WalMart's competitive advantage is a result of several key strategic choices. First, WalMart's choice
of geographic location in rural/small town locations that were not being served by competitors
allowed it to establish itself as the sole discount retailer in these areas. As Sam Walton describes "the
key strategy was to put good-sized stores into little one-horse towns which everybody else was
ignoring?. If we offered prices as good or better than stores in cities that were four hours by car,
people could shop at home." This key strategic choice of location was completely different from
what competitors had done and gave WalMart a first mover advantage in markets that had not
previously been served by discount retailers. A second key strategic feature is WalMart's inventory
management strategy. From the onset, WalMart has been a leader in implementing new and cost
effective methods to manage inventory. Merchandise is tailored to local market demand via "traiting"
where a product's movements are indexed over a thousand store and market traits. In addition, store
managers are given local control over which items to display based on customer preferences and how
to allocate shelf space based on local demand. Therefore, each store is fine-tuned to best meet local
needs rather than follow a general corporate policy. In addition, WalMart's pricing strategy allows
more local control again based on geographic demand. Store managers can price to meet local
demand, to maximize sales volume and inventory turnover and to minimize expenses. Pricing varies
by geography and by proximity to competitors. This flexible pricing policy allows WalMart to
achieve maximal strategic pricing, whereby it remains most price competitive in regions ...