Economic Wisdom to Apply in Your Twenties

Chapter 25

Chapter 3, Section 6 Go to Wal-Mart to buy "everyday parity"

据报道，从2007年7月5日起，沃尔玛持续在中国78家购物广场和2家位于深圳的社区店推出特惠商品。

"Every day parity" is a sales policy launched by Wal-Mart, and its purpose is to "save every penny for customers".If something is cheaper near Wal-Mart, Wal-Mart will drop the price immediately.In the retail industry, the general retailer's profit is around 45%, while Wal-Mart's profit is much lower than this.In fact, Wal-Mart adheres to such a business philosophy of low cost, low cost structure, and low price.

Shopping at Wal-Mart has become a consumption habit of urban young people.Walmart offers products at very competitive prices that are unrivaled in China.As Chen Yaochang, president of Walmart China, said: "Walmart strives to be a member of the community where it is located, and is committed to providing consumers with high-quality and low-cost commodities."

Wal-Mart, the top company in the world's top 500 companies, is the largest private employer in the United States and the largest retail chain company in the world.As of May 2009, Wal-Mart has opened 5 shopping malls in 14 countries around the world, with a total of 7900 million employees and 210 million customers who visit Wal-Mart every week.

Wal-Mart entered China in 1996. In order to achieve a large-scale "landing" in the hearts of the Chinese people, Wal-Mart has been working hard to reduce costs and save money for customers.After several years of hard work, Wal-Mart China has achieved rapid development, and has jumped to the top of the list of retail supermarkets in China.By 2008, Wal-Mart had opened 89 stores in 143 cities in China, and more than 500 million customers visited Wal-Mart's stores in China every week.

Looking back at Wal-Mart's success, its biggest contributor is the "everyday parity" strategy.Over the years, Wal-Mart has fulfilled its promise of the cheapest price in line with the purpose of "saving every penny for customers", making its "affordable" image deeply rooted in the hearts of the people, which has attracted a large number of customers both openly and secretly.

From this point of view, shopping at Wal-Mart seems to be the first choice of every rational consumer who pursues "everyday parity".But even if you often go shopping at Wal-Mart, do you still have doubts: Why are Wal-Mart’s products cheaper than other stores for the same profit-oriented merchants?
Wal-Mart is not a philanthropist who does not seek profit. Carrefour, Wumart, RT-Mart and other large domestic and foreign large supermarket chains like Wal-Mart can advertise "cheap and service" as their core business philosophy because they have a coup to reduce costs:
First, large supermarkets buy goods directly from manufacturers and sign supply and sales contracts, which saves some intermediate links (such as buying goods from vendors) and reduces part of the cost.At the same time, the order volume of ordinary traders cannot be compared with that of large supermarkets.Large supermarkets buy and sell a lot, which is conducive to the cash flow of manufacturers, so manufacturers usually lower prices.From the source of goods alone, the price of large supermarkets is much cheaper.

Second, reduce transportation costs.For example, in order to achieve high quality and low price, a large supermarket has formulated a hub-and-spoke distribution strategy, that is, select a central location as the logistics center, and take the driving distance of no more than one day as the radius. The branches established within this range do not need large-scale The warehouse directly turns the warehouse into a store and cancels the storage link.The cost of transportation is reduced, and the price of natural commodities is also lowered.
It can be seen that large supermarkets do have their reasons for "high quality and low price", so smart consumers will tend to go to Wal-Mart and other supermarkets to buy "affordable".

However, while enjoying the "everyday parity" of big supermarkets, don't naively think that these big supermarkets can really bring you the benefits of "everything is cheap".Enterprises want to make profits, and large supermarkets are no exception. In order to survive, it is impossible for all commodities to be cheap.If you pay attention carefully, you can easily find that the products in the big supermarkets are always discounted in turn. Today there is a big food promotion, and tomorrow there will be activities for daily necessities.In fact, the price parity of large supermarkets is mainly aimed at those products that customers are more familiar with and sensitive to price perception, so as to establish the "parity" image of large supermarkets in the minds of customers.The low price of some commodities brings more customers to the supermarket, which can promote the consumption of promotional commodities and regular-priced commodities at the same time.

If you are smart, you may have discovered this secret in your life.Therefore, savvy financial experts know that when buying necessities such as food and daily necessities in large supermarkets, books, major appliances, clothing, etc. in large supermarkets are not the main promotional products, and they should go to specialty stores of such products. Taobao".

Wisdom Pieces: Rankings of World Retail Industry and Large Supermarkets
Ranking of the world's retail industry and hypermarkets:

1. Wal-Mart Stores (wal-Mart Stores), ranked No. 500 among the top 1 companies;

2. Carrefour (France);
3. American home storage (Home Depot);
4. American Kroger (Kroger);
5. Germany Metro (Metro);
6. US Target (Target);
7. Sears Roebuck, USA;
8. Tesco, UK;
Ranking of China's retail industry and hypermarkets:

(End of this chapter)