Walmart Course Project
Summer2020-Module1
1
Table of Contents
Background Information………………………………………..………………..3
Competitive Priorities.……………………………………………………….…...3
Walmart vs Target………………………………………………………..……...4
Walmart vs Amazon……………………………………………………………..5
House of Quality Diagram……………………………………………….……….6
Facility Location and Layout…………………………………..…………………7
Curbside Pickup………………………………………….……………………….9
ABC Inventory System………………………………………………..…………13
Threats and Opportunities…………………………………………….………..16
Conclusion………………………………………………………………………..17
References…………………………………………….………………………….18
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BACKGROUND INFORMATION
Walmart is one of the largest retail stores in the United States, founded by Sam Walton in 1962
(Robson et al.) It was first established in Rogers, Arkansas. Its founding philosophy was to offer
the lowest prices to all its customers. Walmart's focus is to make life differences for its
customers by ensuring they save money and live better lives. More than 24 stores opened in 1959
under the Walmart Store's Incorporation. In 1972, Walmart recorded $78 million sales from its
51 stores in the New York Stock Exchange free trade (Robson et al.). By the end of the 1970s,
Walmart was operating 276 stores in 11 States. Walmart introduced its warehouse club chain
Sam's Club in 1983 and its first Supercenter stores in 1988. Walmart was the top retailer market
by the early 1990s. The company further entered the United Kingdom marked by joining the
European Union in 1999. The company was already in the Mexican market, Canada, and China.
Walmart was committed to increase energy efficiency by implementing environmental measures
by offering 100% renewable energy. Secondly, they were committed to zero waste and selling
environmentally friendly products to its customers (Robson et al.). Today, Walmart is present in
India, Chile, and South-Africa with 11,484 stores worldwide.
COMPETITIVE PRIORITIES
Cost
Walmart is the low-cost leader retail store with an efficient supply chain. It provides customers
with low priced services and products. The products and services are of high quality and satisfy
customer needs. Therefore, the customers enjoy both quality and low prices at Walmart's
expense. Walmart achieves this low cost through its vast sales, customer base, and scope of
operation. The sales volume makes a substantial profit that caters for the slimmer margins of
individual products (Robson et al.). As such, it manages to always sell at lower prices compared
to its competitors Target and Amazon
Walmart has a strategic method of managing its stores, giving it an advantage of sales per square
foot against its competitors Amazon and Target (Robson et al.). Walmart's stores are located in
rural towns, which allows for significant discounts. The store location results in cheaper costs of
operations in terms of rent and payroll. Consequently, Walmart has a secure entry barrier for its
competitors to merge into the already saturated rural markets. Walmart has a dedicated
workforce with excellent customer service skills and significant labor productivity. The Human
Resource Management (HRM) offers a low turnover and focuses on high incentive bonuses, and
stock purchase plans with a discount. Employees are promoted upon merit within the company
and the policy is an open door not based on seniority.
Walmart manages its 3,000 plus stores in rural areas through its effective control and
management information systems (Gielens et al.). The store's data is electronically collected,
analyzed, and send via the system to Walmart's headquarters to see how it is operating. This
analysis filters out the low operating stores and stock-outs hence reducing slow-moving stocks
markdown needs, maximizing inventory turnover. The stores are also benchmarked to help the
low running stores catch up with the smooth operating ones. The company controls shoplifting
losses by implementing strict policies of fining fifty percent of the employee savings in the
affected store (Gielens et al.). In the case of pilferage, industry standards require to decrease the
number of employees who work in the given store.
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The company is America's favorite store since there is no other store that sells lower than
Walmart (Gielens et al.). The brand was among the top 25 retail stores globally in 2017 (Xie et
al.). The company has expanded to 28 countries with 59 banners. It has over 2.3 million
employees, and 1.5 million are US-based. The company has generated not only high sales but
also employment opportunities to many. Walmart has remained at the top because of its daily
low prices. It achieves the low-cost strategy by cutting on operational costs. Walmart's
significant competitive advantage over its rivals Amazon and Target is the low-cost strategy that
they use.
Time
Walmart responds on time, offers timely delivery, and free two-day shipping. The company
ensures that the products are developed on time and uses information technology and store
control to prevent stock runouts. Walmart offers the best customer convenience, which has
resulted in a vast empire (Robson et al.). It beats Amazon and Target in its response time and
convenient shipping and delivery of products.
Quality
Walmart has an excellent supply chain with consistently high-quality products and services. The
company cares for the customers by ensuring they receive high-quality services and products at
friendly prices. For instance, they ensure that the electronics are in good condition and allow a
grace period for customers to return faulty products. Walmart is known for its customer
experience focus and offering quality products. Walmart has framed a 90-day return policy for
its customers, increasing their convenience and trust (Robson et al.). The company strives to
improve its customer base by investing in digital marketing tools and Human Resources. This
digital and HR investment has led to significant sales, customer service improvement, and
satisfaction. The product quality supersedes that of its competitors, Amazon and Target.
Flexibility
Walmart offers a variety of general-purpose products. The company partners with high skilled
manufactures and laborers that have specialized in the production of high-quality products and
services that meet customer needs (Robson et al.). As such, numerous products are produced
simultaneously, offering great flexibility in the market. A product can easily be removed or
added from the supply chain, depending on customer requirements. Walmart beats its
competitors in terms of flexibility in the market, however it lags behind Amazon in the online
store flexibility.
Walmart vs Target
Walmart dominates the market with its sheer size, but its rival Target is closely carving out the
market share with hip partnership design and catchy advertising (Gielens et al.). The difference
between these two brands is that Walmart targets low costs while Target leans more towards the
youthful image and high-profit margin. Walmart is about twenty times bigger than Target. Target
utilizes a low pricing strategy as Walmart, though it focusses more on the use of e-commerce
platforms, having more than 30% sales growth using e-commerce platforms in 2018 (Gielens et
al.). Both are low-cost orient companies with Walmart controlling the 180,000 square feet
supercenters (Gielens et al.). Walmart is efficient in its operation, as is reflected by a higher asset
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turnover and inventory. Target uses a supply chain to generate revenues and high-profit margins.
The supply chain is designed to buy directly from the manufactures instead of the suppliers to
lower costs and provide a broad range of merchandise. Walmart partners with Proctor and
Gamble, where inventory replenishment is automatic. The supply chain actions help Walmart to
offer a wide range of products to its customers at a lower cost, which its overall competitive
advantage. Target is more profitable than Walmart as it beats it in both gross profit margin and
the net profit margins (Gielens et al.). This is the case even though both companies have belowaverage prices for their products, Walmart boosts of unimaginable low price guarantee policy.
The inventory turnover for both companies is lower compared to the other players in the sector.
Walmart beats both Target and the entire sector in the receivable turnover. It takes Target 62
days to turn its inventory compared to that of Walmart that requires only 43 days and an average
of 49 days that of the entire sector (Robson et al.). This difference shows how efficient Walmart
is compared to Target and the rest of the sector because of its high receivable turnover.
Walmart vs Amazon
Amazon and Walmart form the two biggest retail stores, and it is evident that they are in stiff
competition. Both use new inventories and offerings, and it makes it harder to determine which
company is on top. While Amazon dominates online, Walmart leads in the physical retail size
(Robson et al.). Both stores have improved in areas where they lack competitiveness and
continuously make efforts to increase customer satisfaction. Innovation in both brands compare,
and the competition will be tighter as they blur between online retail and in-store. The biggest
market for both the stores in the United States, Walmart stores are positioned near most of its
consumers nationwide, and they deal in the same products available on Amazon (Xie et al.).
Amazon has invested majorly in distribution centers that are not as efficient and prove to be
more costly than Walmart stores. Whereas Amazon stocks a wide variety of products in each
merchandise category than Walmart can appear in its stores.
Walmart has been in the market for 30 more years compared to Amazon. Currently, the two
brands are always fighting for the same customers (Xie et al.). Walmart is fiercely competitive
and has a unique growth and strategy. Amazon founder, Jeff Bezos, is ambitious and believes
that one-day, Amazon will outgrow Walmart. Amazon began as an online store while Walmart
as a big-box store. The two stores have expanded with Walmart creating a significant ecommerce presence, and Amazon occupying the brick-and-mortar space. Both companies have
improved their customer service techniques, added other services like Amazon web, music,
video, and Walmart pharmacy. The real competition started after Amazon-Whole Foods
acquisition and Jet.com purchase by Walmart.
One recommendation for Walmart is to invest more in e-commerce and the advertising industry
to match Amazon's. Amazon dominates online with a secure market place that is more
competitive and saturated. Walmart can catch up if it continues offering third-party sellers digital
marketing opportunities. Digital investment will increase Walmart's market scope, popularity,
and significant sales margins. As this is a strategy employed by Amazon when playing 'the
landlord and the anchor tenant' of the leading online market.
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WALMART HOUSE OF QUALITY WITH AMAZON AND TARGET AS COMPETITORS
Product Characteristics
What
customers
want
Quality
25%
Free
Shipping
and
Delivery
Options
Payment
Methods
Returns
and
Cancellatio
n policies
Youthful
Orientation
TOTAL
Competitiv
e
Evaluation
Our targets
20%
Physical and Digital
presence
Diversification
Promotions
Bulk sale
Low price
Relative importance
Strong positive
Positive
Negative
Strong negative
Competitive evaluation
1
2
25%
1
2
1
2
15%
1
2
W/A T
1
2
10%
5%
100
A
T
3
4
5
Figure 1
Figure 1: Walmart's House of Quality
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W/T A
3
4
WTA
3
4
WTA
3
4
WTA
3
4
3
4
5
5
5
5
5
(W) Walmart Products – (T) Target Products – (A) Amazon Products
There exists strong competition between Walmart, Amazon, and Target. The relationship
between Amazon and Walmart, as illustrated above, is that they rival Walmart due to their
virtual presence as compared to Walmart's physical presence. Walmart's main product attributes
are illustrated in the house of the quality diagram. The house of quality also includes low price,
bulk sale, promotions product diversification, and their online and physical presence.
Walmart's strong negative attribute is their lack of strong presence in the youth sector as
compared to Target, who has specialized in providing stylish youth products for their customers
though at a high price to increase their profit margins and rival Walmart.
It is also important to note that customers are interested in checking prices and any discounts
provided from these stores, quality, free shipping, payment methods, return on cancellation
policies, and youthful orientation. Walmart has tried to meet some of these attributes; they
provide free shipping when a customer makes an order above $35. Walmart has tried advertising
on television, social media, and on billboards, but this does not rival the level with which Target
does. Target style, advertisement, and its layout are simply the best and second to none.
WALMART'S FACILITY LOCATION AND LAYOUT
Walmart Floor Layout
Bakery/Deli
Pets
Crafts Books
Baby
Grocery
Restroom
Photo
Center
Paper &
Cleaning
Electronics
Do-itYourself
Home &
Office
Apparel
Auto Care
Sporting
Goods
Toys
Home
Cards
Shoes
Seasonal
Jewelry
Tire & Lube Express
Dairy
Check Out
Cosmetics Health &
Beauty
Restaurant
Enter/Exit
Courtesy Vision
Desk
Center
Restrooms
Enter/Exit
Tenant Tenant
Hair
Salon
Figure 2: Walmart’s Facility Layout
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Pharmacy
Lawn and Garden
Walmart's floor layout is enticing and persuades the customer to impulse buy. At the impulse
area, the cashier's desk is staffed with candy, sweets, and treats that attracts children and
customers to buy after doing the shopping. The dairy, bakery, grocery, and apparel layout are
stores within a store. They are uniquely arranged and decorated in a unique way that makes them
stand out. The electronics section has special lighting and wooden floor that makes the customer
pay more attention to the department. At the end of the extended shelves are endcaps that display
price offers that appear to be discounted. Customers always rush to buy discounted products, and
the retailer experiences high sales. The products are at eye-level; they are not too low placed
such that the customer must bend, nor too high, making them strain. They are placed at the waist
level that makes it easy for the customer to examine and interact with the product hence
encouraging them to buy.
The grocery, dairy, and bakery departments are strategically placed and exposed to the customer,
which increases the chances of purchases. The checkout section is centrally placed, such that all
the shoppers entering the store get to see most seasonal products and promotions. This power
aisle gives the customer the impression that good deals await them as they tour the store. The
bakery produces fresh, inviting smells that attract the customers. Also, colorful fresh vegetables
give the impression of a fresh, healthy environment.
The customer desk, restaurant, tenants, and vision center make the front of Walmart's store. The
layout gives the buyer the idea of a small downtown shopping center. The use of signpost brands
for popular products like Coca-Cola, Campbell's soup, or Heinz ketchup gives the customer
anticipation of what to find on the shelves. The buyer expects to find low-cost brands next to the
super brands. Walmart has a consistent overall environment for customers to locate goods and
prices quickly. The company stores a broad product range of about 142,00 items for customers to
choose from. Walmart's store is significant, and a buyer might find it hard to locate a product. As
such, they will be forced to look at other things as they walk around, leading to other sales.
Walmart demonstrates an excellent process layout, which increases its efficiency in product
grouping and movement according to its unique needs and functions (Robson et al.). This layout
maximizes movement and store operations efficiency. The adequately designed layout brings
order to the environment and uses less capital in facilities due to the production of a single
product. Great effort and thoughts have been implemented in Walmart's layout and locations to
give customers comfort and predictability (Robson et al.). The merchandise in retail stores is
grouped categorically. For instance, snacks are placed in one location, and so are shoes, clothes,
and stationery. The company layouts maximize the floor space usage as they have many narrow
aisles compared to fewer but more full aisles; this is to maximize the exposure of the
merchandise to the customers. Walmart also increases product visibility and store inventory to
the customer by stacking their products highly enough. The organized process layout gives
Walmart an advantage over its competitors.
The company's process layout offers flexibility in the market as a large number of different
general-purpose products are easily added or removed following the current demands and
customer intimacy (Robson et al.). The layout relies on high skilled employees who handle
different roles and functions. The processing of a single product takes longer, and there is a more
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significant workstation movement. The cost of material handling and movement between
processes is high. Process handling faces the challenge of resource scheduling.
If proper planning is not done, then some work centers remain idle, while others have long
waiting ques. Process layout can sometimes be problematic and quite complex. This is because
the case at hand is not a single product or two resources, but rather all resources/products being
handled simultaneously. Walmart's process layout requires ample space because of the high
needs for inventory storage and processing.
Walmart has an incentive to put its stores close to each other (economies of density) to
economize on the shipping costs (Robson et al.). This close location is also crucial in the growth
of 'Walmart's culture.' As such, it is easy to swap employees as well as managers within and
between the stores. The close location also ensures that employees keep learning from each other
in the subsequent stores. The location of these stores is close to the customers to ensure that it is
immediate and swift delivery of goods to customers in time.
Walmart has a free two-day shipping offer for online food and household products that are above
$35 dollars. It delivers grocery to thousands of stores in different cities in a single day.
Conversely, Amazon requires customers to pay first before getting the grocery delivery services.
Walmart's sales gained a 53% increase compared to Amazon's 8% (Robson et al.). Walmart's
two-day free shipping offer gives it a competitive advantage over Amazon and Target. Amazon
uses Prime Pantry, Prime Now, and Amazon Fresh to deliver groceries from Whole Foods.
However, Walmart beats Amazon in the grocery market. Furthermore, Walmart provides more
affordable, accessible, and convenient delivery options than Amazon. Amazon, in recent years,
in the effort of rivaling Walmart, has also begun setting up physical stores through which they
plan to upheaval Walmart.
Walmart's facility location and layout can be improved by venturing into more markets globally
to expand its market and sales. The stores can be standardized such that they are attractive and
stand out in the market. This branding will help customers recognize and familiarize themselves
with Walmart stores regardless of where they are. This strategy will give Amazon and Target a
headache as they strive to catch up. Walmart also needs to maximize the use of information
technology, customer security, stock control, and insurance policies to reduce the risks of losses,
damage, theft, and security breach in its stores.
In conclusion, Walmart remains the largest retail store occupying the United States and other
countries. Its low cost and focus on customer needs is the primary competitive advantage. The
management has put much effort into investing and strengthening its weak points to match out
with Walmart's competitors; Amazon and Target. Even though amazon dominates the online
market, Walmart has made significant steps in venturing into the e-commerce market and staying
competitive. Target has a low-price strategy that puts Walmart on toes, and the competition very
stiff.
Curbside Pickup
As online shopping from home starts to ramp up across the markets why should buyers have to
even step out of their house to get what they want when they can have it delivered right to their
doorstep with a few clicks? For years Walmart has been on top of the retail market with little to
not even coming close to their numbers. Unfortunately for them, Amazon has come in out of
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nowhere to challenge for the main title (Webster, 2018). For Walmart to stay ahead of the curb in
innovation they must revamp the market again just as Amazon has done. Many problems come
in with ordering online. These problems can be fixed with the implementation of curbside
pickup. It has the same steps as ordering online with a few clicks away but without the hassles of
paying shipment, waiting days/weeks, and having your items come in damaged. In the data, you
can see trends with customers that prefer curbside over online ordering and walking into the
store.
(Torretti,
2019)
In the bar graph shown above it is evident that people would rather shop in a curbside pickup
environment. People would rather shop at Walmart with a curbside pick-up at 76%. While their
preference in store is only at 14%. This is a weighted 62% difference (Torretti, 2019). More
investment needs to be made in perfecting the system of curbside. It is a rock filled with gold
ready to be mined. Walmart must stick to what it does best, and customers enjoy the ease of
ordering from home and being able to pick it up at their set time. Having the grocery brought
straight to their car. Grocery shopping, in general, can be very time-consuming. Thankfully with
the Curbside Walmart pickup app, this can all be done in a very fast manner. Preferences can
even be specified for the next time a customer shops so the process can be done easier. This
system can even help in Walmart’s inventory due to the fact that people will set a specific date
and time when they want to pick up their items. In Q3 of the year 2020, the curbside pickup
market for Walmart grew to 74% (Davis, 2020). With many of the customers using it for the first
time. These number are inflated due to the recent pandemic. As customer prefer to shop online
and at curbside than in store. However, this is a great testing ground to see if the consumer does
enjoy the experience and to continue this experience past the pandemic. This curbside pickup
experience has also boosted Walmart sales up to 8.6% to $134.6 billion (Davis, 2020).
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It is obvious, as seen by the graph that Walmart has stayed consistent with its share of the
marketplace, while Amazon has come out of nowhere. Amazon has increased its share of the
market by a whole percent each year. In the years of 2017 to 2018 Amazon was able to increase
its share by about 2%. We must remember that Amazon somewhat still scenes as a new company
and is already trailing right behind Walmart. With the trend continuing, we will see Amazon
taking most of the share with 10% by 2021 (Webster, 2019). Therefore, more investment needs
to be put into curbside to deteriorate customers from clicking checkout with the competitors.
Something else to look out for is maintaining great prices. Currently out of all the different item
categories offered at Walmart only food and beverages are priced lower compared to Amazon’s
prices. Out of all the retail spending done, only 8.3% is spent on food and beverages (Webster,
2018). All the other categories are priced higher from 5% to 33%. This contradicts the marketing
campaign slogan of everyday low prices. More investment needs to be put in on finding a way to
lower pricing. The price percentages can easily be cut in half by investing into Chinese
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manufacturing. Also, by cutting out the brokers and having direct sourcing will heavily cut down
on cost. Working directly with the manufacturers that make the products it sells. Sending out
Walmart trucks to pick up the supplies. This can easily be done by making deals or even straight
out buying out the suppliers (Permeack, 2019).
Buying out the suppliers can not only lower prices but increase the Walmart e-commerce market.
Fighting fire with fire is another route Walmart must go to lower Amazon’s market share.
Walmart now has a huge chunk of capital. With its most recent capital sitting at 21.966 billion
(finbox, 2020). Keeping on a steady investment in the e-commerce market in the future for the
company. Just in the e-commerce market alone, Walmart has been able to increase sales by 43%
nationwide (Jiang, 2018).
(Feldman, 2018)
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Integrating an ABC Inventory System to Walmart
More and more people have more actively been shopping online, there are many reasons for this
including convenience, speed of receiving, and lack of products and options at store. One of the
methods we can integrate into Walmart’s system is an ABC inventory system. Walmart has a
poor inventory system because people get told to pick up an item at one particular store and
arrive only to find out that the selected store does not have the item.
The ABC inventory system needs to analyze each item in its inventory to determine the proper
identification of each item. There are four steps to follow when completing this inventory system
which are:
Step 1: Calculate the annual dollar usage for each item
Step 2: List the items in descending order based on annual dollar usage
Step 3: Calculate the cumulative annual dollar volume
Step 4: Classify the items into groups
Once the classification is complete, Walmart would then know which items are critical and
which are not. Allowing for enhanced efficiency throughout all Walmart stores making it very
beneficial for them by allowing them to maximize the flow of items to consumers.
An ABC inventory system classifies each item as A, B, or C. A is items that are heavily bought.
B is bought at a moderate pace and C would be items that are not purchased at high intervals. By
classifying each product in this scale, it would allow Walmart the opportunity to track what items
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are running low and how fast they would need to be replenished. The faster Walmart finds the
shortage of supply, the faster it can be corrected allowing Walmart to always have the needed
items in demand.
By implementing an effective ABC inventory system, this would allow Walmart to gain a
competitive advantage over other companies like Target, Tom Thumb, Amazon, and HEB. The
ABC inventory system will distinguish the products that are important and will also allow
Walmart to find what products are becoming more increasingly important. This will prevent
shortages like when the current pandemic hit, and all Walmart stores were out of toilet paper,
water, and food. Some of these issues were not entirely Walmart’s fault, but a proper system
would have allowed them to analyze that these items were rapidly becoming scarce. This way it
would have forced them to restock in a timely manner before becoming stockout of inventory.
As a result, it would have pushed business even higher because other companies did not forecast
this problem either.
With the addition of an ABC inventory system, it would allow Walmart to save money from
ordering things that are not of high importance. If an item was labeled as C, then there would be
no reason for a rush shipment. This would save on shipping costs because this item is not of high
importance. On the other hand, if the item was classified as an A and the inventory is low, then
Walmart would know that it needs to get that item delivered fast. The system allows for Walmart
to order what needs to be ordered and how fast they need it. This system allows for Walmart to
save money by not having overages that become futile and need to be trashed, instead it would
order the proper amount at the right time ensuring an endless supply.
Walmart uses a vendor-managed system which allows the owner of the merchandise to see how
many products are on hand at the Walmart store and allow for restocking keeping cost lower for
Walmart. The problem with this system is that many times the vendor is not paying close enough
attention to the items in stock and this leaves many Walmart stores without the products that they
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need in stock. When switching to an ABC system, this would alleviate the error of the vendor
and have a real time tracking of what item is needed and where.
The ABC inventory has many benefits, but there are some more that would also allow for an
advantage. One is that forecast will become easier for Walmart because of this classification they
could track all items by importance which will ensure that all items that sell quickly will be in
stock. This leads to allowing Walmart to have strategic pricing with the items in the
classification. If an item is in category A, they would know that this item will sell quickly, need
to be resupplied quick, and would not sit on a shelf for a long period of time. The strategic
pricing would allow Walmart to raise the prices on items that sell quick because there is a huge
want or need for that item. Even raising the item in price just by a few cents would have a huge
impact on Walmart’s financial benefit. Another benefit of this system would be that Walmart
would be able to make better deals with its suppliers. If Walmart does not sell a lot of the item,
then they would be able to decrease the amount they pay for each piece. This is done because of
shelf time, Walmart would be able to negotiate better prices on many of its items allowing for the
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saving to decrease the price they pay which could lead to a raise in demand because Walmart has
it for a cheaper price.
Threats and Opportunities
Walmart is an organization that holds a dominant position in its industry that has been tested and
equipped with many strengths. Sam Walton laid a strong framework for his successful company,
he pushed his company through just about every possible supply chain initiative and every sector
of business ranging from pharmacy, health insurance, groceries, etc. It is easy to see why
Walmart has developed into the big box retailer that it has, but it is important to also look at
potential opportunities for expansion and growth as well as current market threats.
Opportunities
-
Customer acceptance of onetime shopping
Small towns / No Urban Locations
International markets
Sam’s Club
Concentration on healthy home cooked meals
The customers prefer one-time shopping and demand for such facilities are higher. This is an
opportunity for Walmart, and it can formulate strategies which will achieve customer satisfaction
and even more loyal customers. Walmart can diversify the products they have even more so than
they already do. This will allow Walmart to solidify the “one-stop-shop” concept and capture
customers focused on convenience.
When looking for a Walmart location, there are almost never located in a city center. They can
be found on the outskirts, in rural settings - closer to their primary customers. Walmart has a
significant opportunity to enter city centers by re-branding their big-box retailer image and cater
to a grab-and-go crowd. Walmart also has a great chance to expand globally, by tailoring to
worldwide consumers. This can also be achieved by increasing their retail capabilities for online
shopping and international shipping.
One of Walmart’s greatest competitive strengths is “always low prices” – which has increased
and kept their customer loyalty over the years. Even more so, Walmart has created a loyal
customer base through buying in bulk at Sam’s Club. Sam’s Club caters to families and
businesses who are interested in saving big but need the discount from buying bulk products.
Finally, Walmart has an opportunity to cater to consumers focused on a healthy lifestyle through
creating home cooked meals – similar to “At Home Fresh.” The company has been exploring
different options for this as well as expanding their delivery options for groceries and home
items.
Threats
-
The threat of new entrants
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-
The threat of substitute products
Competition - Dollar stores, online retailers, other big box retailers like Target
Community resistance to expansion from local authorities
Since the organization is operating in the supermarket industry, it is open to the threat of new
organizations coming up in the same field. If the producers open their own show rooms then it
can be a substitute for Walmart and the consumers would prefer the direct showrooms than the
intermediaries. The competition rivalry is very high when this stream is considered which a real
threat for the organization is. This impacts the organizational strategy to be more focused on
achieving competitive advantage.
In any market, there is always potential for a substitute, lower priced product. Walmart
constantly looks for cheaper, better quality, low cost products. They constantly communicate
with their suppliers to negotiate for cheaper prices for their consumers. It is easy for any big box
retailer to negotiate for these lower prices with their suppliers.
Everyone is after that top spot. They want to achieve the same customer base that Walmart has
achieved as well. Dollar tree, online retailers, and Target are all going after the same slice of pie.
One issue that Walmart has as they seek to move into smaller communities is resistance from the
local residents. They are rebelling against the big-box retailer, so their mom and pop business do
not go under in the process.
Conclusion
This analysis demonstrates that Walmart needs to prioritize using its strengths to take advantage
of possibilities in the worldwide retail industry. Secondary priorities should be the opportunities
and threats of the company. To enhance firm efficiency, Walmart can enhance its leadership
standards and product quality standards. Walmart must also continue to expand its business to
take advantage of financial possibilities in developing economies and international markets.
These untapped markets can bring new revenue streams and allow Walmart to have a global
presence. Based on its worldwide organizational size, worldwide supply chain, and high supply
chain effectiveness, Walmart's strengths can promote aggressive overseas market development.
By taking advantage of their strengths and working on their opportunities and modifying
potential threats, Walmart will continue to maintain its retail giant status.
References
17
Davis, D., Bloomberg News, & Bloomberg News. (2020, May 19). Walmart.com sales surge.
Retrieved from https://www.digitalcommerce360.com/2020/05/19/walmart-com-sales-surge-74in-q1-as-curbside-pickup-grows/
Feldman, S. (2018, November 16). Infographic: Walmart Is Serious About E-Commerce. Retrieved
from https://www.statista.com/chart/16117/walmart-ecommerce/finbox. (2020). Retrieved from
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