What You Can Learn From the Wal-Mart Way

I have found one of the most fascinating pursuits is discovering recipes of successful companies. On Thursday, I had the opportunity to review Wal-Mart — the mammoth discount retailer started 47 years ago by the late Sam Walton, who amassed a fortune that more than two decades ago made him the richest man in America. Alfred Edmond Jr., editor-in-chief of BlackEnterprise.com, and I traveled to the corporate headquarters in Bentonville, Arkansas. We joined some 60 journalists from publications across the globe to participate in the annual media conference of the nation’s second largest publicly-traded company (2008 revenues: $405.8 billion). The event, held a day before its much-anticipated Annual Shareholders Meeting, included tours of part of its massive distribution operations, a revamped superstore and a cavernous Sam’s Club outlet, as well as a session revealing its plan for global dominance.

I must tell you that the operations and staff were quite impressive. For one, no matter the division, Wal-Mart “associates”, as all employees are called, greet you with a welcoming smile,  a firm handshake and a need to serve — an approach that owes more to the corporate DNA than Southern hospitality. It was a part of the Wal-Mart culture and its magic revenue-building formula.

As I spent my day shuttled from location to location, I gained valuable lessons related to business success — some that I believe companies, large and small, can use to increase viability and longevity.

Focus on efficiency. For roughly two hours, Alfred and I toured the sprawling, 1.2 million-square foot Bentonville distribution center. One of 147 such centers across the nation, it is the model of efficiency, shipping 600,000 cases of products a day to 120 stores in Arkansas, Missouri, Oklahoma and Texas. How is this feat achieved with 99.9 percent accuracy and an OSHA safety track record of less that two accidents per 200,000 man hours? The 12 miles of conveyor belts and sortation process that tracks inventory and designates appropriate outlets are made functional through a comprehensive, just-in-time system driven by the latest technology. But the company has always understood and embraced innovation for inventory control and sales management. In 1966, Walton wooed employees away from IBM because he knew such talent could help create efficiencies in product selection, store orders and outlet deliveries. In short, reduce costs and boost sales. “We help stores keep perpetual inventory correct and, as a result, stores keep orders correct,” says Mike McClemore, a 20-year veteran who serves as regional vice president of logistics. And the effective use of technology saves on manpower: since 1991, the distribution center has reduced head count from 1,200 to 700.


Don Frieson

Be Obsessed With Your Customer. When our group visited “Store No. 1” — one of the first locations in Rogers, Arkansas — Don Frieson, divisional vice president for the central region and one of the company’s highest-ranking black executives, shared an aspect of the retail strategy.  The company is in the process of upgrading 600 or so stores, he says, as part of Project Impact to “make differences in our stores’ footprints so that they will be cleaner, faster and friendlier.” The Rogers store, he asserts, has been revamped to “pull that experience together.” Palettes of products that once filled aisles — known as “action alleys” — have been cleared to make the store less cluttered and more accessible. Sections of the store — sporting goods, groceries and home and office products, to name a few — are now color-coded. Products with the greatest sales volume — in this case, electronics — have been given more floor and shelf space. How did they arrive at these modifications? Loads of research, including caller surveys, customer focus groups and third-party analysis. Besides the redesign, there’s been an increased emphasis on the price, quality and relevance of products to female consumers who make 60 percent of the household purchasing decisions. Says company spokesman Lorenzo Lopez: “We have to continue to upgrade our look and services. Price may bring people to our stores in tough times. When the economy recovers, it will be the experience that keeps them coming back.”