Escola Universitària d’Enginyeria Tècnica
de Telecomunicació La Salle
Final Thesis
Graduate in Management of Business and Technology
Student
Promoter
KETAN KUMAR BALA
UYEN VO
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FINAL PROJECT DEFENCE
Meeting of the evaluating panel on this day, the student:
D.​ KETAN KUMAR BALA
Presented their final thesis on the following subject:
AN INVESTIGATION UPON WALMART
How has Walmart grown to become the largest retailer in the world? (by revenue)
At the end of the presentation and upon answering the questions of the members of the
panel, this thesis was awarded the following grade:
Barcelona,
MEMBER OF THE PANEL
MEMBER OF THE PANEL
PRESIDENT OF THE PANEL
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Abstract
The goal of this paper is to understand the reasons why Walmart has become the largest retail
business in the world (by revenue), and the extent to which the business will maintain its position
in the future. In the literature review section, an in-depth analysis of the background has been
carried, using multiple sources such as business articles, news publications and videos,
pinpointing the reasons that have propelled the company to its status. After scrutinising the
background, an explanation of the challenges the company is facing has been developed,
resulting in a complete contemplation of what has driven this business to success, and what can
block it to failure. After understanding that Amazon is the most important competitor to
Walmart, because of the growth of the online business, a comparative analysis has been carried
to understand the strengths and weaknesses of both companies. The most recent 10K report has
been used to gain insights on the management’s decisions​. The scope of the research has been
mainly US centric, because of the fact that most of the strongest competitors are in the US. But,
there are some insights from other countries, such as Spain, France, Russia and The Netherlands,
mainly because of the primary research. The primary research consisted in collecting views from
important stakeholders about the company. A survey was distributed where 130 responses were
obtained, 10 customers were interviewed and an Observation was carried to understand the
customer’s purchasing behaviour, and the attitudes of the different stakeholders on how they see
the company right now and its future. Primary research gave insights on what the market thinks
of Walmart. This has helped in deciding the key principles that have propelled a small retail
store into the biggest retail business in the world​.
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List of Contents
Abstract
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List of Contents
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List of Tables and Figures
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Acknowledgements
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Executive Summary
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Foreword
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Introduction
1.1 Research Question and Objectives
1.2 Expected Limitations
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Literature Review
2.1 Context
2.2 Background
2.2.1 Early Stages
2.2.2 Success
2.2.3 Setbacks
2.2.4 Competition
2.3 Walmart vs Amazon
2.3.1 Snapshot of Walmart in 2020
2.3.2 Snapshot of Amazon in 2020
2.3.3 Comparison
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Methodology
3.1 Scope and Research Methods
3.2 Timeframe: Gantt Chart
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Research Findings and Analysis
4.1 Semi-structured Interviews to Customers
Key Findings
4.2 Semi-structured interviews to the employees
4.3 Observation
Key Findings
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4.4 Survey
4.5 Compare and contrast of the information
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Conclusions
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Bibliography
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Appendix
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WORD COUNT: 11,000
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List of Tables and Figures
7.1 Tables
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7.1.1 Table 1: Walmart’s growth over the years
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7.2 Images
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7.2.1 Image 1: The beginning of Sam Walton’s entrepreneurial journey, 1945
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7.2.2 Image 2: 1962, Opening of the first Walmart store.
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7.2.3 Image 3: Income statement from the financial report posted in 1972
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7.2.4 Image 4: Financial highlights from the financial statement in 1972
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7.2.5 Image 5: Map indicating the Walmart stores from the financial statement in 1990
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7.2.6 Image 6: Map indicating the Walmart stores from the financial statement in 1990
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7.2.7 Image 7: Professor McNair’s ‘Wheel of Retailing’
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7.2.8 Image 8: Copy of the survey distributed
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7.2.9 Image 9: Copy of the survey distributed
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7.2.10 Image 10: Copy of the survey distributed
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7.2.11 Image 11: Copy of the survey distributed
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7.2.12 Image 12: Copy of the survey distributed
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7.2.13 Image 13: Copy of the survey distributed
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7.2.14 Image 14: Copy of the survey distributed
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7.2.15 Image 15: Copy of the survey distributed
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7.2.16 Image 16: Copy of the survey distributed
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7.2.17 Image 17: Copy of the survey distributed
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7.2.18 Image 18: Copy of the survey distributed
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7.2.19 Image 19: Copy of the survey distributed
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7.2.20 Image 20: Copy of the survey distributed
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7.2.21 Image 21: Copy of the survey distributed
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7.2.22 Image 22: Copy of the survey distributed
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7.2.23 Image 23: Copy of the survey distributed
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7.2.24 Image 24: Copy of the survey distributed
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7.2.25 Image 25: Copy of the survey distributed
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7.2.26 Image 26: Income statement from Amazon Inc. posted at year ended 2019
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7.2.27 Image 27: Screenshot representing a sample of the responses obtained from the survey
distributed
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7.2.28 Image 28: Screenshot representing a sample of the responses obtained from the survey
distributed
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7.2.29 Image 29: Graphic representation of the responses obtained from the survey distributed 74
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7.2.30 Image 30: Graphic representation of the responses obtained from the survey distributed
7.3 Charts
7.3.1 Chart 1: Synthesised chart of the responses obtained from the survey distributed
7.3.2 Chart 2: Synthesised chart of the responses obtained from the survey distributed
7.3.3 Chart 3: Synthesised chart of the responses obtained from the survey distributed
7.3.4 Chart 4: Synthesised graph of the responses obtained from the survey distributed
7.3.5 Chart 5: Synthesised chart of the responses obtained from the survey distributed
7.3.6 Chart 6: Synthesised graph of the responses obtained from the survey distributed
7.3.7 Chart 7: Synthesised chart of the responses obtained from the survey distributed
7.3.8 Chart 8: Synthesised graph of the responses obtained from the survey distributed
7.3.9 Chart 9: Synthesised chart of the responses obtained from the survey distributed
7.3.10 Chart 10: Synthesised graph of the responses obtained from the survey distributed
7.3.11 Chart 11: Synthesised chart of the responses obtained from the survey distributed
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Acknowledgements
This paper marks the termination of our Business Degree, and what a great way to end it,
demonstrating the skills, abilities and all the knowledge that we have acquired in the past few
years of our journey. None of this would have been possible for me without the complete and
unflinching support of my parents, MR. RAJESH KUMAR and MS. ANJU BALA, my sister
MISS ISHIKA KUMAR BALA, ALL THE OTHER FAMILY MEMBERS, MY ESTEEMED
PROFESSORS, YES ALL OF YOU, ALL OF THE LA SALLE TEAM, and ALL MY
FANTASTIC FRIENDS.
My name now bears the support of hundreds of amazingly beautiful people.
A MASSIVE THANK YOU TO EACH AND EVERYONE.
TO SUCCESS AND NOTHING LESS!
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Executive Summary
This thesis paper is an investigation on a retail giant, an American company regarded as Walmart
Inc. The pursuit is to better understand its status and position in the market, and decide whether
this will be maintained in the future. The motivation for this investigation is the fact that while
on the one hand, many brick and mortar types of businesses have recently filed for bankruptcy,
Walmart, on the other hand, has been thriving in the market beating expectations quarter after
quarter, while growing a strong online presence.
The paper starts with an exploration of the company’s past. It uses mainly secondary sources
such as articles, publications and news to better understand the founding principles and the
motives for its success. Adding on to this, the most recent financial report has been scrutinised to
obtain comparable information with regards to the company’s present. This information,
financial in its nature, has been used to compare the company’s status against the most direct
competitive businesses.
After identifying the founding principles of the business, and determining the conclusions from
the financial reports, this thesis has attempted to gather and contrast information from primary
sources. Attempts to collect information from the inside of the company have been made, by
trying to talk to the employees at one of the stores, but this was not fruitful as it resulted in a “no
answer” situation. In continuation, information was collected from the consumer’s perspective,
by a series of questions in a semi-structured focus group/interview scenario. There are answers
from center America (Missouri) and the west coast (California). From these discussions a
detailed understanding has been developed of what customers think of the company. Following
this, with regards to the primary research, a 3 hour long Observation has also been carried out to
collect first hand insight on the business. A survey has also been distributed where 130 answers
have been recorded, gaining quantified knowledge of how the different stakeholders perceive the
business.
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The conclusion is that there are 3 main principles that have catapulted the business to its
leadership status; keeping Everyday Low Prices, maintaining a system within the workforce and
continuously revamping the existing business and expanding into new territories.
This research is useful to anyone with an interest in entrepreneurship, business development or
understanding the strategies that have catapulted a small time store into leadership status, which
can be replicated to personal pursuits.
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Foreword
Before getting into the investigation, it is important to understand the context in which it is
written. This should help clarify the motives, the objectives and some of the challenges of the
paper. The investigation upon Walmart is being undertaken from Barcelona, Spain, where there
are no Walmart stores. While this already poses a challenge to collect primary research, a solid
network has previously been established to mitigate this challenge. The main reason for this
investigation is passion. The largest retail company by revenue has been chosen to be analysed to
gain knowledge on how to transform a retail business to the multinational scale. Insights on its
foundation, growth strategies and current decisions should help incentivise ideas for the
management and control of new and smaller scale businesses. To be successful in my analysis, I
aim to get as much information as possible on Walmart by reviewing as many primary and
secondary sources as possible. While I acknowledge this is ambitious, I will attempt my best in
defining the key principles that have led Walmart to its success, and whether these will suffice in
the future.
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1. Introduction
The retail industry dates back to more than 10,000 years. What first started as a simple exchange
between individuals, grew into proper establishments who would sell to large sums of people
(Jones, Brian D.G.; Shaw, Eric H, 2006). The more people these establishments would sell to,
the more they grew in sales, market share and size. As the years passed, new and more creative
methods were used to increase the number of sales. Many factors came into consideration, the
pricing of the products, the locations where to set up shop, how to handle the competition and
how to approach, acquire and retain new customers. Businesses started to engage in door-to-door
selling, mail orders and even catalogue selling. However, with the advent of the internet, the
concept of retail has changed (Ellis, 2019). Online selling, in contrast with the traditional brick
and mortar, has led to the death of many multinational corporations, some that have been
operating for more than a hundred years, such as Sears, one of the largest American chain of
department stores (Thompson, 2017).
At first glance, it seems that the brick and mortar type of business is the bedrock of exchange, it
is something that has been going on for thousands of years, and there should not be a reason for
this to shrink and even die, but with the growth of the biggest online retailer, Amazon, the ideas
of business have started to change. Businesses, be it multinational organisations such as Aldi, a
German chain of discount supermarkets, or smaller scale stores, like local garment stores, all
have started to understand the value and importance of developing and growing an online
presence. Despite this, there is a company that has managed to survive this collapse of a way of
doing business, recently beating earnings every quarter Walmart has managed to not only
survive, but also thrive in the market, making the founding family one of the richest families in
modern times. However, it is important to state that Walmart is not an exception to the rule,
Walmart has also been establishing and growing it’s online presence.
Walmart is an American retail company that has been operating for more than 65 years, and
since its ​inception in the 1950s it has managed to become the largest retail company in the world
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(Fortune, 2019). It has a traffic of nearly 265 million people on a weekly basis in more than
11,700 stores in 27 countries and eCommerce websites in 10 countries including (corporate-us,
2019). According to the information displayed on Yahoo Finance, Walmart “WMT” has grown
by almost 1,960 times (196,000%), since 1972, with the stock price on the 1st of October of
1972 being 6c and the recent closing price on the 1st of November 2019 being $117.62
(Finance.yahoo.com, 2019). Such a staggering growth begs the question how has Walmart done
it? What financial, marketing and operational decisions did Walmart take that have led it to such
heights?
1.1 Research Question and Objectives
This paper will attempt to unravel what the secrets are behind Walmart’s success, using
information about the company and other relevant data about the industry and its changes within,
it will aim to determine ​How has Walmart grown to become the largest retailer in the world?
The objectives of this paper are, to first determine what Walmart has done in the past,
specifically, what key decisions were taken to catapult the company into retail leadership. While
there is abundant theoretical literature on potential growth strategies that businesses can use to
expand, on the retail industry, the trends, patterns and shifts within, such as the paper published
by Devika Mohan: “Retail change: a consideration of the UK food retail industry, 1950-2010”
which analyses multiple theories applicable to the retail industry and its development, namely,
the wheel of retailing, the retail accordion, the polarisation principle, the multi-polarisation
principle, the darwinian approach, and the dialectic retail evolution” (​ Mohan, 2011), there is
not much scrutiny on how Walmart has expanded to success. This is why the nature of the
sources will be more practical to better understand this particular business.
Following this, an analysis will be undertaken about the present threats the company faces,
including a consideration of the challenges the competition poses. Understanding the company
and its strategies, as well as the threats it faces, will help understand how the company has been
adapting to the rise of online selling.
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In order to achieve the objectives, thorough desk and field research will be conducted including
the analysis of multiple articles and the financial reports, summaries and insider publications
available online, and on the official website. Along with this, several interviews will be
performed and surveys will be used to compare and contrast how solid the company is on paper,
verus what the people/the market think about the company. An attempt to gather information
from the inside of the company will also be made. All of these sources should lead to sufficiently
valid and reliable information to draw conclusions answering the question: ​How has Walmart
grown to become the largest retailer in the world?
To carefully and thoroughly collect and analyse the data, methods such as pie charts, bar graphs
and linear charts will be used, which will help in the understanding and when drawing
conclusions.
1.2 Expected Limitations
There are a few difficulties that can be expected before commencing with the research. The main
problem is the fact that this investigation is being undertaken from Barcelona, Spain, where
Walmart stores are not available, which means that the primary investigation will heavily depend
on the assistance from fellows in Springfield, Missouri and San Jose, California, both in the
United States. Coordinating, recording and gaining quantities of valuable information will be
difficult. Other than this is the fact that Walmart is a multinational corporation operating in
multiple countries, while primary research will be done to gain valuable information, the
information can only be used as suggestive of ideas, and cannot be used as conclusive, because
of the sheer size of the company. Another problem that should be factored in, is the reliability of
the answers from the interviews and the survey. This is a problem because the subjects taking the
surveys and doing the interviews can be biased because of prior knowledge, and this may skew
the answers in a certain direction. One way the aforementioned problems can be mitigated is by
increasing the size, in other words, interviewing a larger number of candidates, however, it
should be taken into account that resources like time and network are limited. Nonetheless, an
existing knowledge of the company, a passion for the retail industry, and a good network in
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Springfield, Missouri should dwarf the limitations by comparison, and provide useful
information to draw conclusions upon.
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2. Literature Review
2.1 Context
In recent years, the retail industry has been going through a tough transition. According to
articles published by Business Insider, a reputable financial and business news website, many
powerful retail companies operating in the United States, including Walgreens, Gap and
Gymboree, have closed thousands of square feet of business in 2018 (Peterson, 2018), and this
shutting down of business space has only continued in 2019, with almost 6.100 stores expected
to close in the year (Peterson, 2019). It is important to state that the three aforementioned
companies operate in different sectors, Walgreens is a pharma selling company, Gap is a clothing
company, and Gymboree was a children’s attire company. Nonetheless, their revenue largely
depended on the sale proceeds of the physical stores. The three businesses had an important
presence in the market, which has recently been declining. This matter has left the whole idea of
selling through a physical store in the spotlight with a doubtful future. However, on the other
hand, Walmart, a multinational corporation operating in the same business field, the retail
industry, has managed to appear time after time on the news because of it beating market
expectations (Reagan and Thomas, 2019).
2.2 Background
2.2.1 Early Stages
The operations for the business that is now known as Walmart, started in 1962, but the journey
as an entrepreneur for Sam Walton, the founder, started much earlier, in 1945. The years
between 1945 and 1962 were years of mistakes and setbacks, which can be detailed as the years
where Sam Walton learned what will be the foundation for Walmart. The 27 year old, military
return businessman chose personal, and friends and family as a source of finance to start a
business. The article published by Richard Tedlow details that the one strategy that launched
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Sam Walton as a successful businessman was ​low margins and large volumes​, which means
increasing the quantity sold by selling at cheaper prices. This article further explains that it was
not that there was no competition or tough times, as he had competition across the street, John
Dunham with his Sterling Store, but it was this idea which resulted in a sales increase from
$72,000 to $250,000 with a profit between $30,000 and $40,000 (Tedlow, 2001). His tenure with
this store ended only after 5 years as he did not have an option to renew the lease, but this led
him to see the strategy in a franchise model under the Butler Brother’s business that was known
as Ben Franklin stores. It was their denial to let him experiment that led to the beginning of
Walmart discount stores (Pbs.org, 2014). ​Image 1 shows the roots from which Walmart began (A
Tour of the Walmart Museum in Bentonville, Arkansas, 2014). One store operated by a 27 year
old military return family man. The fact that Walton chose a personal source of finance and that
he lost the first business due to a minor contract issue, both suggest that at the time he was a
novel and conservative businessman. While in the later years he does become a more savvy
entrepreneur, his conservatism is highlighted in the later years of operations, particularly with
employee relations.
Theoretically speaking, one reason why arguably Walmart found ground in the industry can be
explained by the theory mentioned by Devika Mohan in her paper “Retail change: a
consideration of the UK food retail industry, 1950-2010” known as ​the Wheel of Retailing
(Mohan, 2011). The wheel of retailing is a theory put together by Prof. McNair in 1931, which
explains how new businesses find a competitive advantage in an already saturated market. ​Image
7 illustrates that new businesses find space because of their limited costs, this allows them to
operate with reduced margins, which is something that larger businesses cannot do as they have
higher operating expenses (M, 2019). However, this theory is limited as it fails to account for the
economies of scale that larger businesses can enjoy, as they start acquiring greater market share.
2.2.2 Success
Because of the economies of scale, between 1962 and 1970 Walmart exploded as a business, it
went from one store and $975,000 in sales with 25 employees to 38 stores and $44.2 million in
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sales and 1,500 employees, over a million dollars of revenue per store on average (Youtube.com,
2019). It is important to emphasise that the growth of the company during these years was
mainly due to the high volume and low profit margin strategy, which is why it is understandable
that much of the growth happened with high amounts of debt (Pbs.org, 2014). To deleverage the
company, Sam Walton considered the idea of launching the company in a public offering
(Corporate - US, 2006), successfully achieving this in 1970, and retaining a 61% of ownership.
Image 2​ shows the opening of the first Walmart discount store in 1962 (Cain, 2019).
At this point, two new principles can be depicted that Sam Walton followed which also
contributed to the success, namely ​maintaining ​a system within the workforce and
continuously adapting to cut down costs further (Frank, 2016). The system with the
employees consisted in making them commit to satisfy the customers to their full extent, he had
them execute the following pledge: “​From this day forward, I solemnly promise and declare that
every customer that comes within ten feet of me, I will smile, look them in the eye, and greet
them, so help me Sam​”. With regards to adaptation, the company was an early bird to adopt
computers in its operations to obtain data about the sales and streamline inventory calculations
and gain greater efficiency.
Considering the years after 1970, the business’ strategies were what Sam Walton had laid out up
until then. The first and most important was to keep the costs at the lowest such that Walmart’s
pricing would be the cheapest to pay by the customers. The second was maintaining a culture
within the firm, so that the employees would always have the client first. Lastly, the third was
adaptation. The company was to be in a continuous adaptation mode adopting the latest
technology and methods to be the most efficient and effective business in the market. These three
points can be considered as Walmart’s recipe for financial success and retail leadership.
However, it would be incorrect to state that the three aforementioned principles were the only
ones that took part in Walmart’s success. ​Revamping the business in new and innovative ways
and expanding into new territories was key for the business’ growth and expansion​. Since
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by 1970 the foundation was laid, all the business had to do in the later years was to implement
these principles into new territories, and this is what was done, taking the external environment
into account. The financial report the company provided in 1972 has been looked into to
understand the status of the company after it became publicly offered. This report reveals
information on the company’s revenue and number of stores growth from 1968 until 1972.
Image 3 and ​Image 4 both show that the company essentially multiplied its sales and income
over the years, with ample capital to continue growing. The report also highlights how the
previously mentioned strategies were the key to the company’s success (Annual Report: year
ended January 31, 1972, 1972). By the year 1979 Walmart managed to open 276 stores with 21
thousand employees and one billion dollar in sales (Pbs.org, 2014).
To put things into perspective, at this point the enterprise was making over $3,000,000 per store
on average, or more than $47,000 per employee, in relation to the million dollars per store and
almost $29,500 per employee at the beginning of the decade. Simply comparing the revenue over
the years makes it clear how big this business was becoming. Managing 276 stores meant the
business was bound to have warehouses for storage and distribution of the inventory.
Transforming these spaces into a place for business, known as Sam’s Warehouse Clubs, was also
a brilliant move to propel the business for further growth. This move could be considered as the
necessity to revamp the business to keep attracting the customers. It is important to state that
Sam’s Club Warehouses started operating through a ​membership-model, ​which consists in
getting the customers to pay a membership fee to proceed with their purchases.
During the decade of the 1980s Walmart maintained its staggering growth, and by the end of the
decade, the company shattered another record of being the first retailer in history to report
after-tax profits of $1 billion. The company operated 1,402 stores and 272,000 employees in 26
states (S2.q4cdn.com, 1989). According to the financial report published by the company in
1989, the company’s revenue generated that year was over $20 billion, $5 billion more than the
previous year, with 1259 Walmart stores and 105 Sam’s Warehouse Clubs. The number of
employees increased from around 175,000 the previous year to around 225,000 in 1989
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(Walmart 1989 Annual Report, 1989). The financial report published in the fiscal year ending in
1990 gives a decent view of the performance of the company over the decade of the 1980s.
Image 5 and ​Image 6 combined illustrate a map of how the company has been expanding the
brick and mortar business in the country, more heavily so in the east coast, close to where the
operations began. The income statement provided in this report for the decade, shows that the
company continued maintaining the low margins and large volumes strategy for its expansion of
the market share (Walmart Annual Report 1990, 1990).
It was since the decade of the 1990s that the business started operating outside the United States,
first expanding into neighbouring countries including both Mexico and Canada and later into
Europe, Africa, countries in South America, India and China. When it comes to business
expansion in international borders the business had two main considerations, to bring the
business name, Walmart, into the new country, or acquire the leading chain retail discount store
of the host country. In whichever the case, the company would make sure to implement the key
core principles to ensure business growth and expansion. This has been clearly elaborated in the
financial report published in 1995, “​We are encouraged by our Canadian stores’ results. The 122
former Woolco stores were “Wal-martized” and the new Associates there readily embraced our
corporate culture” ​(Walmart Annual Report 1995, 1995).
Along with internationalisation, the company also ensured to revamp through new types of
stores. With Walmart’s stores and Sam’s Warehouse Clubs already operating, the business
introduced Walmart Supercenters, Walmart Neighbourhood Markets and Walmart Discount
Stores, further widening the product and service portfolio and increasing the customer range.
When considering the company’s years after the 1990s until the present times, the business has
mainly been expanding its international and its online presence. 2012 was the year the company
celebrated 50 years of operations, and the report published that year is useful to get a perspective
of the company’s evolution. Starting from $30,000 of income and a solid set of founding
principles in 1962, the company declared $15.8 Billion of income in 2012 (Walmart 2012
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Annual Report, 2012). By 2018, According to the annual report of that year, the company
declared over $500 billion in revenue from over 11,700 stores worldwide. Out of this, more than
$11 billion of revenue was from the US ecommerce platform. The company employed
approximately 2.2 million people during the fiscal year.
At this stage, Walmart holds 16% of the market share of the grocery industry (S2.q4cdn.com,
2018). ​Table 1 includes Walmart’s revenues, number of stores and the number of employees
working per year that have been previously mentioned. It gives a visual representation of how
Walmart has been scaling the brick and mortar business over the years, and the magnitude at
which it currently is.
2.2.3 Setbacks
The previous analysis of the company and its operations since its inception until the present
depicts the growth and escalation that the business has faced. It is important to state that this
record-breaking growth has not been achieved without failures, multiple lawsuits, fines and
obstacles. It has been since the 1970s that the business has had to face multiple lawsuits
regarding several subjects, such as labour conditions, hourly pay rates, gender discrimination,
and opposition to unions. These legal battles have not only been setbacks for the company’s
growth, but have also had notable impact on the business’ stock performance. One example is
the 2007 class-action lawsuit regarding gender discrimination, which had resulted in an
approximate 10% decline of the stock in August that year (Greenhouse, 2007).
When it comes to failures as business operations, the most important failure the company
endured during its years of growth, was in the period of internationalisation in the 90s. When
expanding into european markets, the company failed to successfully penetrate the German
market and was run out of the country due to high competition and lack of customer acquisition.
In this market, Walmart had also attempted to acquire customers with the price penetration
strategy, but unsuccessfully differentiating itself from the competition and a poor reputation due
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to multiple lawsuits regarding its treatment to the employees, the enterprise failed to generate a
profit and had to close operations (Boyle, 2009).
As it is colloquially stated, success does not come without haters, such is also the case with
Walmart. The company has been critiqued copiously regarding its financial, social and economic
impact in the geographical location where it penetrates. Despite the large debate among scholars,
it has been superficially agreed that the company has both positive and negative effects. While
the business does have a positive impact regarding the employment of the zone and the aggregate
consumption, it is known as a small business destroyer, as many smaller outlets face bankruptcy
and closure due to the loss of clientele, and therefore business activity. However, many small
businesses also claim to benefit from the entering of multinational corporations such as Walmart,
because they find their niche in the market (Stone, Artz and Miles, n.d.).
2.2.4 Competition
When it comes to competition, on the one hand it can be argued that Walmart has not faced a
‘real’ threat of competition in the early years because of the way the company has grown,
outpacing most of the existing businesses at the time. The company’s biggest issue has not been
how to beat or even deal with the competition, but instead, Walmart has always focused on how
to further expand its business operations and grow sales. Paradoxically the competition did see
Walmart’s staggering growth as a threat. One example of such a case is Kmart, a company that
had been operating in the sector of discount stores far before Walmart, and had to eventually shut
down its operations because of its inability to generate profits.
Looking at the bigger picture, Walmart is such a large business, that the competition only
challenges certain divisions of the company. In the article published by Abhijeet Pratap, the top
companies that challenge Walmart by revenue, include Amazon, Costco, Walgreens, Kroger,
Home Depot, Target, Lowe’s and Best Buy (Pratap, 2020), and to exemplify, broadly speaking
Amazon challenges the online operations, Costco challenges the wholesale operations, Kroger
challenges the groceries segment of the product line, Home Depot challenges the home
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improvement product line, Target challenges the apparel product line, Lowe’s again challenges
the home improvement products, and lastly Best Buy challenges the electronics product line.
This suggests that as long as Walmart continues to remain true to the founding principles, and
keeps on expanding market share, it should not be threatened by the competition.
However, the company that is arguably increasingly posing itself as a ‘real’ competition to
Walmart, is Amazon. This can be said because according to Karen Webster, “Walmart accounts
for roughly 8.9 percent of consumer retail spending in the U.S. and 2.8 percent of all consumer
spending in the U.S. [... and Amazon] 6.4 percent and 2.1 percent, respectively” (Webster, 2018).
What is troubling is the idea that Walmart has been constant in its share, while Amazon has
almost trebled in the past 4 years (Webster, 2018). This consideration places Walmart at a
questionable perspective, as a business that has been operating for 58 years is being threatened
by one that is relatively new and does not comparatively have a physical presence. However, a
more recent publication by Mallika Mitra, suggests the contrary, where it states that Walmart,
Target and other major retailers are threatening Amazon with bigger jumps in online consumer
spending this CyberMonday. The publication is based on the analysis conducted by Edison
Trends, which has looked over 1.2 million transactions (Mitra, 2019).
2.3 Walmart vs Amazon
This section consists in comparing Walmart with Amazon, from a financial perspective. The
reason why only these two companies need to be compared is because, as it has been elaborated
before, it is Amazon that poses itself as the strongest competitor because of the shift to online
sales in the market.
2.3.1 Snapshot of Walmart in 2020
Walmart in 2020 is being led by Doug McMillon, who has been the CEO of the company since
2014, but has been handling the ‘nitty-gritty’ work since his teenage years. The company’s
current focus is to continue expanding its philosophy, known as Every Day Low Prices (EDLP)
and develop an ‘omni-channel’ presence. This consists in establishing low prices for the
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customers to pay everyday, at all the points of sale, including eCommerce, at the supercenters,
neighbourhood markets, international markets and the wholesale division, a.k.a Sam’s Club.
At this stage, Walmart has 783,557,000 square feet of operating space in the US and 344,949,000
square feet of operating space internationally, and when it comes to its own property, the
company owns 11,909 different units world-wide. The company’s revenue posted for this fiscal
year ended has been just under $524bn, and this has been growing between 1% and 3%
approximately for the past 4 years. Their main capital allocations are in renewing and revamping
the current business units, spending just over $2bn, developing the online presence, spending
$5.6bn, and expanding in the international markets, spending $2.8bn.
When it comes to understanding the company’s financial strength, Walmart’s current ratio is at
0.8, which suggests that they do not have enough spare assets to pay off their current liabilities.
The company’s most important current asset is the inventory, which adds up to $44.4bn and
cash, which adds up to $9.5bn. On the other hand, the biggest current liability is the accounts
payable, which adds up to approximately $47bn. While this may appear negatively, it is
important to understand that the company has over $105bn worth of property, which can be used
to smoothen the capital burden. In this financial report, it can be clearly seen that Walmart still
continues to maintain the key principles that shot the company to success. Its EDLP strategy is
proof for the ​low margins and large volumes​, and the way they allocate their capital shows how
revamping the existing business and expanding into new territories ​is critical to stay at the
top position. (Walmart Inc. 2020 annual report, 2020)
2.3.2 Snapshot of Amazon in 2020
Amazon is currently being led by Jeffrey P. Bezos, CEO and Chairman of the board, as well as
founder of the company. In the letter to the shareholders, the company expresses its strategy.
Amazon’s main focus is to establish a reputable brand, where customers are continuously
repeated, their goal is to achieve leadership in the industry and to do that, they believe in even
giving the employees equity, such that they bring out the best of their abilities for the company.
23
They prefer growing by revenue, before the profitability, which grew by 838%, from $15.7m in
1996 to $147.8m in 1997. Their current main business operations consists in selling through the
online platform, nationally in the US and in foreign countries, Amazon Web Services (AWS),
which is the server facility provided B2B and B2C where customers use Amazon’s server
facilities to store and manage data, and the proceeds through Whole Foods Market, the brick and
mortar retail business they had acquired in the US, whose reports have been included since 2017.
Considering the properties that are under the management of Amazon, the company owns
15,615,000 square feet of space and leases 318,171,000 square feet of space, running its physical
store operations in 564 units in North America, and 7 international units. ​Image 25 shows
Amazon’s most recent post on total income distribution. In the most recent fiscal year, 2019,
Amazon has posted a revenue of $280bn which is 20% higher than the previous year. With
regards to their capital allocation, Amazon had generated $38.5bn worth of cash by the end of
2019, up by 25% from the previous year, and this has been growing for the past four years
between a range of approximately 6% and 67%. Out of this, in the past year, a 33% was left as
free cash flow, a 33% was invested in acquiring property and land, and a 33% was spent in
acquiring equipment under leases.
In terms of financial strength, Amazon had a current ratio of 1.1 by the end of 2019,
demonstrating great financial strength, as it can pay off all of its current liabilities with the
current assets. Amazon’s current assets were distributed pretty equivalently among cash
marketable securities, inventory and accounts receivables, and the current liabilities on the other
hand, these are among Accounts Payable adding up to $47bn and other accrued expenses
($32bn). When it comes to solvency, Amazon is in a strong position, its amount of debt, be it
long term or short term is eclipsed by its asset size, especially because of the property valuation
of $72.7bn (Amazon 2019 annual report, 2020).
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2.3.3 Comparison
Walmart and Amazon, while operating in the same industry, they have managed to find a market
that is separate to both the businesses. On the one hand, Walmart is the undisputed current king
of the brick and mortar business and Amazon is the current undisputed king of the online
business. Both businesses have a large cost of sales burden, suggesting that both sell at ​low
margins and high volumes, ​they both also have a huge dependency and must ​keep a system
within the workforce to maintain customer acquisition and satisfaction. However, after looking
at the financials, particularly the growth of revenue of the companies, it can be said that Walmart
is at the stage of maturity, but Amazon is still at the growth stage. Because of this, it seems that
both companies have now started to compete for the market of the other, Amazon is increasingly
investing and expanding its physical business, and Walmart is working on developing a strong
online service and platform. In fact, according to the recent publication in Bloomberg, there
seems to be a head to head clash on the acquisition and retention of new customers, with the
recent move by Walmart pursuing a “membership program rivaling Amazon’s Prime” (Boyle,
2020). Both companies have strong financials, they both have massive revenues, a significant
cash and cash equivalents balance, and not a large amount of debt that they are dependent upon,
but Walmart has a strong square feet space that it can take advantage of to reach customers
faster. This is now a head to head competition on who develops a strong presence in the
international markets faster, who acquires and retains the most customers on the eCommerce
platform, and who acquires and retains the most customers in the brick and mortar business.
The literature scrutiny conducted in this paper takes into account Walmart’s modus operandi in
the past, the challenges the company has faced and the competition by which it is being majorly
threatened. The investigation assesses the various occurrences and puts the events into
perspective to draw conclusions regarding the strategies and principles that have catapulted the
business to a leadership status, as well as the lawsuits and failures that have challenged the
business’ position. While the past years of the company can be concluded as calmer, as none of
the external troubles hindered the company’s solvency, the future years can be taken as more
25
troubling because of the growth of the online market and price competitors such as Amazon,
which are gaining a greater market share. However, these conclusions have been drawn solely
from purely secondary sources and considerations of others, which is of partial value. Therefore,
it is a requirement to carry out research using primary sources to draw further scrutinised
conclusions.
3. Methodology
3.1 Scope and Research Methods
Walmart operates in the retail industry, and after the consideration of several news publications
and articles, it is certain that with e-commerce, the brick and mortar type of businesses have been
found at a questionable status, and many have also declared bankruptcy, such as Sears and Toys
R Us. Despite this, Walmart has managed to beat market expectations and continued to grow its
sales and profitability.
The objectives of this paper are to understand in what strategic and tactical ways has Walmart
done this, and whether this will suffice to maintain the number one status in the industry. To
achieve these objectives, desk research has been conducted, which has given a perspective of the
underlying strategy that has catapulted Walmart to success and maintained it to leadership status,
namely its persistence to ​keep low prices, maintaining a culture to understand the
customer’s behaviour and revamping the business model according to the customer’s
behaviour to increase sales. However, in order to get a balanced, actual and relevant view, field
research should also be conducted. The focus of the field research is to understand the business
from the perspective of the different stakeholders. This includes a view from the customers about
aspects such as, their spending patterns, opinions about the business, the competition and the
threats that have been previously elaborated. Along with the customers, other stakeholders such
as internal management, investors/traders and the competition will also be considered to collect
information about the company.
26
To gather this information, the methodological approach is going to be straight forward.
Semi-structured interviews will be carried out to the different customer segments and
stakeholders enabled by my friends. I will get help from my peers in the United States, including
Grant Gamm and Kristopher Grischott. An attempt to collect information by observing through a
video call will also be made. A survey will also be distributed to collect quantifiable information
on how Walmart has become the largest retailer in the world.
With regards to the survey, the questions asked can be found from ​Image 8 to ​Image 25 in the
appendices
section, and this
can also
be accessed
through
the following
link:
http://bit.ly/walmartsurvey2020​. The survey has been designed in a format so that the answers
that are obtained can be classified according to the stakeholder. The aim is to obtain answers
from customers/potential customers, investors/traders and internal stakeholders, among others.
Some questions in the survey have been repeated with the intention to increase the requirement
of consistency, and therefore increase the validity of the responses.
The type of questions asked allow the gathering of information about the different aspects of the
business, particularly, their product, their people and their processes, giving an understanding of
the opinion of the stakeholders. This opinion is relevant because it helps in determining whether
the business will continue growing, or the advent of e-commerce will prove fatal.
Conducting a semi-formal interview is the best way to collect the data because this type of
research requires a view of the opinions and thoughts of the stakeholders. This format maintains
a structure in the conversation, while allowing room for discussion about tangents. Including an
Observation is an advantage because it allows me to personally judge Walmart as a business,
determine its potential flaws and strengths, and it helps me contrast my own view with the
opinion collected from the stakeholders. Extending the research by adding a survey allows the
opportunity to quantify the information.
27
The interviews that will be carried to the ​customer segments will include the following
questions:
-
What do you think of Walmart as a business?
-
How would you describe your experience at their different stores?
-
How often do you visit a Walmart store?
-
How much do you tend to spend on average? Monetary focus.
-
Do you think that your spending in Walmart has increased over the years? Why?
-
What kind of products do you typically buy from Walmart? Are you satisfied with your
purchases?
-
How would you describe the treatment from the employees?
-
What do you think about the morale of the employees in the store?
-
How would you position Walmart against the competition?
-
What sort of challenges would you describe that Walmart has? How do you think the
growth of e-commerce and companies like Amazon are impacting Walmart?
-
Do you think Walmart will continue growing its sales and profitability over the years,
maintaining its market status?
28
The interviews that will be carried to the ​internal stakeholders​, including the associates, will
include the following questions:
-
What do you think of Walmart as a business?
-
How would you describe your position in the company, with regards to morale?
-
What do you think about the rewards system in the company in contrast with your inputs?
Do you think there is fair treatment in the company?
-
Do you think that spending in Walmart has increased over the years? Why? Monetary
focus
-
What kind of products do you think Walmart most sells? Are you satisfied with the
quality of the products and services that are offered in the company?
-
How would you describe the treatment towards you from your superiors?
-
What do you think about the satisfaction of the customers from the store?
-
How would you position Walmart against the competition?
-
What sort of challenges would you describe that Walmart has? How do you think the
growth of e-commerce and companies like Amazon are impacting Walmart?
-
Do you think Walmart will continue growing its sales and profitability over the years,
maintaining its market status?
29
However, the main problems I predict with this type of research is the coordination to
communicate with my colleagues and the collection of information from stakeholders like
internal management. Some limitations that should be accounted for in these methods of primary
research are bias and the reliability of the answers. Respondents can be biased from prior
knowledge, which can influence their responses in a certain direction. Other than this, there are
many variables that influence the quality and reliability of the answers, such as the time, place
and thought process while answering, among others. Despite this, the answers should provide
valuable information with regards to the subject.
3.2 Timeframe: Gantt Chart
Activity
Start Date
End Date
Number of days
taken
Specifying the
7th of January
24th of January
18 days
25th of January
1st of March
31 days
2nd of March
13th of March
12 days
14th of March
20th of March
7 days
21st of March
27th of March
7 days
questions and the
methodology
Carrying out the
research
Elaboration of the
research on paper
Conducting the
analysis of the
research
Polishing and
presentation of the
first draft
30
4. Research Findings and Analysis
4.1 Semi-structured Interviews to Customers
With regards to the interviews to the customers, 10 semi-structured interviews were carried to
individuals from ages between 20s and 60s. All of the interviewees are from the United States, 9
of them are from Springfield, Missouri and 1 of them is from San Jose, California. The
interviews were carried via phone calls, where the interviewer would ask a question, and then
allow the interviewee to provide a soliloquy on the subject. The interviewer allowed room to
discuss tangents and would also ask further questions on the topic to get more information. In
order to maintain a structure the interviewer would then ask the next question on the list, so that
the topic of the conversation would be maintained. The format to record the information was
taking rough notes of the details provided, which were then transcribed into proper ideas
presented by the interviewee.
Details about the interviewees:
Name
Age
Profession
Location
Grant Gamm
22
Graduate Student - Missouri State
Springfield, Missouri
University
Kristofer
25
Grischott
Nicole Gamm
Student/part-time working
San Jose, California
professional
53
Auditor - Missouri Health and
Lake Ozark, Missouri
Senior Services
Greg Gamm
57
Electrician - ABB
Lake Ozark, Missouri
31
Sean Naudet
22
Student - Missouri State University
Springfield, Missouri
Adam
21
Graduate Student - Missouri State
Springfield, Missouri
Schoening
Jordan Wilson
University
21
Warehouse Associate - Bass Pro
Springfield, Missouri
Shop
Gavin Herst
22
Rancher/Entrepreneur
Jefferson City, Missouri
Ashley Green
22
Kidney, Liver Transplant Nurse -
St.Louis, Missouri
Barnes Jewish
Savannah Adair
20
Student - Missouri State University
Springfield, Missouri
Opinion of Walmart as a Business:
A diverse range of opinions have been collected of Walmart as a business. This question was
asked focusing on the judgement of the customers with regards to the attributes that they found
valuable, and those that they found disadvantageous of the business.
On the one hand there is the positive judgement, which particularly appreciates the vast range of
products that are offered in multiple forms. There are claims such as, “If you need it, they have
it...if you need it now, they’ll also have it”. There is also appreciation of the multiple forms of
business. Having general Walmart stores, Neighbourhood markets and Sam’s Club Warehouses,
means that there is a giant amount of range from which to choose from, which is not offered by
almost any other company. General stores have everything that one may need, ranging products
from groceries, to guns, tvs, fishing gear and even baby supplies. Neighbourhood markets are
more focused on groceries and cleaning supplies, rather than offering everything. Lastly, Sam’s
Club Warehouses are “all about the bulk purchases”. It operates in a way that clients pay a
32
membership price, where they can get products at much larger sizes and much cheaper prices,
“works great for large families”.
The answers from the interviews clearly indicate that Walmart is definitely committed to
offering the cheapest prices, “they almost always have the cheapest price, and if you can find it
cheaper somewhere else, they’ll make that price for you on the spot”.
However, on the other hand, there is also the opinion that Walmart does not treat the employees
well enough, “not paying enough”. Other than this, concerns were also expressed with the
regards to the jobs of the employees, “logistic employment strategy is stupid...the way roles are
set up for employees”. In this case, both ​Costco ​and ​Macy’s ​were appreciated.
The common opinion about the business was that Walmart is for middle to lower-income people.
“You can find everything, and the prices are so cheap that you don't concern yourself too much
with the quality. People with higher income, usually go to specialty stores”.
The answers from this question support the information collected through desk research,
demonstrating how ​low margins and high volume was the strategy that catapulted the company
to success.
Experience at Walmart:
With regards to the experience, the comments indicate that the area where the store is located
matters quite significantly. If the store is located in a bad area, then the people working may not
be that servicial, and the clientele may also be more gross, but if it is in a better area, then the
clients may be more proper and the associates more helpful. “Customers/people make the
experience different[…] the area definitely has an impact”. Generally speaking, the stores are
organised in an intuitive manner, “you can find whatever you need easily without asking for
help”. Nonetheless, one problem that was repetitively mentioned was that, “it's very time
consuming, there are always lots of people”.
33
Time and money spent in Walmart:
The answers to this aspect are highly varied. Out of the interviewees, there are those that do their
routine purchases from Walmart, so visit a store every other week and spend between $80 to
$140, and there are also those that might visit once a year for a particular item they may need,
one that is cheap and gets the job done.
In this case, motivations for the patterns of behaviour indicated that the amount of choice makes
a big difference. Living in a smaller town means you do not have that many stores to choose
from, whereas living in a big city, means you can be more selective.
What is definitely true, was asserted in the interview, is that “Walmart has become a part of the
culture, this is not common with ​Amazon or any other business”. “People don’t think of
Walmart as a business, they just go, do their thing and come back”. With “online pick, and
grocery delivery it is easier to do your shopping spending less time”. This highlights the
increasing value they are gaining in the eCommerce market.
Has the spending increased? Why?
The general opinion is that the spending has in fact decreased because of individual stores. While
the product and service range has increased, now including tax booths, medical check-ups, hair
salons, food courts, and vision areas for glasses, it is all usually for poorer people.
Businesses such as, ​Aldi, Wholefoods, Trader Joe’s and Hy-vee are becoming more attractive
particularly in the world of groceries.
What kind of products do you typically buy from Walmart? Are you satisfied with
your purchases?
The interviewees have indicated that they make all sorts of purchases, depending on the
situation. They can buy things ranging from cheap costumes for occasional parties, such as
34
Halloween parties, to buying their groceries and cleaning supplies from there. One interviewee
described that they would go to Walmart because they could get everything done in one go, for
example, they would go to get their car service done, and in the while that that would be done,
they would get their groceries and other items as well. With regards to the quality, the common
and repeated phrase was “it’s good enough for the price you pay”.
Treatment from the employees and their morale
The interviewees expressed satisfaction from the employee’s treatment, “they help you when you
need them, otherwise you won’t even notice they are there”, that is the general feeling. But the
interviewees from Springfield did reemphasise the local impact at the stores, the impact of the
area where the store is located.
Regarding the morale of the employees, the common consensus from the opinions expressed was
that they make minimum wage, or a little above that, so they are neither satisfied nor dissatisfied.
It was explained that it is the kind of job a young adult would get at the beginning of the career
to pay the bills, or a lower-income family member would get to make some money to contribute
to the family’s expenses. It was pointed that in the rural areas, you would see a lot of older
people working at the stores.
Walmart against the competition
“Walmart is much bigger, and in many cases the competition offers different things, you do not
go for the same thing”. Other companies, like ​Whole Foods, ​Trader Joe’s ​and ​Aldi ​offer
groceries at a slightly more expensive price, but it is perceived as better quality, and ​Target​, you
don’t go for the groceries, you go for the clothes and other products. This is suggestive of the
idea that Walmart is huge, it is very hard to defeat such a company, nevertheless, companies find
their niche and space in the industry, steadily increasing sales, market share and business
presence.
35
Challenges for Walmart
The interviewees suggest that the company is probably in their mature stage, “they have a
physical presence everywhere”. This means that innovation and adaptation to new methods is
key for them. They indicate that the business has been growing their online presence, which is
particularly important, especially during the COVID-19 crisis, where the online sales are thriving
and retail sales are nonexistent. It has been indicated that Walmart should definitely focus on
maintaining revenues, because it is a company with a lot of overhead on all their stores, and
major revenue decreases can really hurt them.
Opinion on the future of Walmart
“Walmart is a company that is not going to go away, [but regarding the growth], it is hard to
say”. The company definitely has to adapt to the technological shift, and increase its online
presence. “It is a company, [whose growth] will move in sync with the people who have less
purchasing power and education, if the economy goes in the tank from the pandemic shutdown,
their sales are going to go through the roof, because they offer the lowest prices on goods”.
Key Findings
After talking to some people about Walmart, a new perspective has been acquired on how the
company is positioned according to the customer. Walmart is viewed as a brand that offers all
the variety of products that one may need at very cheap prices in comparison to the other
competitive brands. While this is advantageous such that the customer does not think twice with
regards to the pricing, it is disadvantageous because it raises concerns on the quality. Other
brands such as, ​Aldi, Hy-Vee, Whole Foods, Trader Joe’s, Target and Amazon have all been
positioned as slightly more expensive, but of better quality in comparison. However, this should
not be interpreted to understand that what Walmart offers is of poor quality, the best way to view
this is that customers believe that the variety offered by Walmart is the right quality for price,
while knowing that they can go for a better quality but at a higher price. Other than this, Walmart
is seen as a strong business “it is not going to go anywhere”, but as it has been said, the business
36
must adapt to eCommerce, otherwise its sales can drop, which can be troublesome due to the
high overheads.
4.2 Semi-structured interviews to the employees
It was attempted to collect suggestive information from the employees working at one of the
stores nearby, but this was not fruitful because of a no response situation. The employees were
approached, and were described the case, but they declined to answer the previously listed
questions in the methodology section. This would have been reattempted at a different store, but
the lockdown situation due to the COVID crisis, made it impossible. This information would
have been extremely valuable to contrast with the findings from the yearly fiscal reports, but it
became unfeasible.
4.3 Observation
This research method consisted in gathering information about Walmart by experiencing a store,
by spending some time in one. The method was a key to personally judge the patterns of
behaviour of the customers and the employees, how the stores are designed, and how the key
details, such as the organisation, are set to maximise sales. This was done quite successfully via a
video call, where Mr. Grant Gamm, went to a nearby store for his usual purchases.
It was a Saturday morning in Springfield, Missouri when this took place. The video call started
after Mr. Grant Gamm had made it to the parking area of one of the stores. The size of the store
from the outside was first shown, and it was huge, nothing like that, in terms of size, is available
in Spain. The walking distance from the car’s parking spot to the entry of the store was not that
much, and upon entry, it was grand, truly a place that seemed to have everything. A glance was
first shown, where the structure and organisation was judged, and it appeared fairly clear, one
could easily see what could be found in which area. After the glance, walking around the store to
see how the store was designed was reasonable. Every departement appeared to have its own
designated space. There was an area for produce, another for fresh produce clearly indicated,
37
another for cleaning supplies, a food area and entertainment area, among others. The store
seemed clearly organised, and with indications everywhere, it seemed easy to find whatever one
would be looking for.
During the walk, an attempt to measure the number of people working was also made, and
considering the size of the store, this seemed fairly low, however it cannot be considered as a
major disadvantage as an obvious attempt to indicate with maximum clarity could be perceived.
Mr. Grant Gamm, then proceeded to continue with the purchases he had planned to do, keeping
the video call on, all the while. The Observation lasted for 3 hours, the amount of time Mr. Grant
Gamm took for the completion of the purchases. It should be stated that this amount of time
cannot be taken as an indicator of the duration, as this was prolonged because of the video call.
During the process of gathering all the products, little information could be gathered, which was
a major limitation of this form of research. Observing physically versus through a video call has
a significant variance. Yet, it is better than any other format as it is the only way that provides
first hand information. While Mr. Grant Gamm carried with the purchasing, details were
gathered regarding the processes in the store. Employees restocking and helping other clients,
machines cleaning the floors and announcements with offers were all seen and heard.
After collecting all the products to be purchased, Mr. Grant Gamm proceeded to the cashiers for
payment, where he placed all the products, these were scanned, and a bill was delivered to be
paid. Upon completion of this process, Mr. Grant Gamm showed around again, and at this point
new spaces were noticed, including the customer’s care area, a pick-up area, and an “after-sales”
area. It is interesting that these were noticed towards the end of the Observation, which suggests
that these are located strategically for the usual customer to get help, when needed. The video
call then finalised with Mr. Grant Gamm exiting the store and advancing towards the car to put
the purchases in said vehicle.
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Key Findings
The observation assisted in comprehending that Walmart is a solid business. After exploring
meticulously one of the stores, the strategies that have been elaborated in the Literature Review
section could really be seen implemented; cheap prices being seen and reminded continuously,
new technologies and methods to serve the customer, and associates working without hindering
the customer experience at all. The idea that can be extracted from the Observation is that
Walmart is a business that has made it to success by devoting itself to the customer, to such an
extent that those who are loyal, they will not think of going anywhere else, when they can get
everything done in one place. It is a place where you do not have to worry about the quality,
variety or pricing, you will find everything you may need intuitively and at a cheap price. It was
seen that Walmart understands the patterns of behaviour, the psychology and the attitudes of its
customers, those that just want to pick their products and leave, they can do it, and those that
want to take their time and go through the shopping experience, they can too.
4.4 Survey
The purpose of the survey was to quantify the patterns of behaviour and thoughts and opinions of
the different stakeholders. A total of 130 answers were collected from the survey that was
distributed.
Demographics
Chart 1 illustrates the country of origin of the respondents. The majority of the answers are from
the USA, and then there are answers from Spain, France, Andorra, India, Australia, The
Netherlands and Russia, giving a more global point of view of what people think of Walmart.
Chart 2 shows the different age groups that the people answering belonged to. There are
responses from all the different age groups, but the grand majority are from the ages 20 to 30,
which can be considered a limitation, and to improve the quality and depth, a balanced amount of
answers can be obtained to draw conclusions from the comparison of the opinions. ​Chart 3
shows the point of view from which the respondents answered the survey, the grand majority
39
answered from a customer’s or potential customer’s point of view, but there are some responses
from traders and investors, as well as other people who have an interest in the company.
However, there are no responses from the internal management, despite the multiple attempts to
obtain them.
Customer and Potential Customer’s Point Of View
The first question asked to this stakeholder how they assess the business. The pursuit of this
question is to get a numerical rating in a scale from 1 to 10, 1 being poor and 10 being great.
Chart 4 shows that 8 is the most common response, followed by 7, and then 9. This suggests that
Walmart is rated very well among the customers as a business. Following this, the question
whether they have purchased from Walmart or its subsidiaries was asked, and ​Chart 5 shows that
a 57% of the respondents have had a purchasing experience from Walmart. Those that did have a
purchasing experience from Walmart were redirected to express details on this experience and
those that did not, were redirected to express the products for which they would have considered
Walmart.
With regards to the customer’s experience, the first question was to understand the reason why
they chose Walmart. The question was designed such that the respondents could choose multiple
reasons, and ​Chart 6 illustrates the results. The answers from this question hint the reasons why
Walmart still attracts customers and remains to be a successful business. The most common
reason was pricing, followed by the variety that the business offers, and then proximity. Since
pricing is still a strong reason why customers visit Walmart, it is a good thing that they continue
maintaining the “EveryDay Low Prices” strategy. After this, an attempt to gauge the spending
was made. ​Chart 7 shows that for most of the respondents the spending has increased, which
gives an understanding why the business has been beating market expectations quarter after
quarter. ​Chart 8 pictures the satisfaction of the customers from the products/services, 1 being low
satisfaction and 10 being high satisfaction. With 7 being the most voted number, it can be said
that there is a considerable amount of satisfaction. In other words, to better understand the
customer’s pattern of behaviour, these are attracted by the business because of the pricing, the
40
proximity and/or the variety, they are retained because of the quality satisfaction and this results
in an increase in spending. Altogether, it can be said that this is a good part of the reason why
and how Walmart has been growing for the past years, this is proven by responses collected in
the following question, shown in ​Chart 9​.
After this, as it has been mentioned before, the question was regarding the product choices. The
purpose was to understand the variety of choices for which the customers considered when going
to Walmart, but as it can be seen from ​Image 26​, a screenshot of the type of responses obtained,
the most common answers were groceries and electronics, lacking depth for further scrutiny.
Financial Assessment
In continuation, the respondents were presented with a series of questions with a financial nature,
and the first question asked about the judgement of Walmart as a business. In this case as well,
the answers matched with the previous similar question, obtaining 8 as the most common
response, as it can be seen in ​Chart 10​.
Considering the competition, ​Image 27 is an extract from the responses obtained, and it shows
how the investors, traders, customers and potential customers find ​Amazon to be the prime
competitor for Walmart. There are other companies such as the ones previously mentioned
including ​Target, Costco, and Tesco ​among others as well as ​Carrefour ​that should not be
neglected. The threat of this competition is considered between moderate and high, based on the
responses obtained from the different stakeholders. However, when asked about including the
company’s stock in the long term portfolio, the great majority of the answers were between ‘yes’
and ‘maybe’, as it can be seen in ​Chart 11​. The questions about the debt to equity ratio and the
price to earnings were asked for the pursuit of validity of the question regarding the inclusion of
the company in the long term portfolio. The fact that the responses from the 3 questions matched,
made the results of the 3rd question valuable, as seen by comparing ​Image 28 and ​Chart 11​, if
these had not matched, the opinions would not be valid.
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Future
At the end of the survey, all of the stakeholders were asked about the future of Walmart and a
strong opinion was expressed indicating that the company will certainly keep growing in the
future. However, judging on which company will be the bigger business, it is firmly believed that
Amazon will beat Walmart in 5 years, as it can be seen in ​Image 29​.
4.5 Compare and contrast of the information
Walmart is a massive business, and it has arrived at this position apparently seamlessly,
according to the customers, as they have expressed that in many cases they do not even consider
it as a business, and just go and do their thing. However, based on the information gained and
after an in-depth analysis of the business, multiple actions/strategies/reasons have been depicted
that have taken the company to where it is today. Both the customers and the company view the
pricing as a very important variable, when it comes to attracting customers and growing a
business. Additionally, the service and the quality offered is also of great importance for the
retention of the customers. If the customers would not find shopping at Walmart a satisfactory
experience, the business would have never reached the stage at which it is, this is why revamping
the business and maintaining a system within the team is critical.
While on the one hand through the insights gained from the semi-structured interviews the
spending by the individuals had decreased over the years, after selecting a border sample, it has
been found that the spending has generally increased among the average customer, which is
more consistent with the earnings posted by the company, consistently growing between 1% and
3% for the past 4 years.
Despite this, both sources of primary information, as well as the findings from the Literature
Review point that the future of Walmart can be troublesome. The shift towards the online
business resulting in a decrease in footprint in the stores, not matched with an increase of sales
in the eCommerce platforms can prove fatal for the business. A successful implementation of
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Walmart’s strategy to offer an omni-channel service can be the key ingredient for the company
to continue prospering if it is matched with an increased requirement of effectiveness and
efficiency in the delivery of the orders. Walmart must continue reinventing its ways to approach
the customers, surprising them with pricing, variety and service in all of the markets to continue
being successful. Nonetheless, Amazon has certainly found its gap in the market, and based on
the results obtained both from the survey, as well as they key knowledge gained from the
financial report analysis, the business will continue growing in the future, and may possibly even
surpass Walmart by revenue.
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5. Conclusions
In this paper, it has been understood that the Retail Industry is shifting towards a new form of
selling, where the customers simply click and select from a board range of choice to make their
purchases, and then have their orders delivered within a short timeframe at their chosen location,
also known as eCommerce/online selling. This form of selling has proven fatal for many old and
huge multinational corporations including ‘Toys R Us’, but Walmart has proven to consistently
beat the market’s expectations.
The focus and goal of this paper has been to understand how has Walmart made it to success,
and after scrutinising multiple forms of secondary sources, including articles, videos, news posts,
financial earnings posts, and gaining insights from customers and investors/traders through
semi-structured interviews and the distribution of a survey, and obtaining a perspective from the
Observation, it can be concluded that there are a combination of principles that this business has
adopted since the early stages, which have catapulted the company to the leadership status.
The first principle is pricing, and from customers, to investors, financial reports as well as news
publishings, all agree that Walmart is perceived, and actually is the business where the cheapest
prices are offered for the products demanded. With this brand value and strategy, the company
manages to successfully keep attracting new customers and even strive during times of crisis, as
it has been suggested by the responses obtained from the interviews.
The second principle is to maintain a system within the associates and continuously adapt to cut
down costs further. Walmart was an early adopter of technology to synthesise the processes in
the company. Because of this, the company managed to create what can almost be regarded as a
corporate culture, respected in all of its operations, where the customer’s service and the
customer’s satisfaction always comes first. It has managed to create a system, where the US
customers do not even find Walmart as a profits and growth generating machine, it has been
44
adopted in the US culture such that people behave taking Walmart for granted, believing that it is
always going to be there, offering good quality for good prices.
The third principle is to revamp the existing business and continue expanding into new
territories. While the company met with strong challenges and competition in the early stages of
internationalisation, it can be concluded, that the business has now successfully expanded into
multiple markets of the world, generating profits in many countries, including the UK and
Canada among others. However, a complete internationalisation has not been completed as the
company still only has operations in 27 countries. The company is now revamping the existing
business by developing a strong omni-channel service where the customers pay cheap prices
while enjoying good service across all boards, including eCommerce, at the supercenters,
neighbourhood markets, international markets and at Sam’s Club warehouses.
With regards to the future, this can conclusively be described as more challenging where a
speedy adaptation is required because of the competitive threat. It is this stage at which Walmart
is currently devoted, as well as maintaining its key core principles evidenced by the decisions
shown by the most recent financial reports and multiple news articles posted by CNBC and
Bloomberg. Walmart is currently focused in maintaining “Everyday Low prices” and creating
the omni-channel service to better serve the customers, whether existing or new. However, time
is required to decide with certainty whether this will suffice so that the company continues to
maintain its leadership status.
Nevertheless, it is important to point that there are some limitations with this paper, particularly
the breadth of sources from which the conclusions have been drawn. Walmart is a business that
has millions of customers on a weekly basis, and while the multiple sources do provide key
insights, they should only be taken as suggestive. To further enhance the quality of this research,
the number of people from which the ideas have been derived can be expanded, which may
result in more definite conclusions.
45
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7. Appendix
7.1 Tables
7.1.1 ​Table 1​: Walmart’s growth over the years
Year Revenue
Number of
Stores
Number of
Employees
1962
$975,000
1
25
1970
$44,200,000
38
1500
1979
$1,000,000,000
276
21000
1989
$20,000,000,000
1364
225000
2018 $500,000,000,000
11700
2200000
7.2 Images
7.2.1 ​Image 1​: The beginning of Sam Walton’s entrepreneurial journey, 1945
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7.2.2 ​Image 2​: 1962, Opening of the first Walmart store.
7.2.3 ​Image 3​: Income statement from the financial report posted in 1972
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7.2.4 ​Image 4​: Financial highlights from the financial statement in 1972
54
7.2.5 ​Image 5​: Map indicating the Walmart stores from the financial statement in
1990
55
7.2.6 ​Image 6​: Map indicating the Walmart stores from the financial statement in
1990
56
7.2.7 ​Image 7​: Professor McNair’s ‘​Wheel of Retailing’
57
7.2.8 Image 8: Copy of the survey distributed
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7.2.9 Image 9: Copy of the survey distributed
7.2.10 Image 10: Copy of the survey distributed
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7.2.11 Image 11: Copy of the survey distributed
60
7.2.12 Image 12: Copy of the survey distributed
61
7.2.13 Image 13: Copy of the survey distributed
7.2.14 Image 14: Copy of the survey distributed
62
7.2.15 Image 15: Copy of the survey distributed
63
7.2.16 Image 16: Copy of the survey distributed
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7.2.17 Image 17: Copy of the survey distributed
7.2.18 Image 18: Copy of the survey distributed
65
7.2.19 Image 19: Copy of the survey distributed
66
7.2.20 Image 20: Copy of the survey distributed
67
7.2.21 Image 21: Copy of the survey distributed
7.2.22 Image 22: Copy of the survey distributed
68
7.2.23 Image 23: Copy of the survey distributed
7.2.24 Image 24: Copy of the survey distributed
7.2.25 ​Image 25​: Copy of the survey distributed
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7.2.26 ​Image 26​: Income statement from Amazon Inc. posted at year ended 2019
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7.2.27 Image 27: Screenshot representing a sample of the responses obtained from
the survey distributed
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7.2.28 ​Image 28​: Screenshot representing a sample of the responses obtained from
the survey distributed
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7.2.29 ​Image 29​: Graphic representation of the responses obtained from the survey
distributed
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7.2.30 Image 30: Graphic representation of the responses obtained from the survey
distributed
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7.3 Charts
7.3.1 Chart 1: Synthesised chart of the responses obtained from the survey
distributed
7.3.2 Chart 2: Synthesised chart of the responses obtained from the survey
distributed
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7.3.3 Chart 3: Synthesised chart of the responses obtained from the survey
distributed
7.3.4 ​Chart 4​: Synthesised graph of the responses obtained from the survey
distributed
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7.3.5 ​Chart 5​: Synthesised chart of the responses obtained from the survey
distributed
7.3.6 ​Chart 6​: Synthesised graph of the responses obtained from the survey
distributed
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7.3.7 ​Chart 7​: Synthesised chart of the responses obtained from the survey
distributed
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7.3.8 ​Chart 8​: Synthesised graph of the responses obtained from the survey
distributed
7.3.9 Chart 9: Synthesised chart of the responses obtained from the survey
distributed
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7.3.10 ​Chart 10​: Synthesised graph of the responses obtained from the survey
distributed
7.3.11 ​Chart 11​: Synthesised chart of the responses obtained from the survey
distributed
80
81