A popular American global retail corporation, Walmart functions as an array of discount departmental stores, hypermarkets, and grocery stores. The operations started as a small and only discount store and with the modest idea of retailing more for less. It has grown large over the last 50 years into one of the major retailers worldwide. Almost 265 million customers visit about 11,500 stores per well that across 27 countries along with its online websites as well. The company sells many products that range from groceries to many musical instrument types.
The SWOT analysis of Walmart mentions its strengths, weakness, opportunities, and threats that gives a pointer to the company to grow more and build its revenue more. Read out this article, to get an idea of where Walmart stands.
Before we begin in-depth on the SWOT analysis of Walmart, let us understand a bit of the background of the company Walmart.
The following points provide you a bit of Walmart’s background:
- The company is known with the name Walmart Inc.
- Walmart was established during the year 1969 and it is headquartered in Bentonville, Arkansas.
- The company logo is shown in Image 1.
- The company has various divisions like Walmart Supercenter, Walmart Discount Store, and Walmart Neighborhood Market.
The SWOT analysis of Walmart highlights the good things in the form of strengths and its weakness that would help the brand to improve. It also projects the threat that the business could face soon and the various open opportunities that it must improve on its business.
To make sure that Walmart meets the long-term competitive advantage it must address the various concerns or measures mentioned in the SWOT analysis of Walmart.
Let us discuss on the SWOT analysis of Walmart.
- Brand Recognition – The brand has millions of customers who visit the store each day and it is indeed the most recognized brand in the retail industry worldwide. The online store of Walmart has about 60 million items available for their customer.
- International Expansion – The brand has lately purchased ASDA, which is a UK based retailer and Flipkart, the e-commerce giant of India. Also, it has entered into a joint venture with Bharti, India’s huge retail store. These kinds of global expansions are a major strength for the brand and have proved to be a great success for the organization.
- Walmart Stores – Walmart has many stores in about 50 states and provides low prices on various products and has many formats that include Walmart Supercenter, Walmart Discount Store, and Walmart Neighborhood Market.
- Walmart Supercenter provides a one-stop experience on shopping that combines a grocery store with many fresh products, dairy products, bakery products, apparel, home furnishings, toys, etc. Most of the Walmart Supercenter is opened for about 24 hours.
- Walmart Discount Store is smaller than Supercenter and provides various products that include toys, apparel, home furnishings, beauty aids, and many more.
- Walmart Neighborhood Market is designed for a smaller footprint for various communities in the need for affordable groceries, pharmacy, and merchandise. It provides many fresh products like dairy products, meat, bakery, household suppliers, and many more.
- International Presence – During the year 2017, Walmart has opened about 47 stores in Central America, 11 stores in the UK, 15 stores in Chile, and four stores in China. Having increased its operations at the international level, Walmart has seen enormous sales over the years. This is a major strength of the brand.
- The Strategy of ‘Everyday Low Prices’ – Walmart is always based on the schema of economies of scale and hence it provides its products at a low price. It has a fixed cost for many products and hence it is considered the cheapest shopping place at the global level.
- Distribution Centers – Walmart has more than 150 distribution centers and it is the hub of its business activities. The distribution operation of Walmart is the major in the world servicing clubs, stores, and direct delivery to the customers. The transportation of Walmart has a fleet of about 61,000 trailers, 6100 tractors, and about 7800 drivers. The distribution center network transports dry groceries, general products, and many more.
- HR Management – The main asset of Walmart is employees and the company take a lot of effort, time, and money to develop and manage its employees. This is a big strength to the brand as when the employees are satisfied, it gets reflected in the result.
- Resource Management – The brand manages its resources well that includes supply chain management, information systems, knowledge, distribution facilities, and skills. All its locations have an excellent operation set up to perform better.
- Strong Market power – Walmart has a large organizational size and its global reach has made the brand capable to get more market power over its competitors and suppliers.
- Employee Working Conditions – Walmart was subject to some lawsuits many times with regards to its labor force. Insufficient healthcare, low wages, and deprived working conditions are a few of the issues that have been criticized publicly. This has been a great weak point for the brand, and it did affect its reputation.
- Big Control Span – The big size of the brand and its huge span of control has the possibility of the company subject to some mistakes and keep them weak in a few areas.
- Fewer Profit Margins – Yet another weak point for the brand is its fewer profit margins. This is due to the fact the company focuses on a strategy of cost leadership. As Walmart reduces the selling prices it requires to lessen the profit margins and then they depend more on the sales volume.
- Business Model can be Imitated Easily – The business model that the brand follows can be easily copied. The brand does not face any noteworthy competitors, but only for its prices and business size.
- Issues in Stores – Walmart stores have some issues seem in them. Many a time, it is overflowing with customers and not many employees to handle the customers. It has a few cash registers open and many lines of people waiting especially during popular seasons.
- Penetration to other Markets – Walmart sees a huge opportunity on expanding its operations to the market areas where it has not ventured. Few countries like Middle East, China, and Latin America. On expanding its operations to the other market, it can see more sales and revenue.
- Strategic Alliances – Walmart sees a huge opportunity to establish strategic partnerships with big firms or collaborate with other international retailers. It can also acquire small companies to increase their profit. On getting into these possible opportunities, Walmart can foresee a big growth to the brand.
- Increase in the HR Practices – Yet another opportunity for Walmart is to bring advanced improvements in human resource practices. As its business operations are exclusively dependent on its employees, the company should bring out innovative human resource standards to reflect on its growth.
- Improve on the Quality Standards – There is an observation that low-cost products reduce the quality of the product. Walmart sees an opportunity to increase the quality standards of its product to get more sales.
- Impeach 45 Controversy – Lately, Walmart was exposed to ‘Impeach 45’ controversy. It has sold T-shirts that had words written that promoted violence. But Walmart had reversed the controversy that the T-shirt was sold by some third-party sellers on their marketplace and not of Walmart itself.
- Controversy on Fake craft beer – During the year 2017, Walmart was charged for selling fake craft beer. This controversy has led to a huge threat to the brand thereby impacting its reputation.
- Main Competition Target – Being the largest grocery retailer, Walmart is subject to be the main target for competitors. One of its direct competitors, Target provides the same products that are of higher quality. Also, Costco provides the option to purchase bulk items to its customers. These companies have a good reputation for employee satisfaction that Walmart. This is a big threat to Walmart.
- Website’s Technical Issues – Many times customers have faced a lot of technical issues in Walmart’s website. The website does not place the products in an orderly manner, and it has slow loading pages. This is also a big threat to the company as it might not lead to conversions.
- Healthy Lifestyle Trend – Currently all people are switching to a healthy lifestyle trend. Walmart’s business is often seen as not organic, not natural, and not healthy. This is a threat to the business and needs to improvise on this.
The SWOT analysis of Walmart mentioned in this article has highlighted the main strengths of the brand in the form of brand recognition, international presence, selling strategy, distribution, and Walmart stores. Its weakness lies in its large span of control, thin profit margins, business model copying, and employee dissatisfaction.
Walmart sees opportunities in expanding its business to other markets, creating partnerships with other firms, and improving its quality. It sees threats from its various controversies and its technical glitches on the website.