Speech Summaries

Christine Spivey Overby Principal Analyst Forrester Research, Inc.

Winning In A Wal-Mart World

Christine Spivey Overby, Analyst, Forrester Research, emphasized that Wal-Mart has mastered the supply chain but has left the consumer experience up for grabs. To succeed, manufacturers must duplicate Wal-Mart's supply chain mastery and differentiate with shopping experiences.

How does Wal-Mart use technology to expand supply chain mastery? It focuses on three strategies: store-specific data, centralized distribution, and global sourcing -- all of which lead to significant savings for the consumer.

What are shoppers' attitudes toward Wal-Mart? Grocery shoppers like Wal-Mart for its prices, large array of products in store, and having products in stock; but they think that cleanliness, customer service, and the checkout experience need improvement. There is opportunity for both manufacturers and retailers -- both need to strategically go after the opportunity.

What can CPG players do to win in a Wal-Mart world? Think about technology investment along two dimensions: supply chain efficiencies and enhancing the shopping experience. Retailers need to duplicate Wal-Mart's supply chain and differentiate on the shopping experience. Manufacturers need to collaborate with Wal-Mart on supply chain and extend the shopping experience.

Questions And Answers

Q: How does Wal-Mart's distribution network accommodate Sam’s Club? What does Costco do to threaten Wal-Mart's warehouse stores?
A: Wal-Mart has had to tweak some of its distribution networks by making them more decentralized. In addition, Wal-Mart recently put Kevin Turner, former CTO of Wal-Mart, in charge of Sam's Club, which Forrester believes is a direct reaction to the Costco threat.

Q: By duplicating Wal-Mart's efficiencies, do we strengthen Wal-Mart's advantage?
A: It is not about becoming the 1,000-pound gorilla, it's about maximizing cost efficiencies. Wal-Mart is a metaphor for keeping costs down. Retailers do not need to do this by squeezing manufacturers -- they can achieve this by sharing data with suppliers and duplicating Wal-Mart's operating efficiencies.

Q: Will Wal-Mart expand its capabilities online to compete with Peapod?
A: Wal-Mart has had some problems with online organization and we are in a moment where Walmart.com is trying to stabilize and attract consumers by offering general merchandise. This window of opportunity will not last long -- I expect that Wal-Mart will begin to sell groceries online within the next three years.