Daiso versus Wal-Mart

free essayWal-Mart, Inc. is the largest retail chain not only in the USA, but also in the whole world, which contains more than 10,000 stores worldwide. The format of the stores is hypermarkets and supermarkets where people can purchase both food and household goods as the company maintains a maximum range in its stores. Thanks to the huge Wal-Mart’s turnover, price there is much lower than the market average and almost equal to trade price. The company’s large turnover also allows the management to dictate their terms to many retailers. Usually, when Wal-Mart enters a new small town, all other shops are closed down in this city since they cannot compete with the giant company. Daiso, Ltd. is the chain of non-food dollar stores whose concept is a proposal of goods in the store at the same price to the buyer. The price is 100 yen in Japan and up to $2.00 overseas. The chain is growing rapidly due to the work of franchising, including abroad. The company focuses on the expansion in the Asia-Pacific region, the Middle East, as well as the USA and Canada.

Marketing Area

Daiso, Ltd. is a retail corporation offering its customers the qualified goods at a lower price. The target audience includes adults, seniors, and families. One of the marketing concepts implemented by the management of the company has become a location factor. It is important to notice that Daiso opens its stores in downtowns and uptowns so that its target audience is able to reach the shops in the most convenient and fastest way. The marketing strategy of the company involves the principles of merchandising based on constant replenishment of goods presented in every store, monitoring customers’ purchasing power in order to forecast the future sales, as well as prevention of shortages (De Souza, n.p.).

To manage its inventories system, the company always monitors the level of inventory by analyzing products having a good selling rate and purchasing them extra. Another advantage that strengthens the company’s marketing strategy is that most of the products are non-perishable, which allows Daiso to save on equipment and facilities. Allocation of merchandise to stores is based on demographics and lifestyle trends of Daiso’s customers. Additionally, a great attention is paid to conducting seasonal merchandise offerings held during Christmas, Chinese New Year, and Valentine’s Day (De Souza n.p.).

The company expands the variety of products during that period making a surplus of income and increasing the number of permanent customers at the same time. The concept of everyday low-pricing strategy allows customers to purchase goods at a fixed price of $2 per item supported by fast service of the staff. A combination of both grid and racetrack layouts lets customers to easily find and purchase the desired product (De Souza n.p.). With products being presented vertically on shelves, the customers can to view the entire shelve and easily search for the needed thing. Seasonal products are displayed in large quantities in every company’s store.

End-caps are one of the company’s strategies used to increase the customers’ exposure to more merchandise categories. All the implemented steps encourage the customers to purchase more goods while shopping. In addition, bright lightning, welcoming and friendly atmosphere are a pledge of a customer’s successful purchase in one of the shops, while white and red colors create the illusion of a larger place and proper mood for doing shopping. Another company’s approach is the slow music played in stores to make each customer forget about time and place pushing them for making a good purchase. Moreover, Daiso tries to use diverse genres of music playing it while carrying out different festivals or seasonal offers for example (De Souza n.p.).

While adapting to changing marketing conditions, Wal-Mart adopted a competitive strategy of blocking in the marketing area. Sam Walton chose small towns as the target market within the strategy. The idea was to offer products at prices not higher that in retail networks of large cities in order to attract customers thanks to the proximity factor. Indeed, buyers can purchase goods close to their homes with the same economic benefit rather than spend from four to five hours to reach the closest center. Opening of more than one large store in these areas could have been unprofitable, which helped Walton to block competitors and retain dominance on the local market. Thus, the goal was achieved on economies of scale.

Another step was to establish a system of delivery and management of goods to enable a timely restocking by promptly delivery by trucks from the company’s warehouses. There were created several distribution centers geographically combining the system of delivery. Additionally, Wal-Mart is one of the first companies that adopted the facilities of barcode scanning and began using satellite technology, which allowed daily updating its distribution systems about available reserves. The corporate data storage system was too large for that time since the enterprise directories combined a huge amount of information in one terabyte, and retail industry representatives were proposed to move to electronic data interchange for ordering and invoicing (“Walmart’s Keys to Successful Supply Chain Management”).

Instead of selling cheap non-proprietary products, products of recognizable sounding brands were supplied to the stores selling them at reduced prices. It let the company to lure the customers of other local shops and enabling them to go shopping in their neighborhood. In order to enhance its unique strategy, the company consistently supports high efficiency of all operations (Hiles).

Management Area

Being founded in 1977 by Hirotake Yano and headquartered in Hiroshima, Japan, Daiso Industries Co., Ltd has grown to a corporation owning more than 3,000 stores all over the globe. The management of the company tries to organize the performance process aimed at satisfying customers’ needs for the best exclusive price. Thus, it was decided to implement the concept of “everything for 100 yen” in order to achieve the company’s current success. However, due to the rapid growth of the corporation’s stores and reputation, it has been chosen to modernize the business model by offering its customers goods for 200 yen, 1,000 yen, and more. Daiso’s management pays a huge attention to seeking the ways for the improvement, outlining the company’s weaknesses, learning from its mistakes, as well as developing and outlining new programs (“Corporate Vision”).

The company’s mission is to ensure that both existing and potential customers are able to find the perfect goods for each of them at a surprisingly low price and of good quality at the same time. This is probably one of the reasons why Daiso not only retails products, but also manufactures them. Indeed, Daiso, Ltd. has implemented a wide-ranging product lineup to deliver world-class products being able to compete and excel other qualified products presented on both domestic and international markets (“The Daiso’s Mission”).

Another advantage that attracted customers is the company’s provision of leisure activities within the stores. Thus, customers are more than welcomed to each of the company’s store where they can find different surprises and other innovations that please the eye. In order to be the best not only in offering a qualified product at the best price, but also surprise the customer with the fastest delivery, the management of the company has established and developed the company’s personal distribution network supported by powerful soft thus being able to perform all over the globe and strengthen its positions everywhere (Chozick n.p.).

Founded by Sam Walton in the 60s of the 20th century, Wal-Mart has turned into the largest discount retail network in the United States with annual sales level of $32.6 billion in the early 90-ies. Wal-Mart’s impressive growth was based on the work of the first-class team of managers who had introduced innovative strategies based on the company’s commitment to provide consumers with a large selection of high-quality products at low prices.

Walton found out that the administration of Wal-Mart department stores had a bad attitude to its retailers and decided to create a curriculum encouraging employees to awaken the spirit of corporatism from sellers who were be called companions since then. He established options for the company’s shares and bonuses. Walton adopted many things from a very lucky retailer Penney who became the first to call sellers companions and give them a shareholding in the profits of the company in 1913. The company is also known for its dynamic and egalitarian culture that delegates the major decisions on the level of store managers, department managers, and individual employees. It is known that Wal-Mart treats its employees very well, but requires their involvement into the corporation culture and excellent execution of their duties. Thus, Wal-Mart has created a culture and a monitoring system that provides incentives for employees and managers to ensure that they have done everything possible for their company (Saul).

International Business

Daiso’s international business is growing every day thanks to an accurate and effective strategy implemented by the management of the corporation. Thus, the company tries to evaluate the strategic importance of the newly entered market by discovering the population of the country, level of income, level of consumers’ demand, as well as trying to predict the rates of economy growth of the country. All these steps are necessary to realize if the entering is reasonable and can bring significant benefit to the company’s wealth and popularization.

In terms of international business, Daiso’s leaders implemented the principles of joy and happiness into the strategy, which is supported by qualified products at an attractive price. Therefore, it makes existing customers satisfied and potential customers willing to visit the brand and see what is so special in the stores. The business concept of the expansion is based on the company’s three values, which are Quality, Variety, and Uniqueness included into attractive business decisions. Thus, the brand offers a diverse range of highly qualified products at a lower price and supported by unique sales offers and innovations within the program. The combination of these three values is the strongest tool helping the corporation to achieve its goals and gain new visitors (“Business Concept”).

The success of Daiso’s international strategy is the company’s ability to present about 70,000 products, the vast majority of which have been produced by using the company’s own resources. This wide diversity is supported by the strategy of continuous expansion not only within Japan, but also all over the globe, already opened more than 3,000 stores that provide excellent service. Additionally, the presence of 23 large warehouses in Japan and overseas allows the corporation to store the manufactured products and deliver them to the needed shop in a short and convenient time (“Business Concept”).

Daiso has no prescribed set of rules and conditions for franchisors. The retailer tries to be as flexible as possible developing individual schemes for each partner. Like most sellers of franchises, Daiso maximally supports its partners during the launch phase of the store. A franchise buyer consults with Daiso’s representatives on the choice of premises as well as a place for the shop, which is approved only after the consultation with Daiso. After that, the parent company jointly conducts studies on the area around the store, customers, and other aspects together with a new partner (Lim n.p.).

The next step is the creation of the concept and beginning of joint work on the opening. Although the duties are allocated individually for each partner in this period, the team from Daiso’s head office is always present at the preparation for the opening of a new store helping to shape the range as well as recruit and train the staff (Jialing n.p.).

Wal-Mart became the first to address the development of the distribution system, in which the central warehouses occupied a strategic position and served the clusters of the stores. It helped the management of the company to reduce the costs of inventories used in production and logistics. The company also became one of the first to use computer information systems to monitor internal sales and forward this information to suppliers. Information supplied by these systems is used to determine the strategy and the stock prices of goods in stock. Today, Wal-Mart is still the leader in information systems. All the stores, distribution centers, and suppliers are connected to each other through a complex information system and satellite communications, which allows managing daily correction orders, inventories, and prices. Wall-Mart’s international business is being developed at the expense of subsidiaries fully owned by the corporation in foreign countries allowing such investment. Wall-Mart’s leadership has decided that its competitive advantage was based on a combination of culture and supporting information systems and logistics; such a culture and system would be difficult to transfer into the proposed model before franchises as a way of expansion (Carroll and Buchholtz).

Conclusion

Discussing the principles of work of both retailers, Wal-Mart and Daiso, in terms of marketing, management, and international business concepts, it is possible to outline their strengths and weaknesses. Thus, Daiso presents a unique range of products that the buyer will not find anywhere; also, a very attractive price itself is a magnet and attracts streams of buyers. However, there is a possibility that a buyer is offered too wide choice in Daiso stores. More consumers enjoy the process of purchase only if they do not have to choose from many options for the product. The consideration of the choice distracts a customer from purchasing and makes him/her feel the need to make a decision. The layout and shop equipment provide the buyer with a sense of abundance and cheapness, while the reminder of the low price and a warehousing arrangement of space create the impression that any purchase is a bargain in Daiso stores. At the same time, the clearance of a sales area could be more thoughtful. For example, the presence of photos with bright fruits in the store does not correlate with its main range of products. Another important thing concerning Daiso is that flexible working staff and hourly payment system saves payroll but gives the staff the opportunity to earn additional income if they need it. The weakness is that Daiso staff does not have a uniform, which makes it sometimes difficult to distinguish from an ordinary customer. Another company’s strength is an individually developed franchise program for each client supported by the assistance in all phases of launching and running the store. However, there are no clear criteria for selecting partners’ franchisees. A decision to cooperate is accepted promptly, but the criteria for making these decisions are not clear.

Being one of the largest Daiso’s competitors, Wal-Mart has an excellent delivery system and monitoring of products using a modern satellite communications and ensuring timely restocking promptly delivered by trucks from warehouses, wholesale purchase price, regular training programs for staff, and a strong marketing. All these features allow Wal-Mart to significantly minimize costs and let strengthen its competitive positions despite the competitors’ presence.

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