When customers enter a Wal-Mart store, the employees are waiting, ready to greet the new arrivals like old friends. And when shoppers walk down the store's well-stocked aisles, they find prices that undercut those of other retailers.
Customer service and low pricing are the secrets of success at Wal-Mart Stores Inc., one of the most admired retailers in the country. They are also the reasons why the discount store chain is poised to supplant Sears, Roebuck and Co. as the nation's largest retailer - just as Sears is struggling to hold on to its waning market share.For the first 11 months of the retailers' fiscal year, Sears' total sales reached $31.37 billion, while Wal-Mart took in $30.1 billion in business. The gap between the two retailers is likely to close in the near future - while Sears' sales have been rising at an annual rate of 2 percent, Wal-Mart's have leaped by 26 percent.
Some of Wal-Mart's surge has come from the nearly 200 stores the company has opened during the past year. But sales have also jumped 10 percent at existing stores.
Those gains outstrip the performance of other retailers during the same period. For example, Kmart Corp., which Wal-Mart surpassed in November as the nation's second-largest retailer, has had a 10 percent rise in overall sales and a 1.8 percent gain at stores open for at least a year.
Analysts who have tracked Wal-Mart's success say the enthusiastic attitude found throughout Wal-Mart is its life blood and comes straight from the retailer's founder and chairman, Sam Walton.
Walton is credited with galvanizing his troops over the years the same way a football coach rallies a team before a game.
"Most of the employees feel as if they are part of Sam Walton's extended family," Joseph Ronning, an analyst with Brown Brothers Harriman Inc., said Friday.
Ronning said Wal-Mart employees are included in the decision-making process more so than workers at other retail companies. Stores are encouraged to come up with their own marketing ideas and displays and those who turn the biggest profits are rewarded.
Furthermore, most employees are also stockholders and "feel it's their company as much as management," said Walter Loeb, a retailing consultant and analyst.
Employees learn early they must keep their customers happy. Don Shinkle, a Wal-Mart spokesman, stated that "superior customer service has been a trademark of our company since Wal-Mart's inception in 1962."
Wal-Mart's prices are an equally important draw. The company is able to beat its competitors because its costs are kept down by an advanced distribution process that includes the use of bar-code scanning equipment throughout the system.
"They are years ahead of the competition," Ronning said.
Sears, which has lost market share to Wal-Mart and other rivals, announced Thursday it will eliminate 21,000 jobs in a move to lower its costs. Sears' bureaucracy has kept the giant retailer from competing effectively with Wal-Mart, Kmart and other stores.
The first Wal-Mart store was opened in Rogers, Ark., in 1962. Since then, the company has grown to an empire that by the end of December included 1,536 discount stores, 147 Sam's wholesale clubs and four Hypermart USA stores.
Wal-Mart's game plan has been to set up shop in small towns, build up a following and then move toward a metropolitan area.
"They're looking for places where there is very little competition and where they can become the dominant retailer in the area," said Ronning.
The company is also preparing for the future after Walton, who has undergone treatment for cancer.
"The corporate culture is such that it can continue," Ronning said.