WalMart (NYSE:WMT) has probably been the most innovative retail company in the history of industry. Granted, Amazon (NASDAQ:AMZN) has changed the way we view the shopping experience but alot of what they have done is a furthering of WalMart’s policies.
Walmart did discount merchandising better than anyone else when they were really ramping up in the 1960’s and 70’s. They weren’t afraid to back off the 30-45% margins that most retailers were getting on their sales. They would slash the margin to , say 10% and make it up on the additional volume. They learned very quickly that people respond to price, especially for commodity like items. (See the bins of toiletries at your local WalMart for an example.) Amazon basically did the same thing. They cut their margins to almost nothing and have clearly made it up on volume. Walmart took business away from the large department stores at the time, namely J.C. Penney and Gibson’s. Amazon has done the same thing to WalMart, Target (NYSE:TGT) and a plethora of other companies that no longer exist or are on the bring of extinction.
WalMart was as cheap as cheap can be when they first started out. Business trips saw six guys jammed into a small motel room, some sleeping on the floor. Some of WalMart’s earlier stores were n buildings that some would consider candidates for condemnation. Still, the people came in droves to buy their anti-freeze and paper towels at half what they would pay at one of the bigger chains.
WalMart was one of the first department stores that embraced the self service model. You perused the merchandise in the aisles without someone bothering you and brought your goods to the cashier for payment. Most of the other big stores at the time had clerks in the aisles to “assist” you. At WalMart, you went to get someone if you needed them. It’s still that way today. I was walking through a WalMart the other day and one of their associates passed me. He was sporting a partially shaved head and the part that wasn’t shaved was a bright pink. I really appreciated the self service model at that point!
DISCLOSURE: THIS ARTICLE WAS WRITTEN FROM MY OWN EXPERIENCE AND FROM SOURCES BELIEVED TO BE RELIABLE. IT IS NOT MEANT AS INVESTMENT ADVICE AND SHOULD NOT BE RELIED UPON AS SUCH. ALL INVESTMENT INVOLVES RISK AND YOU SHOULD CONSULT A QUALIFIED ADVISOR TO DETERMINE WHAT IS BEST FOR YOU. I DO NOT PERSONALLY OWN ANY OF THE STOCKS MENTIONED HERE AND HAVE NO PLANS TO INITIATE ANY NEW POSITIONS.