Strengths and Opportunities of Walmart
Strengths and Opportunities of Walmart
Wal-Mart Stores, Inc. , branded as Walmart, is an American multinational retail corporation that runs chains of large discount department stores and warehouse stores. The company is the world’s third largest public corporation, the biggest private employer in the world with 2. 2 million employees and is the largest retailer in the world. Walmart is also one of the world’s most valuable companies. First of all, Walmart has good reputation for convenience and their low price strategy and these become their advantage to attract customers. Walmart reclaimed the top spot in the Fortune 500 in 2012 after slipping to No. last year.
The retailer’s refocus on low prices continued to attract frugal shoppers into the discounter’s U. S. stores. Everyday Low Price (EDLP) is the cornerstone of the company strategy and their price focus has never been stronger. Today’s consumer seeks the convenience of one-stop shopping that they offer. From grocery and entertainment to sporting goods and crafts, Walmart provide the deep assortment that the customers appreciate. The company price investments across a broad assortment allow them to deliver a lower-priced market basket.
Through Walmart’s localised and national market basket media campaigns, they show customers market by market that they are the low price leader on baskets of merchandise. In fiscal 2013, Walmart U. S. delivered a strong 1. 8 percent comp increase or an additional $4. 7 billion in comp store sales from last year. Net sales rose to $274. 5 billion, a 3. 9 percent increase and operating income grew by 5. 4 percent to $21. 5 billion. They are driving growth and meeting the customers’ needs by offering lower prices on a broad assortment of relevant merchandise.
Each week, more than 245 million customers and members visit their 10,800 stores under 69 banners in 27 countries and e-commerce websites in 10 countries. By offering everyday low prices on a broad merchandise assortment, the company builds customer trust and resonates with consumers globally. Besides that, Walmart also has some successful cost leadership strategies. The strategies are efficiency in operations and distribution strategies, efficiency in supply chain management and the strong bargaining power.
For fficiency in operations and distribution strategies: the Organisation Development (OD) strategies have helped Walmart achieve low prices- Walmart opens the stores outside of large cities and within 200 miles of existing stores. By bunching stores together in small areas, distribution costs are below average. Moreover, Walmart seeks to meet different customers’ needs with four main distinct retail options; these include supercenters, discount stores, Sam’s Club, and neighborhood markets. For the efficiency in supply chain management: Walmart is incredibly successful in managing its supply chain.
The company applies the most reliable supply chain management system which is very efficient because almost all product data can be tracked to and from the manufacturer, warehouse, and the store shelf. Efficiency in supply chain system may save Walmart several million dollars as it can prevent losses from faulty product management. For the strong bargaining power: Walmart buys its products at rock-bottom prices, exchanges high purchase volumes for low cost while passing the savings onto its customers. The bargaining power of suppliers is weak.
Many suppliers even give in to Walmart’s pressure because they depend on the discount retailer for the majority of their sales. Obviously, suppliers would do what Walmart wanted them to do if they hoped to maintain their sales. The cost leadership strategy enables Walmart to offer products at low price points. The company offers its grocery products at prices about 12% lower than the market. This strategy ensures a steady, recurring stream of customers for its goods, making Walmart synonymous with inexpensive and this keeps constant pressure on competitors.
In addition, Walmart also has a focused strategy in place for human resource management and development. The employees are the key to Walmart’s business and they are willing to invest time and money in training and developing them. They believe that the success of the business model relies on entrepreneurial employees who desire to learn and grow within the industry. They invest in the training and development of each employee, offering equal opportunities for learning at all levels. Training and development of employees provides a competitive advantage, enabling continual improvement of performance across the whole organisation.
The employees must develop the knowledge, skills and abilities to serve, support and sell within the operating framework of their division. Therefore, the company’s goal is to expose employees to training that is specific to their area of responsibility and provide opportunities for further learning and development for ongoing growth within the organisation. Opportunities Retail market growth in Walmart’s emerging markets gives an opportunity to the company. Retail markets grew by at least 5% on average in emerging markets in the last year, opening huge opportunities for Walmart’s revenue growth.
The business currently operates in Brazil, Mexico, China and India markets. Since 2008 to 2012, the number of international locations has nearly doubled. Walmart International serves more than 105 million customers per week in 26 countries. The company’s portfolio provides a balance of growth with improved profitability and higher returns. In fiscal 2013, Walmart International contributed almost 30 percent of the company’s net sales, with an increase of 7. 4 percent from the prior year to $135. 2 billion.
Besides that, the company operating income also grew 8. percent to $6. 7 billion. Walmart ended the year with 497 more new stores, totalling approximately 19 million square feet. As the largest retailer in the world, the retail market growth in its emerging markets has given Walmart a new reason to be successful. Another opportunity for Walmart is the concentration on grocery and food trends continue to grow. The perception that home-prepared foods are much healthier and an unmet desire to enjoy affordable, restaurant-type food at home have given food marketers the opportunity to recapture mealtime.
The current trend of eating healthier food has resulted in higher demand for grocery products. Walmart’s largest part of the overall business – food and grocery had successfully continued to gain share from the market from this trend. As the largest retailer in the world, Walmart has an opportunity to expand its grocery stores to earn more income from this trend. Besides that, the significant growth in the online grocery shopping has given an advantage to Walmart as Walmart had started to offer the customers the option to shop online using mobile devices since the year 2000.
A 2012 Nielsen survey of consumers in 56 countries uncovered some fascinating insights on this trend. The number of people stating that they intend to buy food and beverages online grew 44% over the last two years and 26% of global respondents say they plan to purchase food and beverage products through an online connected device in the next three to six months. In addition, Online grocery sales are also expected to increase 9. 5 percent annually to become a $9. 4 billion industry in 2017, according to data from IBISWorld.
The service fulfilled the customer desire for quick, easy, cost-efficient grocery shopping. Walmart is trying to expand their e-commerce operations with several tactics. One success of the company is the new search engine for walmart. com which delivers more relevant results to online shoppers and led to increased sales conversions. They are also testing some great innovations, such as same-day delivery of purchases from the company’s U. S. website. The company just expanded mobile self-checkout through their Scan and Go™ app.
They have also launched a multi-year process to build the next generation global technology platform. Moreover, Walmart had also carried out many projects which will boost the company’s public image. In the year 2012, Walmart and the Walmart Foundation’s charitable contributions surpassed $1 billion in cash and in-kind donations to positively impact local communities around the globe. This includes $1 billion in cash and in-kind gifts in the United States and $82. 2 million in cash and in-kind gifts in international markets.
In addition, Walmart, Sam’s Club and Logistics employees volunteered more than 2. million hours, generating $18 million to U. S. nonprofits. At 20 June 2013, the Walmart Foundation announced $14 million in grants to provide more than 1. 7 million children and families with free meals and nutrition education programs. The grants will expand access to meals for children outside of school this summer and throughout the year, while also teaching families how to develop healthy, low-cost eating habits. Ethical sourcing is also practiced by the company. The foundation of Walmart’s business has always centered on helping people live better.
This mission applies not only to their customers but also to the workers who make the products. The company collaborate with other retailers, brands, NGOs and government leaders to verify the products they sell are produced in a way that provides dignity and respect for workers in their supply chain. As the world’s largest retailer, they strive to positively influence global supply chain practices by raising their own standards and improving working conditions in the countries from which they source. These projects had successfully increased the company’s public image and community relations.
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 29 November 2016
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