Famous for its massive storefronts, “everyday low prices,” and a reputation for massive retail presence, Walmart is truly a force to be reckoned with. Simply put, it is the world’s largest retailer, growing from a humble beginning in rural Arkansas to an international powerhouse.
It may seem that a corporation such as this could do no wrong, but every company has its ups and downs. Let’s look at the strengths, weaknesses, opportunities, and threats facing Walmart as a company.
1. It is a massive, worldwide organization.
Walmart boasts some of the highest revenues of any company anywhere in the world. It competes with companies like Amazon, Alibaba, eBay, and more for its total sales figures, and it is frequently featured in the list of companies with the greatest quantity of storefronts across the globe. In fact, in a way, Walmart has made its very name on size: its retail locations are known for their massive layouts and a staggering amount of products to choose from.
Walmart is the world’s largest retailer. (Fortune)
2. It is a household name.
Everyone knows the name “Walmart.” It is one of the most powerful brands in the world due to its ever-increasing presence and marketing strategies. It has become a hallmark for affordability, convenience, and a number of other consumer favorites, even if it cannot be identified as a “premium” retailer. However, it seems that Walmart is after quantity over quality as it seeks to increase its storefront locations and customer base every year.
Walmart is among the top 25 most powerful brands in the world. (Statista)
3. It is present in most places around the globe.
In North America, Walmart seems to be in every major city and town, often with multiple locations mere blocks from one another. The chain features three different store types – the basic “discount store,” which is a standard size location; the “supercenter,” which is much larger and offers a wider product selection; and the “Neighborhood Market,” which focuses solely on grocery items.
What’s more, this ubiquitous presence in the United States is only a fraction of its worldwide footprint, with the majority of its retail locations found in other countries.
Walmart operated 11,501 stores around the world in 2020. (Statista)
4. It has mastered supply chain operations.
A massive enterprise like Walmart needs to be able to move products swiftly and efficiently, and Walmart has mastered this art. It maintains tight control over its supply chain logistics, allowing it to (seemingly) effortlessly transport truckloads of materials and products across the country wherever it is needed.
Walmart earned $524 billion in revenue in 2020. (Statista)
5. It exerts immense power over its suppliers.
Part of the reason Walmart is able to keep its supply chain running like clockwork is its powerful control over its suppliers. Companies that sell their goods through Walmart retail locations are forced to adhere to business deals that heavily favor Walmart, often yielding minuscule profit margins or humongous order demands. Manufacturers that want to do
Walmart-sized amounts of businesses must swallow a number of pills, and not all of them work in their favor. Furthermore, this immense power in the market forces competitors to meet consumer demand at this level, which makes Walmart a powerful driver in the overall retail market.
Walmart makes a profit of $1.8 million every hour. (Business Strategy Hub)
6. It offers a massive selection of products.
Shoppers at Walmart can find nearly anything within a few aisles of each other: groceries, prescription drugs, health & beauty products, kitchen goods, power tools, auto care, electronics, books, crafts, pet food, and dozens of other product categories. Walmart is well-known as a one-stop-shop for nearly every kind of customer, which makes it a convenient choice for those seeking to complete their shopping trips as quickly and with as few stops as possible.
Walmart offers a selection of over 60 million different products. (Business Strategy Hub)
7. It also utilizes economies of scale in manufacturing.
Walmart does not offer a mere handful of each type of product on its shelves. Nearly every product can be purchased by dozens of customers at a time, and shelves are constantly being restocked. Companies that sell their wares through Walmart often deal with enormous economies of scale due to the sheer volume of storefronts Walmart must fill for consumers. The “big box store” mentality is alive and well largely due to Walmart’s influence.
More than 56% of Walmart’s retail sales come from grocery products. (Statista)
8. It has a strong focus on affordable products.
In addition to the wide variety of products available at Walmart, prices for its products are typically much lower than those found at competitors. This remains one of Walmart’s distinct competitive advantages; it has long relied on its “everyday low prices” sale campaign to offer key products at particularly affordable prices. Even its normal prices are much lower than those found at other stores, which makes Walmart a popular choice for budget-conscious consumers.
The company was founded in 1962, but started going by the name Walmart in 1969. (Someka)
9. It employs large numbers of people.
Running an international corporation takes a massive amount of manpower, and Walmart certainly fits the bill. It is the world’s largest private employer and one of the top three largest corporate entities of any kind in the world (second only to the U.S. Department of Defense and the Chinese Army).
Whether they work for the retail storefronts, corporate offices, or manufacturing and distribution centers, many people in the U.S. and around the world rely on Walmart for their paycheck.
One percent of all employees in the United States work for Walmart. (Business Insider)
10. Its ability to offer online retail is expanding.
As many companies have learned throughout the 21st century, online sales are the way of the future if a company wants to continue to be successful. Walmart has made great strides in the online sales portion of its business, improving user interfaces and providing online-only specials for certain segments of consumers.
It has also jumped on the current trending bandwagon of online order pickup, allowing consumers to place their orders through the website or app, then picking up those purchases at the store, saving time from actually walking the aisles.
Walmart commands 5.3% of all online sales. (Statista)
1. The company runs relatively low-profit margins.
For a company that boasts such powerful sales figures and revenues, the profit margin for Walmart is actually relatively low. Offering such competitive prices to consumers, even with lower production prices at the outset, means that the relative profit for each item sold is much lower than at other retailers. Walmart relies on the vast economies of scale involved in its selling machine to achieve the high sales and profit figures it enjoys, which may be reliable but are not the most profitable terms to operate under.
Walmart employs 2.3 million people worldwide. (Walmart)
2. Its business model can be easily duplicated.
Despite its continued success, Walmart is not doing anything particularly special in its business model. It sells a variety of products at an affordable price to a wide segment of consumers. Its diversity can easily be imitated by other supermarket-style retailers, and any number of companies can – and do – specialize in one of the hundreds of product segments Walmart offers, often delivering better products for the money. It may have perfected the “big box store” model, but other retailers are slowly but surely catching up.
Walmart’s brand value is $93.2 billion. (Statista)
3. It is significantly disadvantaged against premium retailers.
Premium retailers that focus on a single type of product can devote all of their resources to doing one thing exceptionally well, whereas Walmart wants to do everything at merely acceptable levels. Even though other retailers sell their products at a higher cost to the consumer or may have higher costs to manufacture and distribute products in the first place, their profit margins can also be higher, and consumer trust in those products is also much higher. Walmart may be the economical choice, but it is not always the best choice when quality is most important.
Walmart had 265 million visitors per week in its stores in 2020. (Statista)
4. It has come under fire for its hiring and HR practices.
Walmart is typically seen as a low-wage and low-skill company for the employees it seeks out. It suffers from the “minimum-wage” perception of many of its retail positions, and the company has also come under fire for allegations of unfair hiring practices and wage deals.
Forty percent of Walmart’s workforce is part-time. (Capital Counselor)
5. It does not always staff its stores well.
One common customer complaint about Walmart’s retail locations is that they are not staffed well. It can be difficult to find an associate to answer questions or locate a specific product, and there always seem to be too many customers checking out with their purchases and not enough registers to do so.
Walmart is sidestepping these problems by installing self-checkout kiosks at many of its stores, but low staffing may continue to be a problem.
Walmart’s average hourly wage is $14.26. (Capital Counselor)
6. It is known for offering poor healthcare to its employees.
Healthcare is a popular topic for today’s political and social climate, and unfortunately, Walmart is not known for offering a quality healthcare plan. The costs are high to employees, and the benefits are poor compared to other popular options.
Walmart has 34.27 million followers on Facebook. (Statista)
7. Its point-of-sale system needs updating across the enterprise.
Another key disadvantage is the technology infrastructure running Walmart’s point-of-sale system (the program that runs the checkout counters). Many aspects of the system have not been updated in decades and do not provide frontline employees with the autonomy they need to engage in relatively simple and commonplace transaction types. Updating a worldwide enterprise does take time, effort, and expenditure, but this is a distinct disadvantage considering the improvements that have taken place in this arena in recent years.
The company’s founder, Sam Walton, was named one of the 100 most influential people of the 20th century. (Time)
1. It could expand into developing countries.
Walmart has expanded into a number of foreign markets, but it can continue this streak to remain successful and find itself in more corners of the globe. Capitalizing on its budget-friendly reputation can help the company as it enters markets that may not be as affluent.
Nearly 59% of Walmart’s stores are found outside the United States. (Statista)
2. It could improve its labor practices.
Hiring and firing practices are often the target of headlines for any company, and other aspects of human resource management can cause massive PR nightmares. Walmart has been forced to defend its labor practices – often unsuccessfully – over the years, but recent positive changes have helped the company’s image. It can continue this positive trend in order to remain a desirable employment option.
Fifty-five percent of Walmart’s workforce is female. (Capital Counselor)
3. It could increase quality standards for its products.
Budget-friendly does not always translate to high quality. Despite its already-low profit margins, Walmart can continue to invest in the quality of its products to ensure continued consumer trust.
Walmart operated 4,756 stores in the United States in 2020. (Statista)
4. It could create strategic alliances with other companies.
Partnerships with third-party vendors and other corporations can be immensely helpful in achieving new levels of success. Walmart could partner with many different kinds of vendors to create new avenues for profitability and sales that would benefit both parties.
Walmart’s online sales in the United States reached $19.6 million. (Statista)
1. The jobs it offers may continue to be perceived as low-wage and low-skill.
The “Walmart greeter” stereotype has some amount of truth to it: many of Walmart’s retail positions are typical minimum-wage jobs that do not require a great deal of education or skill. Recent changes in employee benefits will not change the fact that working at a big-box retailer does not provide many opportunities for career advancement based on the level of work performed.
The number of Walmart stores in the United States grew by 44.6% from 2006 to 2020. (Statista)
2. Popular trends toward a healthy and sustainable lifestyle do not align with its current brand.
Many of Walmart’s grocery options are not the healthiest, and consumer trends toward sustainable growing practices and fad diets may turn shoppers away. Walmart could focus on meeting more of these consumer demands in order to reach new segments of shoppers, but failure to reach all types of buyers could prove detrimental in the long run.
Walmart’s Neighborhood Market stores, which focus solely on groceries, grew from 210 in 2012 to 809 in 2020 – a 385% increase. (Statista)
3. It faces aggressive competition in several sectors.
Other companies can still provide strong competition in the market, even against a corporate giant like Walmart. Online powerhouse Amazon still commands a strong segment of online sales, dwarfing Walmart’s ability to compete despite recent strides in online selling capabilities. Other super-retailers like Target have positioned themselves as a premium alternative to Walmart while still providing low-cost options, carving out a critical consumer segment and pulling them away from Walmart.
Walmart’s global online sales reached $39.7 million. (Statista)
4. Other retailers perform better in the online space.
Amazon is just one example of a company that performs better online, with dozens of others rising to the challenge in the virtual space. One major reason for this is that Amazon and other similar companies were purpose-built to be online companies, and even with Walmart’s massive reach, there are still some products that are easier to find on Amazon. Walmart’s success has been, and will likely continue to be, built on in-person shopping, which can chip away at its potential profits if it cannot keep up with consumer demand in this way.
Walmart had $520 billion in net sales. (Statista)
5. It has fallen victim to multiple product controversies.
Low-quality products are only the tip of the iceberg when it comes to consumer controversy. Some products offered at Walmart have caused PR problems for social justice concerns, created political firestorms, or have maligned certain segments of society. Walmart should take great care to ensure that none of its products cause intentional offense, or worse, put consumers in harm’s way.
The Walmart Grocery app has become the most popular shopping app in the United States. (Capital Counselor)
6. Its website frequently has issues.
Walmart is continually improving the online shopping experience for its customers, but its website frequently crashes due to consumer demand or has errors and bugs based on poor design or construction. A retailer the size of Walmart simply cannot afford to continue having problems on this scale. Frustrated shoppers will simply take their business elsewhere.
Walmart is the largest publicly-traded company. (Fortune)
Walmart is a retail giant that, in many ways, cannot be avoided. It offers a staggering variety of products at almost obscenely low prices, which may undercut its profit potential if not for the massive sales figures it commands each year. As one of the world’s largest companies by revenues and employment, however, it still struggles to treat its employees fairly when compared with other companies; and it continues to face stiff competition from other retailers. By making some key changes to its product offerings and labor practices, Walmart can grow even more looking ahead to the future.
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