Book Reviews

Book review: The Retail Revolution.

Most North American consumers, a lot in China and elsewhere in the world know or at least heard of Wal-mart; millions shop in their gigantic stores to save money, and for the convenience.

Nelson Lichtenstein, a historian, shows in this extremely well researched and documented book how the company started, developed, and prospered under the management of Sam Walton, and changed retailing in many countries.

One could regard this oeuvre as a long case study that business school professors could use in their classes. Certainly, many of the chapters would lend themselves very well to lectures and comparisons.

Mr. Walton Sr. was astute entrepreneur and learned quickly how to use modern technology to expand his business empire. While doing this, also astutely decided to push the “envelope” to contain costs by bypassing importers, wholesalers and dealing directly with manufacturers in low labour Far Eastern countries.

Now Wal-mart employs close to 1000 buyers and inspectors in China, who travel to Bangladesh, Vietnam, Laos, and Yemen to inspect contract manufacturers’ premises, in an attempt to ensure that Wal-mart quality standards are upheld and delivery times met.

The founder has also presciently devised software programmes to control inventory shrinkage, and sales to make buying decisions accordingly.

Several layers of management do not exist in Wal-mart stores. This lowers payroll and famously, fringe benefits are kept to an absolute minimum. The management in Bentonville, Arkansas, prefers to hire part time employees pay minimum wages dictated by the State in which the store is located, and promotes employees who managers think are most loyal, pliable, and potentially most valuable for Wal-mart.

The business model of Wal-mart is an amalgam of models of other similar companies in the same sector, judiciously selected and modified by planners in the head office.
Wal-mart is a very successful retailer, but in Germany and Japan its business model proved top be unsuitable and inflexible to consumers, and local business laws, which restrict business hours. Other policies proved to be unworkable as well.

The payroll at Wal-mart is kept low by doing everything possible to keep unions out of its stores, and so far at least in North America, the management has been successful.

This is an excellent book for all retailers, chain operators, business faculty, and students with an interest to become retailers or plan to make a career in them.

Highly recommended.


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