ECR AP - GS1 Hong Kong Supply Chain Management

22
Scott Price : CONSUMER VALUES
“ If we work together, we’ll lower the cost of living for everyone…
we’ll give the world an opportunity to see what it’s like to
save and have a better life.” Sam Walton
50 years ago Sam Walton opened our first store. His vision was
clear – to take quality products to the people in the USA who did
not have access to them (people not necessarily in tier one towns)
at the lowest possible price and provide the best value. Sam
Walton believed in saving people money so that they could live
better.
So Sam went from State to State in the USA replicating his model
of quality products at great prices. Over the last 50 years the
challenges have changed. Today’s global scenario is even more
daunting. Sam Walton’s vision of delivering value to the common
man and Every day Low Prices (EDLP) is even more relevant.
Poverty:
900 million people in Asia are living in absolute poverty.
This group of people is currently spending about two
thirds of their annual income on food.
Asia has 60% of world’s population but only 34% of world’s
cultivatable land
Inflation:
Food inflation is already up in China and in India.
In China food inflation rose by 11.5% in 2011 and in India
the food price index rose by 8.55% in 2011.
Purchasing Decision:
In Asia value and price are the biggest drivers for the purchasing
decisions of customers
79% of customers in China and 72% in India are making
their choice based on price competitiveness of products
Customers are putting ‘rising food prices’ at the top of their
list of worries (13% vs. 8% for ‘Job Security’ and 6% for
‘Children’s education and welfare’).
So clearly price and value are very important.
PRODICTIVITY LOOP:
Co-operation and joint business
planning with key supplier partners
such as Unilever ensure we
can operate for less, buy for less,
sell for less and Grow sales. We
call this the Productivity Loop.
This simple mission is responsible
for making Walmart the success
we are today - a 444 Billion
dollar Company with over 10,100 stores across the world.
In Asia we currently have operations in China, Japan and India,
with close to 150,000 associates.
I want to share with you a few examples of how our work in
providing the best prices to our customers is touching their lives.
In Japan when the tsunami struck on March 2011, we
had 24 stores in Sendai. Within a few hours of the tsunami, our
store managers had already started giving away items of daily
necessity from the parking lots of our stores. Within a few days
they were back full time to serve the communities that needed
help. Many of you in this room played a key role in supplying us
with the products most needed in Japan at the time. Water, noodles,
candles, soap. In total we donated 5 million US $, tones of
water and thousands of our employee volunteer hours to re building
the community. Post tsunami did research on the items that
were most important to customers. We then dropped prices on
the top 1000 items. Customers responded sincerely by posting
“Thank you” notes in the hundreds on the doors of ours stores in
Sendai and other parts of Japan. Most recently customers are
able to vote further via twitter for items they need price reductions
on.
In the UK, as part
of its concerted drive to improve
product quality and
value, at no extra cost to
customers, ASDA has unveiled
a New Quality Mark
Across 3,500 Products -
'Chosen By You‘
New ‘Chosen By You’
range with annual sales of £8
-£9bn is largest, single, own brand re-launch in UK retailing
history
£100m invested by retailer benchmarking, testing and reformulating
products to improve quality
3,500 individual products independently tested by Cambridge
Market Research in just nine months
40,000 consumers took part in 200,000 blind taste tests
across the UK
In India our Best Price wholesale stores are serving
small businesses and helping them delight their own customers.
Best Price stores help our customers (in this case small stores)
become more efficient through increased savings, more reliable
fill rates and higher quality produce. We have even set up a
“kirana” in our Best Price stores where we educate small shop
owners on how best to display, stock and sell their wares. We
are only able to delight our customers thanks to the very strong
partnerships we have with all of our multiple suppliers including
Unilever . So I must thank all of you. Some examples:
Sugar Loose, Fresh Chicken and other fresh produce
Over 90% of goods and services sold are locally sourced. This is
an important first step to eliminating waste in fresh supply
chains.
22