s, distribution centers, and stores much more effective. With this in place, sales data could be analyzed immediately and effectively, and Wal*Mart could better control inventory levels as well. Also instrumental as a means to achieving these ends was electronic data interchange. While UPC and satellite systems allowed sales to be collected and analyzed daily, EDI enabled 3,600 vendors to receive orders and interact with Wal*Mart electronically. All of these systems provided Wal*Mart the leeway to charge lower prices than their competitors, and though no supplier accounted for more than 2.4% of their total inventory, it streamlined the process and let Wal*Mart pass this savings onto their customers.Beyond reducing supplier power and installing pricing/communication systems ahead of their competitors, Wal*Mart has an advantage in the barriers to entry. Granted, the high fixed costs, the concentrated industry, and the high exit costs make barriers to entry high across the discount retailing industry. However, Wal*Mart has the first mover’s advantage and has kept it for the last thirty years by constantly expanding, constantly improving, and always remembering the value of the dollar. As their competitors continue to copy what is working for this industry leader, it is essential that Wal*Mart keep their first mover’s advantage when moving into new territories with improved technology.Understanding the five forces for this industry is helpful in understanding why Wal*Mart has performed well compared to their competitors. The overall profitability is medium in retail discounting for the following reasons: Supplier power, rivalry, and the threat of substitutes is high, which lead to low profitability. Barriers to entry are high and buyer power is low, and this suggests high profitability. As previously explained, Wal*Mart’s growth and profitability have been high relative to the industry, and competitive advantage...
