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Wal-Mart gains strength from distribution chain

Andrea Lillo -- Home Textiles Today, March 24, 2003

"The misconception is that we're in the retail business," said Jay Fitzsimmons, senior vp and treasurer, Wal-Mart; but in reality, "we're in the distribution business."

Speaking to investors at Merrill Lynch's Global Retailing Leaders Conference last week, he added that it's Wal-Mart's job to bring product from the dock to the customer's trunks in as little as 72 hours. Its distribution network of 100 centers nationwide provide efficiencies for the retailer. "Most people say we buy at the lowest price," but actually it has the lowest distribution costs.

Wal-Mart is not afraid of selling premium price points, he added, and already sells such items as plasma TVs and diamonds.

Fitzsimmons also addressed two works in progress. Though international overall performs very well, the company is still improving the stores in Germany, which are doing better and will beat plan, he said, with losses going down. The problems it faced in that country were through mistakes it made, and not the economy.

The Sam's Club division is also making progress, he said. "The club business, over time, has turned more retail, and that's added more costs to the equation." So Wal-Mart is repositioning the division to address "business needs for business people."

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