inc chose to survive in the gap and implement the expansion strategy of "rural encirclement of cities + regional intensive exhibition shops + cross-regional extension infiltration".Now that the industry giants have taken the lead in major cities, Walton has turned his attention to small towns that have been ignored by others. At this time, the town is still unoccupied by discount sales of virgin land, and a large number of potential.

"Deep ring" has been introduced in the article "the United States also has five rings." American cities are concentrated in prosperous coastal areas on both sides of the east and west, while in the sparsely populated central part of the United States, it is actually more common to have a large number of small towns with less population and less development.

As early as 50 years ago, Walton discovered the unmet demand of these then "sinking markets" and the value they could bring to American retailing: "We are well aware that our principle is that even in towns with a population of less than 5000. We will also open stores, and there are many such towns in the country, because there is a lot of room for expansion for us. "

While taking the town as the core, Walton did not forget his lean means of expansion. He has long realized that big companies are so fragmented in their scramble to grab retail markets in big cities that they are deeply caught up in the whirlpool of real estate, urban planning and local politics.

He learned the lesson of big companies that every branch established by Walmart Inc must be under the control of the distribution center. In this way, town after town, county after county, Walmart Inc filled its business map little by little. When markets in northwestern Arkansas are full, Oklahoma and Missouri follow.

The territory of Walmart Inc in the United States today

This expansion strategy has also helped Wal-Mart save a lot of advertising money: people spread Walmart Inc's promotion message by word of mouth, eagerly waiting for Walmart Inc to drive to their town.

For the urban market, Walmart Inc also used a very predictable strategy: Walmart Inc did not take the initiative to attack the city center, but opened branches in the surrounding areas of the city, and then waited for the city to expand into this area.In the 1970s, with the continuous improvement of the level of urbanization in the United States, the main force of consumption gradually shifted from the city center to the suburbs. Walmart Inc's strategy just conformed to the trend of urban development at that time.

The 1980s was a decade of excellence in the development of Walmart Inc. During this period, Walmart Inc's sales and net profit doubled almost every two years. Finally, Walmart Inc's sales surpassed Sears, a century-old store, in 1991 to become the largest retailer in the United States.

Global expansion and change Breakthrough

In 1992, Sam Walton, the soul of Walmart Inc, died at the age of 74.

Sam Walton in 1992

But Walmart Inc did not stop the pace of expansion. In 1992, Walmart Inc opened his first Sam's Club in Mexico, taking the first step into overseas markets.

Since then, Walmart Inc has gradually expanded overseas markets through mergers and acquisitions of local retail enterprises and self-built branches.Although Walmart Inc's road to global expansion is not smooth, on the whole, he has achieved good results and become the retail hegemon in the world.

However, new challenges have been emerging with the development of the times.

Although Walmart Inc is in a dominant position in the traditional retail industry, with the development of Internet technology, the rise of the e-commerce platform represented by Amazon.Com Inc has brought a great impact on the traditional retail industry.

After 2015, the momentum of Walmart Inc's overseas business expansion has significantly weakened, while the e-commerce giants are getting closer and closer, and their revenue and performance growth has slowed down significantly.In the face of the severe competition situation, Walmart Inc chose to close some overseas stores with poor revenue, adjust the development strategy, and actively transform to omni-channel.

On the one hand, Walmart Inc actively embraces new technologies and takes the initiative to expand e-commerce business.Including the establishment of online and offline bootstrap services, stationed in e-commerce platform, the development of APP and Mini Program, etc., and strive to achieve the integration of online and offline channels.

At the same time, with the acceleration of the pace of urban life, consumers' requirements for fast, convenient and service experience are getting higher and higher, and small-format retail represented by convenience stores and community stores begins to show incomparable advantages over e-commerce platform.

Walmart Inc also quickly caught up with this trend and began to develop the community format of the last kilometer of service at full speed.After 2010, Walmart Inc accelerated the development of community stores; by 2019, the number of Walmart Inc community supermarkets had exceeded 800, four times as many as in 2010.

And Walmart Inc's low-price and high-quality brand concept has never changed, until today Walmart Inc is also active in the front line of various retail battlefields, including Black five and Singles Day.

Today's global retail battlefield is very different from the era Walton once fought for, but his cost control, discount marketing and forward-looking differentiation expansion strategy can still give us inspiration to this day.