Thursday, September 17, 2009
Wal-Mart Is Losing Its Technological Edge
Sam Walton, the founder of Wal-Mart was sort of old school. He didn't care much for computer or any technology. Sam Walton said, "Truthfully, I never viewed computers as anything more than necessary overhead. A computer is not—and will never be—a substitute for getting out in your stores and learning what's going on."
It's hard to imagine Wal-Mart not being this $349 billion dollar leviathan, but in the 1960's and 70's Wal-Mart was just a scrappy underdog. Sam Walton was often thought of as the modern day Robin Hood, building his retail discount chain for the cost conscious citizens.
Wal-Mart today is caught between two worlds: Sam Walton's, where a zealous commitment to "everyday low prices" is enforced(despiteWalton's skepticism about "computers") by IT-assisted decisions made in Bentonville, and a new global marketplace in which the retailer's sheer size is not as big an advantage as it once was. Competitors such as Target and Tesco can match Wal-Mart in technological sophistication
and surpass it by innovating in new retailing segments with higher margin
goods.
Wal-Mart was making their margins on sourcing and great technology systems, but everyone has got that now," says Patricia Edwards, a portfolio manager and
managing director at Wentworth, Hauser and Violich who focuses on
retail.
Will Wal-Mart be able to regain that technological edge? Or will up coming super companies like Target or Amazon.com rise to the top?
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A good post.
Wal-Mart's competition has been catching up, they were forced to adopt many of the same innovations that Wal-Mart adopted.
I still think that Wal-Mart is worth watching. Even when it seems to meet with opposition it shows us the practical limits of the information revolution in the current state of the economy. For example, the setbacks in making RFID a global production standard show us that efficiency and greater productivity may not be enough to convince manufacturers to pay for these improvements on their own.
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Wal-Mart's competition has been catching up, they were forced to adopt many of the same innovations that Wal-Mart adopted.
I still think that Wal-Mart is worth watching. Even when it seems to meet with opposition it shows us the practical limits of the information revolution in the current state of the economy. For example, the setbacks in making RFID a global production standard show us that efficiency and greater productivity may not be enough to convince manufacturers to pay for these improvements on their own.
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