ALWAYS LOW PRICES ALWAYS WALMART Scott Edwards VP

ALWAYS LOW PRICES. ALWAYS WAL-MART. Scott Edwards VP Operations Wal-Mart Stores, Inc. CONFIDENTIAL 1

Communicate, Communicate “Communicate and share everything you possibly can to your associates and partners. The more they know, the more they will understand. The more they understand, the more they will care. ” Sam M. Walton Wal-Mart Stores, Inc. CONFIDENTIAL 2

How Wal-Mart Knows What Customers Want • EDLP • Store Associates • Department Managers • SWAS • Store of the Community Surveys • Systems Wal-Mart Stores, Inc. CONFIDENTIAL 3

Merchandise Replenishment Wal-Mart Stores, Inc. CONFIDENTIAL 4

Wal-Mart uses pull vs push replenishment for a majority of replenishable sku's. • all sidecounter merchandise with exceptions in fresh and fashion produce forecasts by store by item • maintain available inventory by store by item • use order point order up to methodology • enabled by modularized counters • enabled by EDLP (demand not influenced by hi-low pricing) Wal-Mart Stores, Inc. CONFIDENTIAL 5

Two Major Distribution Channels Wal-Mart Stores, Inc. CONFIDENTIAL 6

Staple Stock • reviews/delivers 7 days a week • delivers from a Wal-Mart distribution facility • with lead times of 48 hours • small amount of forecast variance • very small lead time variance Wal-Mart Stores, Inc. CONFIDENTIAL 7

Distribution Assembly • reviews/delivers 1/week (some exceptions) from the supplier • x-docked through Wal-Mart distribution facility • with lead times of 12 days on average • medium to large amount of forecast variance • medium to large amount of lead time variance Wal-Mart Stores, Inc. CONFIDENTIAL 8

Forecasts • Variable Rate Smoothing algorithm to update rate of sale • All forecasting is by store/by item • Forecasts are updated weekly • Forecasts are visible for supplier/buyer/replenishment manager collaboration through CPFR • Additional Tool to manage new item forecast • End of Season Logic to buy down a forecast on items leaving assortment • Stores have ability to "forecast to the shelf" ordering manually when needed • All forecasts and seasonality is maintained by a central merchandise replenishment team (home office) Wal-Mart Stores, Inc. CONFIDENTIAL 9

Exception Management Tools • Instock Research Tools with data by store/item last 30 days of history • Fill Rate Reporting • Lead Time Reporting • Forecast Error Reporting • Ad hoc analysis through Retail Link Wal-Mart Stores, Inc. CONFIDENTIAL 10

Retail Link • Critical tool that allows suppliers a detailed view of their business with Wal-Mart • Secure internet site 4 Requires User ID and Password for access • Suppliers can retrieve information about their business from Wal-Mart’s huge data base 4 Currently 250+ terabytes (the Library of Congress would fill 10 terabytes) Wal-Mart Stores, Inc. CONFIDENTIAL 11

Retail Link Data • Through Retail Link Suppliers can view: 4 Sales 4 Inventory Ships 4 Forecasts 4 Purchase Orders 4 Markdowns 4 Product movement 4 Wal-Mart Stores, Inc. CONFIDENTIAL 12

Retail Link Data • Suppliers can view their information: 4 By Item 4 By Store By Department 4 By Warehouse 4 By Company » By Day » By Week » By Month » By Market Basket 4 Wal-Mart Stores, Inc. CONFIDENTIAL 13

Retail Link 4. Company Summary, Store Detail and Supplier Performance Scorecard queries to track: 4 Sales – Quantity and Dollars Inventory – at Warehouses and Stores Ships – to Warehouses and Stores Turns 4 Margin 4 Fill Rate 4 Lead Time 4 GMROII (Gross Margin Return on Inventory Investment) 4 4 4 Wal-Mart Stores, Inc. CONFIDENTIAL 14

Retail Link allows Suppliers to see everything about their items that their Buyers and Replenishment Managers can see. No other retailer shares as much data with their Suppliers as Wal-Mart. Following are examples of some of the reports and other information that are available through Retail Link… Wal-Mart Stores, Inc. CONFIDENTIAL 15

Retail Link Reporting • My Business at a Glance • Exception reporting 4 Store Within a Store 4 Club Within a Club • Preset Reports • Custom (Ad Hoc) Reporting • Collaborative Planning, Forecasting and Replenishment (CPFR) • Global Supply Chain Visibility (GSCV) Wal-Mart Stores, Inc. CONFIDENTIAL 16

My Business at a Glance • Displays Important Financial Information on the Retail Link Home Page • Displays Information in multiple Time Periods: YTD (Year-To-Date) LW (Last Week) WTD (Week-To-Date) WTD Comp LW WTD Comp Yesterday Over Yesterday Comp Wal-Mart Stores, Inc. CONFIDENTIAL 17

My Business at a Glance • No Limit to Amount of Data That Can Be Displayed on Your Home Page • Ability to Click on Data Displayed on Home Page and Go Directly Into Appropriate Report Wal-Mart Stores, Inc. CONFIDENTIAL 18

Exception Reporting - SWAS Store Within a Store reports. Wal-Mart Stores, Inc. CONFIDENTIAL 19

Exception Reporting – Club Within A Club Wal-Mart Stores, Inc. CONFIDENTIAL 20

Preset Reports Additional “drill down” capability. Wal-Mart Stores, Inc. CONFIDENTIAL 21

Preset Reports Wal-Mart Stores, Inc. CONFIDENTIAL 22

Custom Reports – Decision Support 80+ reports for United States alone Wal-Mart Stores, Inc. CONFIDENTIAL 23

Custom Reports – Store Detail Wal-Mart Stores, Inc. CONFIDENTIAL 24

Custom Reports – Market Basket What Sells with My Item? – Items within same Category Wal-Mart Stores, Inc. CONFIDENTIAL 25

Custom Reports – Market Basket What Sells with My Item? – Items not in same Category Wal-Mart Stores, Inc. CONFIDENTIAL 26

Custom Reports – Market Basket Today’s Sales by Hour - Details Wal-Mart Stores, Inc. CONFIDENTIAL 27

Custom Reports – Market Basket Today’s Sales by Hour - Chart Wal-Mart Stores, Inc. CONFIDENTIAL 28

Custom Reports – Market Basket Tender Analysis - Details Wal-Mart Stores, Inc. CONFIDENTIAL 29

Custom Reports – Market Basket Tender Analysis - Chart Wal-Mart Stores, Inc. CONFIDENTIAL 30

CPFR – Assembly Instock by Item Collaborative Planning, Forecasting and Replenishment Instock Drill down for stores that are out of stock late PO count Wal-Mart Stores, Inc. CONFIDENTIAL WAL*MART CONFIDENTIAL 31

CPFR – Item/Late On Order Details Collaborative Planning, Forecasting and Replenishment Drill down for late PO’s Wal-Mart Stores, Inc. CONFIDENTIAL WAL*MART CONFIDENTIAL 32

Where’s My Stuff ? • One application that shows item inventory wherever it is from PO creation to store onhand. • In transit and in every facility. • Provides the ability to drill down. DC & Store Out of Stock. 4 DC On Yard not yet received. 4 Wal-Mart Stores, Inc. CONFIDENTIAL 33

Where’s My Stuff ? Wal-Mart Stores, Inc. CONFIDENTIAL 34

Where’s My Stuff ? Wal-Mart Stores, Inc. CONFIDENTIAL 35

CPFR – Collaborative Forecast Collaborative Planning, Forecasting and Replenishment Wal-Mart Stores, Inc. CONFIDENTIAL 36

CPFR – DC and Store Information Collaborative Planning, Forecasting and Replenishment DC Information Wal-Mart Stores, Inc. Store Information CONFIDENTIAL 37

CPFR – Seasonal Profile Collaborative Planning, Forecasting and Replenishment Wal-Mart Stores, Inc. CONFIDENTIAL 38

CPFR – Event Calendar Collaborative Planning, Forecasting and Replenishment Wal-Mart Stores, Inc. CONFIDENTIAL 39

GSCV – Global Supply Chain Visibility Wal-Mart Stores, Inc. CONFIDENTIAL 40

ALWAYS LOW PRICES. ALWAYS WAL-MART. Easter Predictive Update March 28, 2003 Steve Huth Wal-Mart Stores, Inc. CONFIDENTIAL 41

Predictive Vision Overview Gather Information Wal-Mart Associate Expert Knowledge Wal-Mart Data NOAA Weather Data Demographic and Trend Data Internet Data Sources Create Knowledge Predictive Modeling Creates Business Information Use Knowledge to Improve the Business Replenishment Systems Wal-Mart Stores, Inc. Pricing Systems Create CPFR Event Retail Link My Alerts CONFIDENTIAL Associate Scheduling 42

When Was Easter? 2004 2003 2002 2001 2000 1999 1998 1997 - 3/30/97 1998 - 4/12/98 1999 - 4/4/99 2000 - 4/23/00 Wal-Mart Stores, Inc. 2001 - 4/15/01 2002 - 3/31/02 2003 - 4/20/03 2004 – 4/11/04 CONFIDENTIAL 43

How Do Sales Shift? 2000 and 2003 Easter Weeks Wal-Mart Stores, Inc. CONFIDENTIAL 44

Easter 2003 vs. Easter 2002 • Late Easter vs. Early Easter • Average Temperatures Predicted to be Warmer For Easter 2003 vs. Easter 2002 * 2003 predicted temperatures based on 2000 actual temperatures averaged for the week prior to Easter Wal-Mart Stores, Inc. CONFIDENTIAL 45

2003 Predicted Temperatures vs. 2002 Actual Temperatures Div. E Div. D + 14 Degrees + 6 Degrees + 5 Degrees + 10 Degrees + 2 Degrees Div. U Div. A + 3 Degrees Div. T Div. B * 2003 predicted temperatures based on 2000 actual temperatures averaged for the week prior to Easter Wal-Mart Stores, Inc. CONFIDENTIAL 46

Daylight Saving Time Flip D = DST Change E = Easter Sunday E D E Wal-Mart Stores, Inc. D D E CONFIDENTIAL 47

Daylight Saving Time • This year DST happens on 4/6. Two weekends before Easter. This is the same as in 2001. Last year DST happened the weekend after Easter. • Big opportunity for staffing review prior to DST change. Sales Up 100% from Previous Week Wal-Mart Stores, Inc. CONFIDENTIAL 48

Daylight Saving Time – Customer Count Increase 15% Greater Wal-Mart Stores, Inc. CONFIDENTIAL 49

Daylight Saving Time - Sales Increase 15% Greater Wal-Mart Stores, Inc. CONFIDENTIAL 50

Hot Categories – Daylight Saving Time • Fashion Watch Category almost doubled in sales. Week 10 Week 11 Week 12 Wal-Mart Stores, Inc. CONFIDENTIAL 51

Hot Categories – Daylight Saving Time • Landscape lighting before and after the time change. Week 10 Week 11 Week 12 Wal-Mart Stores, Inc. CONFIDENTIAL 52

Easter 2003 – The Opportunities • Easter falls 3 weeks later in 2003 than it did in 2002. • Weekly Sales History comparisons should be against Easter 2000. • Later Easter brings warmer temperatures and ideal shopping conditions. • Daylight Saving Time change two weeks prior to Easter. • 2003 Daylight Saving Time Hot Categories. Wal-Mart Stores, Inc. CONFIDENTIAL 53

Easter 2003 – Action Items • Staffing: Garden Center 4 Jewelry Counter 4 Paint Counter 4 • Features: Ladders 4 Garden Hoses 4 Doug Degn’s 2/$5 VPI Bucket 4 Watch Batteries 4 Wal-Mart Stores, Inc. CONFIDENTIAL 54

Wal-Mart Marketing Research Wal-Mart Stores, Inc. CONFIDENTIAL 55

How Wal-Mart Knows What Customers Want Tools: • Yankelovich MONITOR to stay attuned with customer trends and preferences • Monthly tracking studies to monitor important attributes to customer • Store level customer satisfaction surveys to serve the local service needs of our customers • Customer segment studies to serve different customer groups at applicable stores (I. e. women, young people, boomers, Hispanics, African Americans, Asians, etc. ). • Departmental and categorical studies on what customers need at the shelf. • Obtain feedback from Store Managers and Store Associates as to how we can better serve the customers Wal-Mart Stores, Inc. CONFIDENTIAL 56

How WM Knows What Customers Want Actionability: • Communicate results of studies to Operators from Store Managers to COO • Communicate how studies are done and how to interpret results at annual managers’ meeting. • Actionability created through accountability by leadership (I. e. COO, Divisionals, Regionals, District Managers) • Obtaining feedback from Store Managers and Store Associates as to how we can gain better insights into what our customers need • Communication, Communication Wal-Mart Stores, Inc. CONFIDENTIAL 57

ALWAYS LOW PRICES. ALWAYS WAL-MART. Scott Edwards VP, Operations Wal-Mart Stores, Inc. CONFIDENTIAL 58