While mega-retailer Wal-Mart has come under some fire for their employment practices lately, an Iowa State University professor says the company is doing the right things to gain ground in groceries. Bobby Martens, an assistant professor of logistics and supply chain management, says Wal-Mart has a world-wide reputation in the way it supplies its stores.
Martens says Wal-Mart is able to offer lower prices and still make a profit partly due to their supply chain practices. Martens says Wal-Mart has done some “very smart things” and continues to do some “impressive” things in their supply chain.
Martens says Wal-Mart’s entrance into a community usually helps push down food prices early on, but Martens says there’s evidence that Wal-Mart drives out competitors in the long run. Martens says it appears to be happening in the grocery industry. He says there has been a mass exodus of medium and small size “mom and pop” or small chain grocery stores.
Martens says small grocery stores could still compete with Wal-Mart by finding niche customers who’re looking for something more in grocery store than big and cheap. Martens says Generation X’ers who have more money for example, may be more interested in going to a smaller grocery store with a meat counter, or a selection of foods that Wal-Mart doesn’t offer.
Martens says Wal-Mart is projected to control 35 percent of the U.S. grocery market by 2010. He says one of the few things that could hold them back are those lingering image questions about how the company treats its employees. Martens says, “One of the things that Wal-Mart is working to do, and they probably need, to do, is improve what people think of their organization.” He says improving public relations will be an important part of Wal-Mart’s future growth.
Martens says Wal-Mart began selling groceries in 1987 and has since become the top grocery retailer in the country.