Wal-Mart — small-town saturation

Win discount retailing in small Southern towns the big chains won't enter

Conventional retail wisdom said a discount store needs a town of 100,000 people, because thin margins only pay off at high volume, so no chain would build in towns of 5,000.

A regional network of stores clustered tightly around company-owned distribution centers, run as one integrated logistics system instead of independent outlets.

Saturate one region at a time: blanket the small towns around each new distribution center before pushing the network outward.

1. 01Build company-owned distribution centers, each within a day's drive of its stores
2. 02Cluster new stores within 200 miles of an existing distribution hub
3. 03Negotiate directly with manufacturers to cut out the wholesaler markup
4. 04Run a private satellite network to track inventory across every store
5. 05Reinvest store profits into the next cluster of small-town openings