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Kevin focuses on the profitability calculations but is more interested in the business implication insights Michael can extract from the answers. Business judgment is vital.
To answer this question, Michael needs to understand the difference between “estimated” and “average” gross margin, and what that would mean for a buyer.
Kevin explains the unique strategy Walmart is able to deploy purely due to the fact that it does not specialize in any single product category.
Yet, Walmart has another major advantage linked to seasonality and this directly impacts merchandising. Kevin tries to help Michael identify this advantage.