Walmart Inc. (formerly Wal-Mart Stores, Inc.) maintains its dominant role in the global retail industry by utilizing its organizational strengths and competitive advantages effectively.
These business advantages mitigate the negative effects of rival stores and digital content distribution companies such as Amazon, Target, Apple, and Google.
Walmart SWOT analysis reveals the factors that significantly impact its retail strategy formulation. The factors include both internal and external influences.
The company must leverage its efficiency and competitive advantages to expand its retail operations, even if these aspects shift throughout the company’s history.
Regardless of its shortcomings, it is essential to consider the company’s strengths.
Walmart is in a position to capitalize on its chances in the retail sector by utilizing these capabilities.
The company can also use its strengths to defend its retail business, particularly its e-commerce activities, from its dangers.
Walmart’s continued competitiveness and leadership as the world’s largest retailer must be ensured by implementing strategic plans incorporating the company’s strengths, weaknesses, opportunities, and threats.
Walmart, the world’s largest retail organization, is everyone’s favorite big box store. Walmart sells everything from groceries to musical instruments; customers can find just about everything there.
Walmart began in 1962 as a single, modestly-sized discount store in Arkansas. The company has become the world’s biggest retailer, with more than 11,200 stores across 27 countries and websites facilitating online shopping. Doug McMillon is the current Chief Executive Officer of Walmart.
Walmart serves more than 270 million customers weekly via its various online platforms, and an additional 89 million customers shop through Walmart’s app.
The Walmart SWOT analysis illustrates how Walmart maintains its dominant position in the retail market while also achieving significant growth by leveraging its competitive advantages.
When conducting a SWOT analysis on Walmart, it is essential to have sufficient knowledge about the organization and its history.
The corporation has a strong customer base in North America and operates retail warehouses under the Sam’s Club brand.
Walmart has bought many smaller retail establishments and major investments in several other retail organizations.
It analyzes the most important strengths, weaknesses, opportunities, and threats most likely affect the firm. You have come to the right site if you are interested in learning more about the SWOT analysis of Walmart.
Walmart SWOT Analysis
|Company Name||Walmart Inc.|
|Year Founded||July 2, 1962|
|Headquarter||Bentonville, Arkansas, U.S.|
|Revenue||$559.2 Billion (2021)|
Strength of Walmart
Walmart’s SWOT analysis encompasses all internal variables and methods the company has implemented to improve its operations and commercial performance.
A retail organization’s internal characteristics and tactics enable it to overcome any obstacles in the retail industry.
Walmart’s strengths position the company well for long-term success and help it achieve its retail industry goals.
A strong brand name
Walmart is the most recognizable retail brand in the world, with millions of people visiting each day. Walmart’s online store offers over sixty million items.
Walmart, the world’s largest retailer, has developed a strong brand name and image internationally and domestically.
The company works to develop methods that will appeal to customers in the domestic and international markets through research and development.
Its retail business has attracted millions of customers who contribute significantly to its revenues through thousands of locations across the country and other countries.
Walmart’s strong brand image and widespread appeal have attracted new and existing customers through various channels.
Walmart generated $559.151 billion in revenue in 2022 and ranked the nineteenth most valuable brand on Forbes 2000.
Low Pricing Strategy
There are two different pricing strategies that supermarkets use: everyday cheap price, which implies discounts on everything, and promotional pricing strategy, which offers temporary discounts on certain products.
Walmart’s ability to maintain competitive pricing comes from its focus on the economies of scale agenda.
It has consistent expenses across thousands of different items. As a result, it is one of the locations in the world where one may shop at the lowest prices.
Walmart’s ability to keep its prices low is one of its most significant advantages (EDLP).
Walmart makes use of available resources efficiently and effectively in this highly competitive climate, making it feasible.
Walmart’s strategy of expanding into new and international markets has made a significant contribution to the company’s revenue and has helped it achieve a high position in the retail industry.
Walmart also acquired companies in other countries, including ASDA in the United Kingdom and Flipkart in India, outside the United States.
By expanding into newer markets, Walmart can diversify its revenue sources and use its strong brand image. This allows Walmart to penetrate international markets successfully.
Walmart’s foreign expansion strategy accounts for approximately 21.7 percent of its total sales.
Consequently, Walmart’s ability to expand its financial capabilities and cement its position as the retail industry leader is enhanced.
Bharti, the largest retail retailer in India, and Walmart have joined forces to form a joint venture. The company has seen a substantial amount of progress and achievement as a result of this global growth.
Supply Chain Management
Walmart operates warehouse clubs across the globe and works with more than 100,000 different suppliers.
Walmart is leveraging cutting-edge information technology infrastructure to estimate customer demand, track and monitor the passage of products from suppliers to shops, and check product inventory levels.
Walmart’s supply chain strategy enables the corporation to achieve various long-term sustainable competitive advantages, such as reduced product costs, costs associated with inventory carrying, and, most crucially, reduced customer prices.
Walmart’s supply chain is the company’s strongest SWOT strength. Walmart’s supply chain gives it an advantage over its competitors in the retail sector.
Walmart’s company processes continue to improve with the help of ever-improving technology.
They kept track of products, recorded inventories, and gathered statistics about customer satisfaction by investing time, effort, money, and care.
Walmart should (never) have shelves without stock in any of its shops due to how effectively data is monitored. It is always important to have products available in each category.
Walmart has established the organizational structure that other retailers have begun to imitate due to its pioneering role in this logistical system.
Walmart enjoys a solid financial foundation. This year alone, it has brought in a total of 559.2 billion dollars in US currency.
Although it has done so gradually, Walmart has been steadily expanding its market share for the past fifty-nine years. Walmart has attained the status of a celebrity company in the eyes of the general people.
Walmart’s financial function places it in a position of inherent advantage, which has helped the company significantly increase its market value and brand recognition by leaps and bounds. As a result, this financially stable function performs exceptionally well for the organization.
Weaknesses of Walmart
Walmart have many internal forces and elements working against it, which makes it difficult for the corporation to defend itself against any new challenges that may emerge in the market.
Business strategies used by an organization are directly affected by these flaws, and as a result, business capabilities, development, resource allocation, and profit margins are negatively impacted.
Business success depends on finding and admitting a company’s shortcomings so that it can focus its efforts on improving those areas.
There are many weaknesses in Walmart’s business model that could undermine the company’s long-term success in the retail sector. The company currently holds a leading position in the industry, but some of its flaws could threaten its future success.
Low Net Profit Margins
Walmart, the world’s largest retailer, is having trouble maintaining satisfactory profit margins. Walmart’s competitive disadvantage is largely due to its lowering prices and massive investment in online retail operations.
Walmart’s “cost leadership” strategy results in exceedingly slim profit margins for the corporation.
The business strives to maintain low production costs but low selling prices, leading to narrow profit margins. A higher net profit would have been achieved if the company had maintained higher selling prices.
The environment retailers provide for their customers is minimally invested in activities that aim to keep expenses low, such as providing a shopping experience without frills. This negatively impacts the shopping experience in general.
In 2019, the company earned only $6.67 billion in net income despite having revenues of $514.4 billion. With a net profit margin of 1.31 percent and a gross profit margin of 24.5 percent, this corresponds to a net profit margin of 1.31%.
Employee Working Conditions
Workers that can blend into their surroundings are required in a retail establishment that must be fully stocked across all aisles and with every item.
Workers on full-time contracts are expected to work their shifts without receiving paid time off or medical leave.
Medical care options for individuals and the health care system are already in danger and are, unfortunately, nonexistent in the United States.
Further, the largest retailer in the world does not adequately provide health and wellness services in the United States to its 1.5 million employees.
You are required to work in as many different departments of the shop as possible, and if another employee calls out sick, it is your responsibility to cover their shift.
Some former employees even claim that “although no fitness service is higher than the fitness plan that Walmart delivers its people.”
You will nonetheless be had to pay a weekly or monthly payment, and a certain quantity will be withdrawn from each of your checks. However, the benefits are so meager that you may, in all probability, pay far less for your health care and receive more advantages.
One of the largest groups in the world, as well as the government agency responsible for the employment of one percent of the total population of the United States, is obligated to provide adequate fitness opportunities for its hard-working employees.`
Duplicable Business Model,
The business model of Walmart is easily replicated. Walmart possesses very little, if any, competitive advantage over its rivals.
Walmart does not have many distinct advantages over its rivals, except for consistently low prices and a massive customer base.
Walmart’s sales have surpassed 500 billion dollars, yet the percentage of revenue retained as net profit is only 1.31 percent.
Despite its continued success, Walmart has never been particularly distinctive in how it runs its business.
It caters to a wide range of customers by offering various products at lower prices than competitors.
Walmart offers a wide variety of products, and you can duplicate its diversity by using other supermarket-style stores; many businesses specialize in one of the numerous categories Walmart offers, often with better products.
It is also possible that it has perfected the “big box store” model while other stores are catching up at a slower pace.
Cost leadership strategy
Walmart’s entire business model is based on the cost leadership approach.
Setting the lowest feasible pricing for each of the connected products to achieve the lowest possible cost of operation is the method that will be utilized.
The consequent lower selling prices result in lower profit margins. It is common knowledge that Walmart has very low-profit margins.
Because Walmart has been so successful for a long time, the cost leadership strategy might be regarded as an example of a “winning” model.
On the other hand, it has traditionally been run on low-profit margins per unit of volume.
Opportunities For Walmart
There are opportunities for Walmart within and outside the company, and both types of opportunities help the company grow and improve.
They can use the opportunities of extracurricular activities and extra-curricular parts of the organization to generate cash and blessings for themselves.
Walmart management needs to do a SWOT analysis before taking any significant steps in the future.
The only way for a firm to see growth and expansion is by actively seeking new chances. The market is gradually becoming more open to cutthroat competition due to the gradual shifts in economic conditions.
Walmart has the possibility of entering into strategic alliances with other significant companies or merging with other international retailers.
Walmart may also succeed in increasing its bottom line by acquiring smaller businesses. Walmart has a unique opportunity to establish strategic partnerships with other businesses.
A good example is Walmart’s strategic partnerships with Microsoft and Google to compete with Amazon and other companies in the same industry and gain a bigger consumer base and profit margin.
The strategic relationship between Walmart and Microsoft enables the world’s largest retailer, Walmart, to improve its retail operations by utilizing Microsoft’s many technologies, such as Azure Cloud, Office 365, Internet of Things, and artificial intelligence.
Expansion to Foreign markets
Walmart has the potential to capitalize on the opportunity by extending its operations into markets in which it has not yet established a presence. These could include countries in China, the Middle East, and Latin America.
Should Walmart have focused just on the markets in the United States or attempted to expand internationally? Expanding Walmart’s operations to other countries presents a significant business opportunity. The population of the United States accounts for only 4% of the world’s total population.
If it is exclusively concerned with the United States of America, it will fail to attract 96 percent of the prospective customers worldwide.
The disposable income of consumers in emerging nations is typically smaller than that of consumers in more developed markets; therefore, discount retailers such as Walmart have a significant chance to acquire customers from these markets.
Walmart is large worldwide but needs to expand into other countries and international markets. These markets and countries are located outside of the United States.
For instance, there is not yet a Walmart shop in the majority of Europe (particularly in Russia and Central Europe), none of the countries in the Middle East, certain parts of Asia, the vast majority of African countries, and the continent of Australia.
Walmart has recently acquired ASDA, one of the largest retail chains in the United Kingdom, and Flipkart, one of the largest retail chains in India.
These expansions are important, yet, Walmart has not established a presence in a significant number of countries and an entire continent.
Raising the Quality of Products
There is a possibility that some of Walmart’s products are of inferior quality since it carries such an outstanding variety and quantity of merchandise.
Retailers must be aware that low-quality clothing can harm a customer’s health.
It is common for low-priced products to be substandard in quality. Walmart can raise the quality standards of its products, which would help address customers’ worries over their health.
There is room for improvement in the quality of Walmart’s wares in the clothes department. It is a wonderful opportunity for Walmart to demonstrate that they can improve upon specific products and sell high-quality clothes. Walmart may take advantage of this opportunity.
Consumers today have a greater awareness and care for their health. There is a fantastic chance for Walmart to supply organic food items in all of the locations in which it operates.
Those who adhere to particular diet plans, such as the Keto Diet, may obtain certain diet plans from the nation’s largest retail firm.
In addition, there should also be a focus on the standards of the items. Sometimes low-cost products represent low-quality products, which can lead to concerns related to one’s health.
Increasing Online Presence
Walmart Inc.’s growing online retail presence presents the company with another significant opportunity.
Walmart will be able to reach those individuals who are usually busy in their offices and mothers who do not have time to come out for shopping if it increases its presence online.
There is a growing tendency toward online purchasing in every emerging country, and Walmart should capitalize on the opportunities presented by this shift.
In recent years, there has been a significant surge in the number of customers doing their shopping online. Walmart can capitalize on this potential by improving its online sales platforms.
Walmart announced in July 2020 that it would be leading an investment of $1.2 billion in its e-commerce company Flipkart, which is situated in India.
Threats for Walmart
A SWOT analysis is incomplete without analyzing potential threats. With a SWOT analysis, it will become evident what has been hindering this community’s development.
Walmart’s operations and activities are threatened by outside forces and circumstances that negatively affect its retail operations.
Walmart may need to adapt its competitive strategy to deal with these factors’ effects.
It is essential for a corporation’s business strategy to include the development of buffers to mitigate potential risks. After that, they will be able to grow even further by making the most of the opportunities.
Walmart can use a SWOT analysis to uncover the factors that may pose a risk to the firm today and potential hazards that may arise in the future.
Rising Prices of Products
It is quite challenging for large shops like Walmart to offer a variety of products at the same cost for all of those things.
Many businesses are considering raising the pricing of a number of their core products due to an increase in the cost of both raw materials and delivery. The prices of Coca-Cola, Procter & Gamble Company, Nestle, and other companies may rise.
It is a challenging choice and a significant challenge for Walmart. If this massive retail chain were to pass on the cost increase to its customers, it would have less of a competitive advantage over its rivals. If not, then the profit margins will continue to be extremely small.
Regarding retail, customers always have options, such as Amazon.com Inc., Dollar General Corp., and Aldi.
Walmart Inc. faces a significant challenge in fierce competition. Amazon, Kroger, Tesco, Costco, Alibaba, and many other retailers are just some of the many utilizing various marketing methods to get an advantage over their competitors, improve their brand image, and expand their client base.
Walmart is already making it more difficult for its competition by expanding its internet business, expanding its reach to customers beyond its traditional business model, and focusing on growing regions. These steps are being taken to make Walmart’s position more competitive.
Other companies within the industry can pose a formidable challenge even against a massive corporation such as Walmart.
Walmart continues to struggle to compete with the online juggernaut Amazon, which dominates a significant portion of the online sales market despite recent advancements in its online advertising skills.
Target has positioned itself as a competitive superstore to Walmart while providing low-priced items.
Thus, they are luring away many customers from Walmart and carving out a significant portion of Walmart’s customer base.
The Internet allows individuals and small businesses to sell their wares with a personal touch and priority assistance through social media platforms, such as Facebook, Instagram, and their websites.
There was a boycott campaign directed at Walmart in 2018 by supporters of Donald Trump.
The retailer Walmart has displayed a variety of garments, ranging from baby pajamas to t-shirts, with the phrases “Impeach Trump” or “Impeach 45” on them, meaning that the 45th President of the United States ought to be removed from office.
Twitter was the primary platform on which some Trump supporters vented their anger and frustration; the following are some examples:
Some Republicans brought to the fact that the corporation was founded by Sam Walton, an entrepreneur who held conservative political views.
However, it is important to emphasize that Walmart has no anti-Trump bias. Additionally, many pro-Trump t-shirts and other merchandise are available at Walmart. The firm’s main goal is to increase profits; it has no political stances.
On the other end of the political spectrum, Walmart has been condemned for selling t-shirts with “Rope. Tree. Journalist. Some Assembly Required.” These t-shirts have been associated with a certain political ideology.
It is important to remember that, in contrast to the t-shirt that says “Impeach 45,” this design expressly encourages violence and has a considerably more sinister message. It was removed from the company’s website and physical locations.
There have been complaints against Walmart and controversies surrounding the company regarding political, environmental, and social concerns.
Tech Issues of Website
Walmart is constantly working to improve its customers’ experiences when shopping online; yet, the retailer’s website frequently crashes due to user requests or mistakes, as well as faults that are mostly caused by poor layout or architecture.
A retailer of the same magnitude as Walmart cannot have sufficient funds to continue to experience difficulties at this level. Customers unhappy with the service they receive are likely to take their business elsewhere.
Customers have expressed frustration over Walmart’s website’s various bugs and other technological concerns. The website is difficult to navigate and does not list the products in an organized fashion. In addition, the website is very slow.
On the other hand, Amazon is well-known for its website’s speed, efficiency, and organization, which provides users with an outstanding experience when purchasing online.
Final Words on Walmart SWOT Analysis
It is impossible to steer clear of the retailing behemoth that is Walmart in many respects. It offers a superb variety of products at quite obscenely low prices, which may also harm its earnings ability if it were no longer for the enormous income statistics it instructs yearly.
The retailer, however, fails to manage its workforce well compared to other groups, despite being one of the biggest retailers in terms of sales and employment.
Walmart has the potential to build even more forward-looking policies by implementing a few critical changes to its product services and labor standards.
In conclusion, it is possible to assert that Walmart’s most significant qualities are a consistent stream of money and the company’s ability to achieve success on a global scale. The random lawsuits that have been brought up against them are their greatest area of vulnerability.
The organization benefits in various ways by conducting a SWOT analysis. It may conceivably make it possible for the senior administrators of the corporation to pull apart the strategic approach the company is utilizing at the moment and investigate it.