Company Analysis: Walmart Inc.

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Walmart is a U.S.-based corporation operating under grocery retail business. It is viewed as the biggest retail partnership for discount offers working in 28 nations, offering a wide exhibit of items with some at the most minimal cost (Company Facts, 2018). Through selectivity with suppliers and manufacturers, the company can have full control of prices and has aggressively demanded reductions in cost and improvements over the years. It has dominated the world economy and has adequate leverage to stir up markets in its favor (Bowman, 2017). Its largest strength is mainly its widely distributed network centers and stores globally. Walmart stores are strategically located, with 90% of the population reaching them within 10 miles away (Cheng, 2018). The company could retain its potential clients who could otherwise be lured away by virtual shopping such as eCommerce emergent. Walmart Inc. has a great influence across the United States market, placing it in a competitive position in the grocery market.

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Organization Business Model and market Share

Walmart operates under three business segments, including Walmart United States, Walmart International, and Sam’s club. The three portions have a focus on the client base and diverse item arrangement. Walmart has set an extraordinary impression not just in the United States, where they are available in each of the fifty states; however, have bargain retailers across 42 states, including little stores like the neighborhood Walmart across 31 states (Visnji et al., 2017). The company has been transpiring via innovative strategies making it one of the best largest retailers globally, with more than 11,000 stores in 28 countries and a workforce totaling 2.2 million employees (Visnji et al., 2017). With a constantly evolving consumer preference, the company has improved its business model to meet the demands making it a dominant retailer.

Walmart’s business is based on four principles: price, differentiation, competitive assortment, and great experience. Walmart maintains a strong negotiation power over its retailers (Visnji et al., 2020). This means that the company dominates the price list and has overthrown supplier prices. It has procured a predominant exchange system over its providers, permitting it to keep up low-value control over its rivals deliberately. Reinvests in access for paths is the principle engaged by the company to counter-attack its competitors, including Amazon and other big outlets. The company has launched many digital access points such as movie streaming services, pick up today, and click and ship to provide wider access to clients. In addition, it also produces a wide array of services, including wire transfers, money orders, and checks to cash. With the third principle of being competitive on assortment, Walmart has played as a leader in product assortment techniques that focus on local and international demographics.

The application of the fourth principle is to deliver an exquisite experience. With a labor force of more than 2 million worldwide, employees have been a pivotal achievement way for Walmart (Visnji et al., 2020). The historical backdrop of Walmart covers an analysis of aggressive representative strategies, for example, lower compensation and negligible professional advancement activities. Not long ago, the organization declared an activity to revitalize its obligation to its workers by expanding wages and vocation advancement programs (Visnji et al., 2020). The company continues to grow and be at the top of the retail world based on its innovative and improved business model.

Customer Base

Walmart is the biggest retail shop in the United States and is bigger than some other corporate store on the planet. It runs over 4150 facilities globally, and it is the dominant retail store in Canada, Mexico, and United Kingdom (Walmart: 2020 global 500”, 2021). Walmart is seen as the most powerful and wealthiest in the world according to the fortune500 index and ranked as the second admired company in the world by fortune (“Walmart: 2020 global 500”, 2021). Walmart provides all sorts of services to its customers like family, health and beauty aids, electronics, toys, crafts, lawn and garden, jewelry, and shoes. They also run a pharmacy department, tire and lube, and photo processing center.

Walmart at first had to major with small towns and alter moved to big cities. As of to date talk, it has 1636 retail stores, 1093 Walmart supercentres, 502 Sam’s club, 31 Walmart Neibhorhoodstores, 1183 international stores, so its retail business is divided into four categories, namely Walmart stores, supercenters, Sam’s club warehouse and neighborhood markets (Visnji et al., 2020). Each category has its function whereby Walmart stores and supercenters provide “one-stop shopping for families”; comprising groceries and general product merchandise club is the leading warehouse. Neighborhood markets offer a helpful shopping experience to clients who need food supplies, drugs, and general products. Walmart has more than 1000 stores in nine countries, and it deals with its customers directly through its warehouses hence avoiding the middlemen (Visnji et al., 2020). It has a strategy of producing high-quality goods and selling them at low prices hence satisfying all its customer’s needs.

Revenue

Revenue is defined as the amount of money a company receives from its customers in the sales of goods or services. It is usually the top line on an income statement from which all costs and expenses are subtracted to arrive at net income. Walmart revenues are usually done annually and quarterly a year. In this case, revenue from 2019 to the latest revenue, which was done on 31st January 2021, shall be analyzed. In 2019, Walmart’s annual revenue was $514.405billions, a 2.81% increase from 2018. In the year 2020, Walmart’s annual revenue was $523.964 billion, a 1.86% increase from 2019. In the year 2021Walmart annual revenue was $559.151 billion, a 6.72% increase from 2020, and Walmart’s quarter revenue ending January 31st, 2021 was $152.079 billion, a 7.35% increase year over year (“Walmart revenue 2006-2021”, 2021). It can be seen that Walmart’s revenue has been increasing sharply from 2006 to 2021.

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Competitors

Walmart being ranked as the largest retailer globally, its approach and strategies of “great value at a low cost” have made it successful and be a step ahead of its competitors. However, it has some significant competitors who are both big and small players. They include:

The Kroger Company

The Kroger company’s headquarters are located in Cincinnati, Ohio, United States. It’s among the largest food stores in the US. Its retail chain stores run through 35 US states and Columbia District. It has 2757 supermarkets in the US and many other store departments in the US-sponsored by 45 distribution centers. Almost half a million workers work in the company. The organization likewise has 1567 fuel general store habitats and 35 food creation plants, and 256 gems stores (Zahorsky, 2020). Like Walmart, Kroger has been putting resources into online business for quicker development, and during the last quarter of 2019, its deals developed by 19%.

Costco

Costco is additionally among the main retail marks situated in the United States. Its working distribution centers are situated in the country and other worldwide business markets. Its mode of operation is different from Walmart and other retailers. It has been investing in technology just like Walmart for faster growth in e-commerce. Sales. It has a good reputation because of its organizational culture centered on its customers, which satisfies them and their employees and stakeholders. It operates 785 stockrooms and runs a private name brand called Kirkland Signature (a direct competitor of Sam’s club). Growth in 2019 improved by 6% compared to the last year (Bhasin & Cruz, 2020). Costco poses a great threat to Walmart following its strong client base and its presence in strategic locations.

Amazon

Amazon was founded by Jeff Bezos, and it is the world’s largest eCommerce brand with a global presence, and its headquarters are situated in Seattle, Washington, United States. Its sales cover a wide range globally. A stockroom for supply and dispersion upholds it. The net deals have multiplied over the most recent four years essentially due to developing interest, mechanical advancement, and client experience. It’s likewise driving in cloud innovation, yet the enormous part is played by eCommerce. Its activities are separated into three parts which are North America, International, and Amazon Web Services. Its sales in 2019 reached $280.5 billion from $232.9 billion in 2018 (Bhasin & Cruz, 2020). There are other competitors of Walmart in the world like the Lowes, which is ranked the second largest home improving brand, Bestbuy one of the largest retail brands in the United States, Wall greens boots alliance which deals with health and wellness products, and it’s based in the United States among others. Walmart has strong competitors in the world.

Supply Chain Management (SCM)

Walmart innovated its supply chain management in 1962 and worked with the current technology to ensure it meets its customers’ service at the lowest prices. Companies within Walmart’s supply chain make a projected sale through collaborative planning, forecasting, and a replenishment system (Rubin, 2020). Every chain is connected to a centralized database system, store-level -point of sale system, and a satellite system. Walmart recently has been working on introducing the latest technologies to improve the in-store customer service. Walmart employs vendor-managed inventory where manufacturers are responsible for maintaining inventory levels. The company, therefore, cuts costs associated with inventory by using a docking system at the warehouse for Fast Moving Consumer Goods (FMCG). The manufacturers have access to distribution inventory data and generate all purchase orders. This means that distributors or retailers do not generate orders.

The manufacturers use EDI A, a step to collaborate supply chain for increased speed and reduced errors. Cross-docking is employed to combine goods from two or more regions avoiding the complex processes in the warehouse (Rubin, 2020). At Walmart’s new distribution centers, trucks from P&G are unloaded directly to the ones destined Walmart stores. Products stay on the shelves for 4 hours, after which they are sold the next day. Walmart has benefited from the cross-docking strategy, which has streamlined its SCM from origin to destination. This cut costs associated with handling and double inspection, which drastically reduce inventory storage costs. In addition, the product reaches the client or destination faster.

Customer Relationship Management (CRM)

To critically understand the Walmart customer, it will be essential to comprehend every facet of the retailer. The way each activity at Walmart begins from the store configuration to barcoding to lighting to greeters cautiously thinking about the effect on clients. Intuitively, every aspect of the business considers benefits to clients. The relationship with customers has evolved from the company’s corporate culture. Walmart has the virtual CRM built-in Enterprise Resource Planning (ERP), where customer care handles all client queries from call answering to order delivery issues (Netrashetty, 2015). Through this strategy, Walmart has built customer loyalty among its clients that is unparalleled among its competitors.

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E-commerce Presence

Walmart is presently the second-biggest eCommerce retailer in the United States with a 5.8%. Its third-quarter 2020 eCommerce deals were up to 79% it crushed Amazon with an enormous edge (Rubin, 2020). It uses the Shopify platform of commerce. It has strategies that have made its eCommerce strong to date, including Omni-channel retailing and one-stop shopping.

Omni-channel Retailing

Stores have turned out to be the secret behind the success of eCommerce in Walmart. Having several networks of stores has helped Walmart to merchandise its goods online. It tested a grocery pickup service in 2013 since most of the United States population lives within 10miles of a Walmart store. This has given some challenges to the retailer, and so far, there are 3,600 grocery pickups at Walmart locations (“Grocers should embrace omnichannel retail strategy,” 2017). During this period of the COVID-19 pandemic, we have seen that consumers love online shopping, but it requires good control. It increased the percentage of eCommerce with online sales up to 155% in the third quarter of 2020 (“Grocers should embrace omnichannel retail strategy,” 2017). Walmart CFO Brett Briggs noted it as a major benefit being an omnichannel retailer since they could utilize their stores to take care of online requests during this period.

Consumers Are Looking for One-Stop Shopping

Since the COVID-19 pandemic began, consumers have been looking for one-stop shopping to shop for their goods online to avoid exposure to the disease. We find that consumers can shop at Walmart multiple things without having to go to other shops. Once they look online what they want from Walmart, they do purchase with ease. Consumers are looking for value in their money (“Grocers should embrace omnichannel retail strategy,” 2017). Walmart is the main retailer shop globally, and it gains shoppers’ craving for esteem. Committing no error to have a worth-based marketing technique is essential for Walmart’s eCommerce achievement.

Database Systems Utilized

The investment made by Walmart has led to the interpretation of data via the creation of a data hub. The company’s data hub for data collection is located in Bentonville, Arkansas. They are in the run of having the largest cloud-based system in the world. The company aims at processing 2 petabytes of data every hour. Walmart uses a wide array of databases across various services. For instance, the company uses Neo4j to optimize customer experience with personal recommendations. Walmart manages roughly 250 million customers week by week across the entirety of its 11,000 stores in 27 nations and by means of its sites in 10 nations (Netrashetty, 2015). The eCommerce group chose the Neo4j to help the customer understand customer behavior and preferences among online shoppers. This system is effective as it has real-time and involves the use of recommendations to elevate revenue. Walmart data warehouse has a storage space of 570 Terabytes which comes second after the U.S government (Netrashetty, 2015). However, the company contracts P&G to monitor all sales and inventory data. Walmart uses this information to make its production and shipping plans.

Security Policies and Customer Privacy Protection

With the famous quote, “Customers are number one,” Walmart has strived for optimal services by delivering low prices and excellent customer services. Walmart uses information shared to provide products and services tailored towards client need and giving the best shopping experience. The company’s policy outlines why they collect personal data, the usage of the personal information, when and whom it is shared with, and choices on data usage (“Walmart privacy policy,” 2020). Security policies prohibit the company from selling personal information for monetary consideration. Walmart fits in the shoes of its founder Sam Walton who emphasized keeping a promise.

Recommendation

The important opportunity that will help position the company more strongly in years to come is expanding Walmart’s online presence. Walmart manages roughly 250 million customers week by week across the entirety of its 11,000 stores in 27 nations and by means of its sites in 10 nations. It gives customers more convenience, more variety, and more accuracy. Still, it also gives customers better prices, and it’s quite true that Walmart has product variety and cheap prices, things that customers want. Physical stores do not provide the convenience and accuracy that online retail and shopping do.

As time changes, customer demands are changing nowadays. Because customers tend to become used to various products and services, they tend to focus on the specialty of a commodity or service. Walmart can take care of customer priorities in different ways. One way of increasing the availability of goods and services so that customers can have various choices and can do this by introducing private corporate labels targeted to value-sensitive customers than price-sensitive customers. This method is secure from price competitors since the brands will be private, and the competitors will not sell the same product.

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Another move of meeting customer needs customization and regionalization of product. Walmart may utilize AI calculations to figure out which items suit which gathering of individuals and which are liked in various regions and utilize similar rules to determine which merchandise is not of much significance and the obsolete ones. The use of AI calculations will also affect necessary Key Performance Indicators (KPI) such as sales volume, the Cost of Goods (COGs), purchase behaviors, data analytics, and financial analytics.

The third proposal is to consolidate both web and over-the-counter deals to establish the most extremely helpful and customized setting for clients. It already allows customers to shop online and pick their products at Walmart locations. Improvement of web-based services and brick-and-mortar facilities may make an additional benefit for Walmart, so if Walmart makes a product and apparatuses for placing the client in a customized reality while the individual is shopping in a Walmart store, Walmart can utilize this instrument to make client experience not quite the same as different retailers thusly drawing in more clients. If Walmart can incorporate these measures, it can stand to hedge the competition in the grocery sector. The organization needs to look into information technology to advance its position in web-based services where it can increase its delivery time. Most clients complain of delayed deliveries or deliveries that were not done appropriately.

References

Bhasin, H., & Cruz, D. L. D. L. (2020). Top 19 Walmart Competitors – Competitor analysis of Walmart. Marketing91. Web.

Bowman, J. (2017). What to Expect from Wal-Mart Stores Inc. in 2018. The Motley Fool. Web.

Cheng, A. (2018). One more Sign Walmart is serious when it comes to Fighting. Forbes. Web.

Company facts (2018). Walmart, corporate.Forbes.

Grocers should embrace an omnichannel retail strategy. (2017). SPS Commerce. Web.

Netrashetty. (2015). Customer Relationship Management of Wal-Mart. Management Pedia. Web.

Rubin, C. (2020). Walmart Supply Chain 2021: Why It Continues to Dominate. Skubana. Web.

Visnji, M., Temeran, A., & Gage, M. (2020). How Walmart Makes Money? Understanding Walmart Business Model. Revenues & Profits. Web.

Walmart Privacy Policy. Corporate. Web.

Walmart revenue 2006-2021: Wmt. (2021). Macrotrends. Web.

Walmart: 2020 Global 500. (2021). Fortune. Web.

Zahorsky, D. (2020). Sample SWOT Analysis for Business: The Kroger Company. The Balance Small Business. Web.

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