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In 1966, SS Kresge (the owner of K-mart stores) had a total of 915 retail stores and over 1 billion dollars per year in sales. Four years later, Wal- mart only had 38 stores and 44 million per year in sales.
By focusing on cost of good, transportation and logistics cost, and sell- thru rates, Wal-mart was able to lower their cost and pass on some of that savings to customers. Today, a purchase as Wal-mart will have a 2% logistics cost that is embedded into the sales price. At K-mart that same cost for logistics is 5%. Wal-mart can sell that item for 3% less than K- mart and still make the same per unit profit.
Today, Wal-mart makes the same profit in 3 months that K-mart makes in 27 years.
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(Corporate owner of K-mart in 1966)
