Introduction
The retail industry has grown from brick-and-mortar to e-commerce as digitization has become the trend globally. A change in lifestyle and unprecedented events have made e-commerce more popular. The outbreak of the COVID-19 pandemic led to an increase in the demand for e-retailing. Walmart is a leading retailer based in the United States that operates in 26 nations around the world. It is a retail business that sells a wide range of products, including food, clothes, car parts, and electronics. Pandey et al. (2021) note that Walmart realized a 97 percent annual growth in the second quarter of the 2021 financial year. An analysis of Walmart’s marketing strategy is conducted through Porter’s five forces model, from which recommendations are drawn for increased competitiveness.
Porter’s Five Forces Analysis
The Threat of Substitutes (Weak)
There are several alternatives to Walmart’s products easily available. Consumers, however, find it difficult to switch away from products offered by merchants such as Walmart because of the external aspect of a limited selection of substitutes (Martinez et al., 2017). In addition, various substitutes are relatively more costly than the lowly-priced items and services accessible at the company’s outlets, making it a weak force of influence.
Suppliers’ Bargaining Power (Weak)
Walmart has been successful in countering and reducing suppliers’ bargaining power. Walmart suppliers are generally at a loss in negotiations since they need Walmart more than the company needs them. Walmart’s shelf space is so valuable that it frequently sets its own prices, forcing suppliers to compete with one another to reach those costs (Martinez et al., 2017). Suppliers also benefit from Walmart’s unique inventory system, which has been operational since the mid-20th century and was a key component of the retailer’s climb to supremacy in recent decades.
Customers’ Bargaining Power (Low)
Walmart has fought against any efforts by customers to reduce profitability. Walmart offers regular low costs that are competitive with those found elsewhere (Martinez et al., 2017). Walmart has also provided a price match promise, which adds to the customer’s motivation to shop around. Purchasing decisions made by individuals have a limited impact on the company’s global sales. Customers’ bargaining power is further weakened by the ineffective force of purchaser diversity, as well as the ineffective force of limited individual purchases.
The Threat of New Entrants (Moderate)
Amid retailing behemoths such as Walmart, it is very simple for new companies to enter the market. It is expensive to establish a brand for a new venture. Despite this, some significant new competitors get the financial capability to establish themselves as well-known brands. Small retailers have lower operating expenses than larger corporations, which is advantageous to them (Martinez et al., 2017). As a result of this situation, numerous smaller stores are capable of competing against Walmart.
The Rivalry of Existing Players (Strong)
In the retail sector, there is a high level of fierce competition and intensity. In this competitive landscape, there are a large number of enterprises of various sizes fighting against one another. Accordingly, the wide range of firms offers difficulties in building Walmart’s competitive edge. Amazon is a viable alternative to Walmart, yet even with Amazon’s acquisition of Whole Foods, Walmart continues to dominate the local food market (Martinez et al., 2017). With the accelerated rate of growth in e-commerce, industry rivalry is set to increase.
Walmart’s E-Commerce Strategy
When it comes to e-commerce, Walmart’s strategy is based on a range of services, including local grocery pick-up after online order placement. Buyers who purchase at the store will be encouraged to check into their site as a result of this. Other strategies include growing their brands to fulfill the requirements of new and existing consumers (Lim et al., 2017). Walmart added a variety of digital advancements in 2019, including the introduction of following-day free shipping without a subscription fee and the accessibility of online grocery purchases for collection or delivery (Pandey et al., 2021). A membership service for limitless grocery delivery was also introduced.
Recommendations for Asset Leverage
The e-commerce sector is dynamic, and retailers have to leverage their essential assets for improved performance. Competitiveness and fresh entry into the retail sector must be prioritized in Walmart Inc.’s long-term strategic planning. Walmart’s marketing strategy and intense growth tactics lay the groundwork for the company’s long-term expansion and competitiveness (Lim et al., 2017). According to Porter’s five forces report, the corporation should expand its engagement in automating internal business operations, which should include its supply network (Martinez et al., 2017). It should also continue to improve its HR management practices and procedures to enhance its competitiveness against Amazon and other retailers.
Conclusion
The online retail industry has grown significantly, with its demand increasing during the COVID-19 pandemic. Walmart is a leading retailer based in the United States that operates in 26 nations around the world. Walmart’s strategy is based on a range of services, including local grocery pick-up after online order placement. From Porter’s five forces analysis, Walmart can leverage its large customer base and improve its HR practices to enhance its competitiveness.
References
Lim, S. F. W., Wang, L., & Srai, J. (2017). Wal-Mart’s omni-channel synergy. Supply Chain Management Review, 30-37.
MartĂnez, A. B., Galván, R. S., & Alam, S. (2017). Financial analysis of retail business organization: A case of Wal-Mart Stores, Inc. Nile Journal of Business and Economics, 3(5), 67-89. Web.
Pandey, R., Dillip, D., Jayant, J., Vashishth, K., Nikhil, N., Qi, T. J., Kee, D.M.H., Mei, T.C., Xin, R.Y.K. & Qhi, L. Y. (2021). Factors Influencing Organization Success: A Case Study of Walmart. International Journal of Tourism and hospitality in Asia Pasific (IJTHAP), 4(2), 112-123. Web.