Walmart Stores – the largest retail network not only in the US but also in the world. The company Walmart includes more than 10 000 stores around the world. The format of stores is supermarkets which you can buy both food and home products – the company maintains the maximum range in its stores. Due to the huge turnover of Walmart Stores, the prices in its stores are much lower than the average market and almost equal wholesale (Mujtaba, 2007).
Walmart Stores as the world’s largest operator of retail stores, the largest company in the world in terms of revenue use network strategy includes such terms as “the maximum range and the minimum, aspiring to wholesale, prices” (Marcilla, 2014). The company operates through three segments: Walmart USA; Walmart International; Sam’s Club. Walmart also provides financial and related services, including money transfers, prepaid cards, bank transfers, currency exchange, and bill payment (Ostrander, 2011).
The business model of Walmart is synergy. It is a ‘strong side’ in the network is considered to be ‘synergy of infrastructure’ (Yang, 2009). Thanks to the presence of 4,600 stores throughout the country, as well as full-service centers and distribution centers, the network can offer the customer or pick up the order from the nearest point to his place of residence, or deliver the goods from a nearby store. None of the competing companies was able to invest such funds in their business. As far as I’m concerned, the key to the success of Walmart was the aggressive expansion combined with low prices.
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The success of Walmart is largely due to the pricing policy of the company. Firstly, the principle of ‘low prices – every day’ is declared. For the buyer, this means the ability to purchase cheap goods at anytime, instead of purchasing only at periodically held sales. Walmart also has achieved success in distribution and transportation due to the fact that the management of the company considers these activities as a source of competitive advantages, and not as secondary functions like other companies. In addition, they support these activities with the necessary investment and funds. Many companies do not want to spend money on distribution until they are forced to by circumstances. Walmart is not going to such expenses, because we see and constantly demonstrate to the others that this reduces our costs.
However, there is also a some factors of failure for Walmart. The main reasons for the failure of Walmart were the high saturation of the market with local discounters and the inability to adapt to the characteristics of consumer tastes. Walmart was also repeatedly harassed by unions, as well as Christian and green organizations. According to APWU, Walmart is accused the network of violating environmental standards, mistreatment of personnel (low salaries, poor medical care), unfair business practices, discrimination against women, and national and sexual minorities.
In recent years, the Walmart network has been constantly criticized by representatives of various public organizations. So, one of the claims is that the company for many years now does not allow the presence of trade unions at its trade enterprises. As a rule, the management of the corporation forces employees to vote against the creation of a trade union, threatening to close the corresponding supermarket and, thus, deprive them of their work.
In my opinion, Walmart will not yet have such a strong position in five years as for now, but it is believed that the company will win sooner or later, for which it will have to invest heavily in improving services, advertising and customer bonuses. However, there is also an opposite opinion existed: that the retailer will not be able to adapt to a more flexible market due to its colossal size.
The old large offline retail brand, one of the biggest on the planet, is desperately trying to stay in demand in a world that is rapidly moving towards online commerce and various additional services. Amazon was a pioneer in this business model. It had been losing money for many years, gradually crowding out competitors in order to win a dominant share in various markets. It as one of the biggest online shopping cite has really done some incredible marketing works to win the consumers. In this digital- driven society, the existence of Amazon really provide consumers convenience. With simply one click, people will have food or groceries delivered next day if you are a Amazon Prime. Also, for student, you can have a Prime discount, which seems to be attracting for student who have less allowances.
Smart supermarkets are far from the only front on which Walmart is preparing for a battle with Amazon. The other day, it announced plans to turn her daughter Vudu into a full-fledged rival Prime Video by the end of this year, with lots of movies and TV shows to choose from. They will help her create personal services to help with purchases, as well as “smart” drones and baskets to help customers with finding and choosing products. Walmart has announced a strategic partnership with Microsoft.
Walmart, the largest US supermarket chain, has long been tough on tough competition with Amazon on all fronts and now plans to compete in a completely new territory. The company will create its own video service as opposed to Amazon Prime, reports The Information (Toonkel, Dotan & Anand, 2018). In competition, the retailer also teamed up with Microsoft. The parties entered into a five-year partnership, within which Walmart will get access to the company’s cloud services and groundwork in the field of artificial intelligence, says The Verge. In addition, Microsoft is now discussing the possibility of using in the company’s supermarkets the developments in the field of autonomous trade, which Microsoft is developing in opposition to Amazon Go (stores without cash registers).
The firm’s prospects for the future is optimistic. Walmart relies on the development of the e-commerce segment, which will act as a catalyst for sales growth in the medium term. To date, this segment is a small part of the company’s revenues, but it shows impressive growth. The attraction of online buyers is crucial for Walmart, as its largest competitor in e-commerce, Amazon, is constantly increasing market share. It is recommended buying Walmart shares for long-term investors who want to receive a growing dividend income and who do not panic in case of individual quarterly failures. The company has an impressive track record when it comes to generating cash flows for its investors.
References
- Marcilla, L. (2014). Business analysis for Wal-Mart, a grocery retail chain, and improvement proposals. Retrieved from https://riunet.upv.es/bitstream/handle/10251/44289/Business%20analysis%20for%20Walmart%20FINAL%20TFC%20Laura%20Barber%C3%A1%20Marcilla.pdf?sequence=1
- Mujtaba, B. (2007). Wal-Mart In The Global Retail Market: Its Growth And Challenges. Retrieved from https://www.researchgate.net/publication/228477402_Wal-Mart_In_The_Global_Retail_Market_Its_Growth_And_Challenges
- Toonkel, J., Dotan, T., & Anand, P. (2018). Walmart Plots Rival to Netflix, Amazon Prime Video. Retrieved from https://www.theinformation.com/articles/walmart-plots-rival-to-netflix-amazon-prime-video
- Ostrander, A. (2011). THE EXPANSION OF A RETAIL CHAIN: AN ANALYSIS OF WAL-MART LOCATIONS IN THE UNITED STATES. Retrieved from https://digital.library.unt.edu/ark:/67531/metadc68027/m2/1/high_res_d/thesis.pdf
- Yang, F. (2009). Strategic Analysis of Wal-Mart. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.900.7982&rep=rep1&type=pdf
