Walmart SWOT Analysis: 2018
Walmart, the leading retail brand of the world was incorporated in Delaware in the year 1969. It has enjoyed fast growth during the recent years despite the continuously increasing competitive pressure from e-retailers like Amazon and E-bay. Walmart has more than 11700 stores worldwide. Apart from that, it also has significant presence in the field of e-commerce with websites under 65 banners in 28 markets through which it serves more than 270 million customers each week. The main strategy which has always driven Walmart’s business is competitive pricing. It offers the largest range of products at most affordable prices. This pricing is also known as EDLP or everyday lowest Prices. This pricing strategy has always been successful at attracting Americans in very large numbers.
Walmart’s obsession with the lowest prices is also the reason behind its market leading position. Walmart has divided its business into three main reportable segments including Sam’s club, Walmart US and Walmart International. In 2000, Walmart launched its first e-commerce initiative and since then its latest investment in international business expansion included the purchase of a large stake in the Indian e-commerce website Flipkart. In 2018, it employs 2.3 million associates of which 1.5 million are working in US whereas 0.8 million work abroad. Revenue of Walmart for the fiscal year 2018, ending January 31 was $500.3 Billion. Read about its Strengths, weaknesses, opportunities and threats in this SWOT Analysis.
– Strong financial performance –
Walmart’s fiscal year ends on January 31st when the retail brand publishes its annual report. In 2018, its net revenue crossed the 500 Billion dollar mark for the first time. Net sales reached higher than 495 Billion. Fiscal 2018 has remained impressive in terms of financial performance. Compared to last year, Walmart’s revenue has risen by around 15 Billion dollars.
– Large assortment of quality products and services –
The primary strength of Walmart is its pricing strategy. EDLP is a great strategy that has proved efficient at attracting and retaining customers. Apart from that it offers the widest range of quality products and services. Its merchandise mix consists of three main categories that are grocery, health and wellness and general merchandise. The general merchandise include entertainment, apparel, hardline and apparel products. Apart from these Walmart offers fuel and financial services and other related products too.
– Brand image –
Walmart has always focused on being customer centric. It has built a customer friendly brand image. This is a major strength for the brand. Focus on customer service has helped it acquire higher popularity as well as increase its market share and customer base. Its low pricing strategy and customer orientation have made the brand America’s most favourite retail brand.
– Market share and large customer base –
Walmart’s pricing strategy and quality have helped Walmart acquire the largest market share of all the US retail brands. It is also working to grow its market share aggressively in emerging economies. It acquired a very large stake in Indian e-retail brand Flipkart to grow its presence in India.
– International presence –
Walmart’s international presence has continued to grow stronger during past three years. India is still not open to Foreign direct investment but Walmart entered the Indian market by buying a large and controlling stake in the Indian e-commerce brand Flipkart. Apart from US, Mexico is the largest market for Walmart with the number of stores there having grown in 2017 to 2411. Its 2018 revenue from Walmart International reached 118.1 Billion dollars.
– Growing e-commerce and digitisation –
Walmart took its first step in E-commerce in 2000 and since then it has come a long way and its e-commerce initiatives cover a large number of markets. Its several websites operate under 65 banners in 28 markets. Growing focus on e-commerce and digitisation will help Walmart achieve faster growth.
– HR issues –
One major problem with Walmart and its organisational culture it has always tried to cut down its operational costs to grow its price advantage even at the cost of employee satisfaction. It has a negative effect on employee satisfaction and drives attrition rate high. During the recent years, Walmart has increased the wages but yet, the HR environment and culture at Walmart needs to be innovated to provide the workers with security and satisfaction.
– Negative image of a large finance hungry corporation –
However friendly Walmart may be to its customers, it has also acquired the image of a finance hungry corporation that is always eyeing a larger pie of the retail market. This image was created because of its poor record in supply chain ethics and HR. While it has strengthened its reputation and image to some extent during the recent years, it will also need to increase its focus on CSR, ethics and HR management to shed its old image completely.
– Growing e-commerce operations –
E-commerce can be a major area of opportunity for Walmart. Apart from US all the major markets including the Asia Pacific markets are seeing higher sales online. Moreover, focusing on its online channels will also help Walmart combat Amazon’s challenge.
– Changing consumer shopping habits –
The demographics of the global population are changing and the shopping habits of the millennial generation are much different from that of the baby boomers. However, studying these habits and catering to their needs offers faster opportunities of growth to the brand. This generation of consumers likes to shop online and is a high tech savvy generation. Understanding its shopping habits and using technological innovation to provide it with a better shopping experience will help increase sales.
– HR Management –
This is also an area where Walmart needs to innovate to establish culture that encourages creativity, collaboration and innovation. It will help the brand manage a better reputation and create a positive work environment which is good for organizational productivity and efficiency.
– Intense competition from other retail and wholesale brands –
Retail industry is marked by intense competition and there are several retail and wholesale brands competing for market share in the retail industry. The competitive pressure from online brands like Amazon has also kept increasing which has led to Walmart focusing more on technological innovation and lower prices. Competition is among the biggest challenges in the retail industry and a primary threat to growth. To overcome its pressure, Walmart will need expand to more markets and increase its online presence.
– Increased legal and regulatory pressures –
The legal and regulatory pressures have increased in the retail industry and this has led to brands focusing more on compliance. This increases the compliance related expenses and in case of non compliance the fines can be immense.
– Stronger dollar internationally affecting profits –
Economic factors too have a major impact on the profits of the international brands. A stronger dollar can have an adverse impact on the profit of the American brands. Fluctuation in the currency exchange rates can also lead to lower profits.
Walmart continues to rule the American retail industry. While competition from e-retail brands like Amazon has increased a lot, Walmart has achieved faster growth during the recent years. In 2018, its net revenue rose to record levels. The EDLP pricing strategy has helped the brand achieve the largest market share and customer base of all the e-retail brands. The brand is serving millions of customers through its e-retail channels and stores. It must focus on making its image stronger by investing in its employees, work culture and CSR activities. However, its strongest position in the American retail industry cannot be debated. To find faster growth globally the brand must invest in technology for making its consumer experiences better. Growing e-commerce operations will also help the brand grow its revenue and net profits better.
- Walmart Annual Report 2018
- Walmart Strategic Analysis