|Company Name||Walmart Inc.|
|Year Established||June 24, 1902|
|Headquarters||Bentonville, Arkansas, U.S.|
|Net Revenue||$ 514.405 billion (2018)|
|Net Income||$ 6.67 billion (2018)|
|Employees||2.2 million (4.35% decline from 2018)|
|Products|| Electronics, Movies and music, Home and furniture, Home improvement, Clothing, Footwear, Jewelry|
Toys, Health and beauty, Pet supplies, Sporting goods and fitness, Auto, Photofinishing, Craft supplies, Party supplies, Grocery
3. Home Depot
6. Best Buy
In this marketing tutorial, we will discuss Walmart Swot Analysis strengths, weaknesses, opportunities and threats and how these strategic key factors affect its profitability and performance in the global retail industry. Walmart Inc. is an American based Multinational Corporation which is also the largest retailer and employer of the world. The Walmart Company operates hypermarkets, discount departmental and grocery stores.
Walmart Strengths in Swot Analysis
Largest Retailer in the World. Walmart started its operations as a small discount retailer in Rogers, Ark. Now Walmart has 11,348 retail units in 28 countries. In the United States, it has 4756 location and Walmart international consist of 5,993 locations. Walmart also operating 10 ecommerce websites in 10 countries. Walmart employed 2.3 million employees around the globe whereas 1.5 million are employed in the U.S only. Walmart is not only creating opportunities but also bringing value to both customers and communities around the globe.
Low Pricing Strategy. Supermarkets has two pricing strategies i.e. everyday low pricing which means discounts across the board and promotional pricing strategy which offer temporary discounts on selected items. One of the key strengths of Walmart is the ability to maintain everyday low pricing (EDLP). In this competitive environment it is possible due to economies of scale and effective and efficient resource utilization.
Global Presence. In the past Walmart has tremendously grown to a world largest retailer with millions of satisfied customer. In 1992 Walmart start its International journey and currently operating in 27 countries outside U.S.A. Walmart acquired ASDA (United Kingdom based retailer) for £6.7 billion in 1999 which has become one of the largest supermarket in the in UK. Recently Walmart acquired 77% shares of Indian’s Flipkart for $16 billion which will provide a huge opportunity for the Walmart International business segment.
Supply Chain. The Walmart Company is a leading global retailer and warehouse club operator that includes more than 100,000 suppliers around the globe. Walmart is using advanced information technology infrastructure to forecast demand, track and monitor products movements from supplier to stores. Walmart’s supply chain strategy enabled the company with many sustainable competitive advantages for example, lower product cost, inventory carrying cost and most importantly providing low prices for the consumers. No doubt supply chain is the key swot strength for Walmart.
Walmart Weaknesses in Swot Analysis
Walmart weaknesses are those area where it is unable to perform well to overcome its threats which we will cover in this swot analysis tutorial.
Low Net Profit Margins. Wal-Mart is the biggest retailer struggling with its falling profit margins. The main reasons for this Walmart weakness is the lower prices and huge investments in e-commerce operations. In 2019 the company revenue was $514.4 billion whereas net income was only $6.67 billion with a net profit margin of 1.31% and gross profit margin of 24.5%.
Employees Treatment. One of the key weaknesses of Walmart is their poorly treatment of employees i.e. gender discrimination, unpaid overtimes, promotion issues and unequal wages. According to CNBC Walmart is trying to reduce healthcare cost.
Business Model. Walmart business model has easily copied model. Wal-Mart has little or no competitive edge over its competitors. The company don’t have any specific edge over its competitors except everyday low prices and huge business size. The company has crossed 500 billion dollar in revenue but the net profit margin is only 1.31%.
Huge span of control. Walmart is one of the leading retailers of the world and operating in many small and large marketplaces. Though Walmart has effective communication and coordination still there will be weak areas due to huge span on control.
Walmart Opportunities in Swot Analysis
Global Expansion. Did Walmart need to expand globally or confine to Unites States Markets? Yes, global expansion is a huge opportunity for Walmart. United States accounts only 4% of the total word population. If it focuses only on United State is will miss 96% potential customers worldwide. Consumers in emerging markets have lower level of disposable income and discounted retailers like Walmart has a huge opportunity to attract these customers.
Strategic Alliance. Forming strategic alliance with other companies is a huge opportunity for Walmart. For example, Walmart has create strategic partnership with Google and Microsoft and many other tech players to compete with Amazon and other competitors to increase customer base and profitability. Walmart strategic partnership with Microsoft enables retail giant Walmart to use its services like Azure Cloud, Office 365, IoT and Artificial intelligence to enhance its retail performance.
Product Quality. Today consumers are more health conscious and concern. It is a great opportunity for Walmart to provide organic food items everywhere it is operating. This biggest retail business can also provide certain type of diet plans, for example Keto Diet, for those who follow such diet plans. Furthermore, it should also focus on products standards, sometimes low-cost products mean low quality products which can create health related issues.
Online Presence. Ecommerce expansion is another great opportunity for Walmart Inc. By increasing online presence the company can target those people always busy in their offices and moms who have no time to come out for shopping. Every in developing countries online shopping trends are increasing and Walmart should utilize these opportunities.
Walmart Threats in Swot Analysis
Fierce Competition. Fierce competition is a major threat to Walmart Inc. there are several retailers like Amazon, Kroger, Tesco, Costco, Alibaba and many more that are using various marketing strategies to beat the competition and increase brand image and customer base. Walmart is already taking measures by increasing online business, reaching customers beyond its traditional business model and refocusing on growth markets to make it more difficult for its competitor.
Internet provides individuals and small business owners to sell their products by using social media like Facebook and Instagram or their websites with a local touch and priority support.
Prices are Rising. It is very difficult for giant retailers like Walmart to provide different products at the same prices. Due to increase in raw material and transportation costs companies like Coca Cola, Procter & Gamble Co., Nestle and several other companies are looking to increase prices on several staple products. It is a hard decision and key threat to Walmart. If this giant retailer pass this hike to consumers, there will be a less competitive advantage over its competitors. If not, then more and more thin profit margins. In retail business consumers have always choices like Amazon.com Inc. Dollar General Corp and Aldi etc.
Social Trends. Today’s key social trend is healthy lifestyle. Many consumer are looking Walmart as not organic and natural food items provider. It is an opportunity and threat at the same time. It is also suspicious for consumers that how Walmart can provide organic and inorganic food items at the same prices. It should improve the products quality and standards, otherwise it will remain a threat for this giant retailer.