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This allowed Wal-Mart to maintain lower costs in it’s stores and not only edge out competition that may be previously established, but also discourage the entrance of other companies in to the area.
The next way that Wal-Mart established its superior cost structure was through it’s rental expenses. By 1985 all but 47 or Wal-Mart’s 859 stores were leased out. Store leases could be easily renewed for up to 15 years. The building rentals accounted for 1.8% (figure 1) of sales, the lowest level for any major discounter. The lower cost of building rental allows Wal-Mart to turn a larger profit then it’s competition without raising its prices to do so...
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