by Thomas Wailgum

It’s Beginning to Look A Lot Like a Wal-Mart Christmas

Nov 06, 20083 mins
Enterprise Applications

It’s beginning to look a lot like a Wal-Mart Christmas

Ev’rywhere you go;

Take a look in the overcrowded superstore, glistening once again

With checkout lanes and half-price videogames aglow.

It’s beginning to look a lot like a Wal-Mart Christmas

Discounted toys in ev’ry store

But the prettiest sight to see, is the loads of money that will be

On Wal-Mart’s own front door.

If there are two things that seem to put a smile on Wal-Mart CEO Lee Scott’s face, they are the Christmas shopping season and an economy in crisis.

As other retailers frown over the prospects of massive declines in consumer spending this holiday season, Scott is grinning ear to ear: “This is Wal-Mart time.” That’s what he recently told analysts, adding, “We see this as an opportunity to widen our moat.”

Last February, when the economy wasn’t doing so hot either, Scott was cautiously optimistic in delivering Wal-Mart’s 2007 fourth-quarter sales and attributed Wal-Mart’s recent holiday sales success to “pricing strategies” and “improved customer service,” citing cleaner stores, fewer out-of-stock products and faster checkout lanes. He was upbeat about the results but cautious about the future, stating, “We know that the economy remains a critical factor in this new fiscal year.”

During the next nine months, as the credit crunch, Wall Street turmoil and retail sector’s sagging sales gradually worsened, Wal-Mart’s “everyday low prices” became the first (and sometimes only) option for many cost-conscious shoppers. Wal-Mart historically thrives in times of economic uncertainty.

Today, Wal-Mart is also capitalizing on newly-implemented retail applications and a re-invigorated IT strategy that takes advantage of off-the-shelf software. The turnaround has been significant. In October 2007, CIO published my article that examined how Wal-Mart’s internal IT department had contributed to the retailer’s fiscal problems, which began with stagnant sales in 2005 and ran into 2006 and 2007.

Wal-Mart’s ISD group, as it’s known internally, had distracted itself with a cutting-edge radio frequency identification (RFID) program that frustrated its suppliers, the article reported. In addition, the ISD group had yet to adjust to the realities of the new Web 2.0 world. Consequently its online sales lagged rivals’ efforts, and IT leaders relied too much on homegrown IT systems and shunned retail software, deeming it not scalable enough. On top of it all, both Wal-Mart corporate and ISD were stuck in a command-and-control mindset that centralized all decision-making and took away the power and flexibility of local managers.

By the end of 2007, however, change had occurred. Wal-Mart announced that it had installed applications it previously seemed unwilling to use. For example, Wal-Mart bought SAP’s ERP software, and Oracle’s retail price-optimization application and HP’s Neoview data warehousing platform to crunch the data Wal-Mart collects in its 4,000 U.S. stores. Combined, the Oracle and HP tools could offer new and powerful decision-making capabilities for Wal-Mart’s merchandising managers.

Which brings us to today: The combination of a down economy, consumers looking for discounted merchandise and the maturation of Wal-Mart’s new IT applications will likely deliver a very holly, jolly Christmas season for Wal-Mart.

Of course, with all its bravado and good cheer, Wal-Mart has also had to display a modicum of humility in its recent chat with the Wall Street watchers. Wal-Mart executives repeatedly told analysts at the meeting in Bentonville, Ark., that they did not want to sound “arrogant,” reported The New York Times, though they acknowledged feeling very jubilant about their prospects.

Said Eduardo Castro-Wright, Wal-Mart’s CEO of U.S. operations: “I sleep very well at night.” No doubt nestled all snug in his bed, with visions of half-priced toys dancing in his head.