A Giant Among Giants: Wal-Mart
– April 2004
When you are the biggest, you can dictate how those who want to work with you handle things like technology. But Wal-Mart often takes a different approach, working to help its contractors and suppliers get up to speed on the technology that will help them both.
How big can a giant be? Wal-Mart Stores Inc., Bentonville, Ark., is considered to be the largest retailer in the world with $244 billion in sales in fiscal year 2003—compare that with General Motors, Detroit, Mich., for example, which had sales of $186 billion in FY 2003.
The company employs more than 1.3 million associates worldwide through more than 6,250 facilities in the United States, Mexico, Puerto Rico, Canada, Argentina, Brazil, China, Korea, Germany, and the United Kingdom. More than 100 million customers per week visit Wal-Mart stores around the globe.
Wal-Mart opened its first store in Rogers, Ark. in 1962. By 1967, there were 24 stores in Arkansas with sales of $12 million. The next year, the company opened its first store outside its home state. While it may seem its stores have been everywhere forever, it wasn’t until 1995 that its Vermont store assured that people in every state could shop at Wal-Mart.
From that modest sounding $12 million annual receipts in 1967 to the day after Thanksgiving in 2002 when the company recorded the largest single day’s sales in history—an astounding $1.43 billion in one day—Wal-Mart has been growing.
According to Wal-Mart’s annual report, company president Lee Scott notes, “Last year  in the U.S. we added 192 Supercenters, and we have publicly announced our intentions to add up to 210 more in the current year. We currently have Supercenters in all but seven states. We also completed the last fiscal year with 49 Neighborhood Markets in eight states.”
More specifically, the Wal-Mart division plans to open approximately 45-55 new discount stores and 200-210 new Supercenters this fiscal year. Relocations or expansions of existing discount stores will account for approximately 140 of the Supercenters, while the remainder will be built in new locations. The company plans to open 85-90% by the end of the third quarter.
In addition, the Sam’s Club division will open 40-45 domestic clubs, approximately two-thirds of which will be relocations or expansions of existing clubs. Wal-Mart Intl. plans to open 120-130 units in existing markets.
The planned square footage growth for the coming year represents approximately 48 million-sq.ft. of new retail space, and represents more than an 8% increase during the fiscal 2003 total.
The company will construct three new regional general merchandise distribution centers, six new food distribution centers during the next fiscal year. Combined, these nine centers will add almost 8.7 million-sq.ft. of distribution space.
According to its charter, Wal-Mart Realty “provides a team of architecture experts and construction professionals to help you plan and build your space in our facility. Dedicated associates will assist you with community involvement projects, alternative uses, and other special property uses. Demographic databases are available that can provide specific information to assist in your decision-making process.” However, with the continuing development of new stores and distribution centers, dealing with the construction side of the business takes up much of the resources of Wal-Mart Realty. It has created dozens of prototype stores that differ from one another in their footprints (size and shape on the ground), total size, the aisle space and other characteristics. It tries to standardize and yet flip-flop those prototypes depending on site parameters and needs.
If you’ve been in more than one Supercenter, for example, you’ve seen that the food section might be on the left in one store and on the right in others, even though the stores may be the same square footage. They differ in terms of which departments are included—some have more robust tire and lube express, some have a larger lawn and garden center.
From these dozens of prototypes, representatives can narrow down a selection in terms of what is being contemplated in a given market, whether a new store or expansion or relocation of an existing store.
Inside and out
Wal-Mart tends to use a variety of general contractors with all sizes represented. Even where it is building several centers in a single state, it tries not to become too much of any one company’s business. Wal-Mart doesn’t want the supplier’s existence to rise or fall on one company’s willingness to use it.
With this focus on internal monitoring of outside contractors that are heavily responsible for the actual construction, both from a physical and financial sense, you might expect Wal-Mart to be first with leading-edge collaboration software and powerful computer systems.
In many ways, Wal-Mart Realty takes a very pragmatic approach to its far-flung construction projects. It wants to use the best contractors, offering the best service and pricing. It realizes that, in some cases, those companies are not at the upper bound in technology implementation. So rather than lose a good contractor, it employs what might be termed “low-tech” technology.
Like most of the industry, Wal-Mart Realty uses the plan-room concept. People who need to see plans for a certain “prototype,” the term used for the standardized plans mentioned earlier, have ways to view them via the Internet. There are thousands of emails sent and received each day. But if you ask a division representative, he or she would probably tell you, “There are a lot of telephone calls that fly around, and we use regular mail. And of course, we’re travelers. We spend a lot of time on the road.”
For many years, the division has gotten a lot of work done without a heavy use of technology. A common comment is, “There are a lot of folks that need to collaborate but they don’t know how to use technology very well. Those are the facts. Until we get it in the hands of more of our project managers, and in use by their consultants, there won’t be 100% confidence that it’s going to be used.”
By the end of 2004, Wal-Mart Reality will have completely implemented a collaboration product called Thumbprint CPM from Cyntergy Technology.
Bringing in technology
Once this program is up and running, those that need to collaborate and be in contact during the construction stages will be able to do so via the Internet. This should bring down Wal-Mart’s telephone bill considerably, not to mention those of its contractors. But even this level of technology, intentionally made simple to use by the developer, might be more than some of the contractors can handle. It remains to be seen if they can improve collaboration given the levels of technology savvy among their consultants and even among their own managers.
The concepts that it allows Wal-Mart to implement are good, and for the customers that have it, it’s working well. But the contractors that have it aren’t necessarily a valid representation of those that Wal-Mart believes need something that will allow them to collaborate better.
The company has an exceptional reputation for employee management. It has consistently been named one of Fortune magazine’s “Best Companies to Work At.” In the realty division, that’s reflected in its organizational approach to “flow the right people to the places where they’re needed.” If a particular region or market has peculiar problems that some group has better experience and success with, it allows those people to handle the issues even if that makes reporting more difficult for the project managers.
Data is therefore a vital consideration in any technology project. A Wal-Mart manager has said, “We’re confident we have the information we need; we’re struggling to make it more readily available when and where people need it. Then people who have to make a decision or take action can do so with a full picture instead of nine pieces out of a 15-piece jigsaw puzzle.”
The use of Thumbprint CPM might give those managers more information, not just more data access. With it, Wal-Mart Realty can get access to up-to-date program information and notify all team members when dates are modified to reduce reaction time for project-impacting issues. By facilitating team collaboration on the Web, it is improving productivity and communication. •
Copyright © Specialty Publishing Co. 2003