Wal-Mart’s Retail Strategy Plan in Canada

History

Wal-Mart Stores Incorporation is one of the leading retailers with over 11,000 stores in different nations (Wal-Mart, 2015). Sam Walton started the company in the year 1962. The company “is headquartered in Bentonville, Arkansas” (Wal-Mart, 2015, para. 2). Wal-Mart has been operating in Canada since 1994 after acquiring Woolworth Canada’s Woolco division. The division used to operate around 122 stores in Canada. The company also acquired Woolco’s employees. Within two years after beginning its operations in Canada, Wal-Mart was ranked by Strategy Magazine as the leading provider of exemplary customer services in the country (Wal-Mart, 2015). The company currently operates 300 stores and 100 supercenters in Canada. This analysis shows clearly that Wal-Mart Canada has evolved steadily to become the leading retailer in the country.

Corporate Structure

The parent company of the targeted retailer is Wal-Mart Stores Incorporation. As well, the parent company owns several subsidiaries and retailers. These retailers “include Asda in the United Kingdom, Seiyu in Japan, Walmart de México y Centroamérica in Mexico, and Best Price in India” (Wal-Mart, 2015, para. 3). The firm also owns “a chain of warehouses known as Sam’s Club” (Wal-Mart, 2015, para. 3). These retailers use similar market strategies to get the best outcomes. The market strategy focuses on various regions that can support the business’ goals. The next move is to open new stores in high traffic stores. The company, therefore, offers reduced prices in comparison with the leading retailers in the targeted region. Customer service delivery is also taken seriously. The approach continues to make Wal-Mart a leading player in the global retailing industry. Wal-Mart Canada, therefore, embraces similar marketing approaches thus supporting the company’s overall strategy.

Mission Statement

Wal-Mart uses the same mission statement for its stores to get the best outcomes. Wal-Mart Canada’s current mission is “to save people money so they can have better lives” (Wal-Mart, 2015, para. 1). This statement continues to support the company’s business slogan. The current slogan is “Save Money: Live Better” (Wal-Mart, 2015, para. 1).

Situational Analysis

Business model

Wal-Mart Canada’s primary business is marketing a wide range of household goods and consumer products to more consumers. The retailing company also operates several grocery stores to address the changing needs of more people. Wal-Mart Canada’s business model focuses on different practices to ensure its consumers get quality products. The company liaises with different suppliers in an attempt to offer low prices. The approach also makes it possible for more people to have better lifestyles (Wal-Mart, 2015). The concept of price reduction continues to support the changing needs of many potential customers.

Macro-environmental variables

The retailer has been operating in an extreme environment. That being the case, the firm encounters numerous challenges that can affect its business performance. The first macro-environmental variable affecting the company is the changing nature of demographics in the country. For instance, the number of young people has increased significantly. As well, more people from different backgrounds have been migrating into the country. These demographic changes compel the retailer to embrace the most appropriate business strategies to emerge profitably (Kotler & Keller, 2012).

The political environment also affects the performance of many corporations. The government of Canada presents powerful guidelines and policies to support the goals of different companies. Companies should also engage in friendly business practices and focus on environmental sustainability (Kotler & Keller, 2012). The political climate also determines the strategies embraced by different companies. More retailers have been emerging because of the political climate experienced in the country (Wal-Mart, 2015).

The economic environment also dictates the performance of every business organization. Fortunately, Canada has been recording a positive economic performance. This performance makes it possible for the retailer to focus on the best business practices. The government also uses powerful incentives to support the level of economic performance (Kotler & Keller, 2012). This approach has made it possible for the firm to achieve its goals.

The cultural environment also determines the performance of every business enterprise. This variable explains why companies should use powerful strategies to deliver culturally-competent services. The needs of people from diverse backgrounds should also be taken seriously. The approach has made it possible for Wal-Mart to realize its business potentials. The other issue faced by Wal-Mart Canada is seasonality. Purchasing trends “of many consumers in the country will vary from time to time” (Wal-Mart, 2015, para. 5). The retailer, therefore, focuses on the best marketing strategies to attract more customers. For example, grocery stores “offer reduced prices for different vegetables whenever they are in surplus” (Strauss, 2015, p. 2). As well, strategic marketing models are embraced during the Christmas holidays.

Overview of the Retail Sector

The Canadian retailing sector is characterized by similar business models. Retailers focus on the same micro-environmental variables in an attempt to achieve their business potentials. The sector “has grown steadily within the past three decades” (Brea-Solis, Cadadesus-Masanell, & Grifell-Tatje, 2012, p. 13). This is the case because the political and economic climates encountered in Canada support the sector. However, changing consumer behaviors force many firms in the sector to focus on better practices. Studies have also indicated that the sector will grow slowly in the next ten years (Brea-Solis et al., 2012). This is the case because “new companies will incur numerous startup costs” (Strauss, 2015, p. 5). The profitability of the sector will, therefore, depend on the economic, cultural, and political forces that will be encountered in Canada within the next few years.

Competition

Competitive Pressures

Wal-Mart Canada has been profitable in the country. However, the firm faces “competition from different retailers such as Sears Canada Incorporation, Costco Wholesale Canada Limited, and Canadian Tire Corporation” (Brea-Solis et al., 2012, p. 17). These retailers market a wide range of products thus presenting both indirect and direct competition. Costco is a direct competitor because it markets similar products. Canadian Tire Corporation also competes with the retailer directly. Some grocery stores in the country continue to attract a large number of potential customers. This move has made it hard for Wal-Mart Canada to realize most of its business potentials.

However, the retailer has numerous stores in different parts of the country. Many analysts also believe strongly that Wal-Mart will be able to acquire new stores in the coming years. This approach will increase its size and make it more successful. The retailer is also dominating the market with its business model. The retailer’s net profits have been increasing steadily within the past few years. The retailer “recorded a net profit of 4.97 billion US dollars in 2014” (Strauss, 2015, p. 6). Wal-Mart Canada’s net sales “stood at 131.5 billion during the same period” (Strauss, 2015, p. 6). These statistics indicate that Wal-Mart Canada has remained one of the successful retailers in the country.

Wal-Mart Canada’s Competitive Strength

The retailer uses a wide range of strategies and models to remain competitive. To begin with, the retailer’s brand name attracts many loyal customers. The firm also avails a wide range of products in every store. This approach makes it possible for more customers to purchase different products. The other competitive advantage is founded on its business model. The retailer hires employees from diverse backgrounds to provide quality customer services (Brea-Solis et al., 2012, p. 17). Its reduced prices also attract more customers. These measures are used to ensure the company competes with its immediate rivals. The retailer’s presence in different locations supports its brand image. The strategies and competitive efforts used by Wal-Mart Canada have worked effectively towards supporting its business objectives (Copeland & Labuski, 2014).

The firm has also identified several retailers that pose numerous competitive challenges and threats. These retailers include Sears Canada Incorporation and Costco Wholesale Canada Limited. The stores are placed in convenient places to attract more customers (Copeland & Labuski, 2014). The retailers also use friendly prices to compete with Wal-Mart Canada.

SWOT Analysis

Strengths
  • Strong brand
  • Fast growth
  • Effective leadership
  • Workforce diversity and culture
Weaknesses
  • Inadequate flexibility for customers
  • Lack of focused/specific marketing practices
  • Absence in different regions in Canada
Opportunities
  • Modern technologies
  • Emerging new markets in the country
  • Availability of products from different suppliers
  • An increasing number of positive business policies
Threats
  • Increased level of competition
  • Bargaining powers of customers and suppliers
  • Changing economic and political factors

Challenges and Strategies

The major challenge affecting Wal-Mart Canada is the increasing level of competition. The retailer might be unable to sustain its growth strategy. Price wars in the country might also make the retailer less profitable. The retailer is embracing various marketing and advertising strategies to attract more customers. It also plans to identify new suppliers to offer reduced prices to its customers (Strauss, 2015). The bargaining power of different customers and suppliers will force the firm to focus on new business practices. However, modern marketing practices and the ability to use online platforms will make it possible for Wal-Mart Canada to attract more customers.

Profitability

Wal-Mart Canada has remained profitable within the past few years. The company’s profitability has been increasing at a rate of 1-2 percent within the past five years. The retailer is currently opening new stores and grocery shops in the country. The firm’s retailing and grocery stores have been generating numerous revenues (Strauss, 2015).

Goals and objectives

The firm has been focusing on the most appropriate business practices to increase its sales and profits. The “same trend of sales increment is expected in the coming years” (Wal-Mart, 2015, para. 6). The retailer’s main objective is to continue satisfying its employees and customers. The retailer’s mission statement seeks to assure more people about the targeted objective (Copeland & Labuski, 2014). The important goal is to satisfy more members of the public. The firm uses reduced prices, quality products, and outstanding customer services to achieve this goal.

Corporate Strategy

Wal-Mart Canada is embracing various strategies to accomplish its business objectives. The corporate strategy focuses on the most appropriate business practices that can deliver the best results. The retailer “invests a lot in customer service” (Strauss, 2015, p. 2). More customers are encouraged to shop online to reduce their expenses. The retailer has identified new strategies that can improve its groceries. Such measures are expected to present new opportunities.

Target Audience

This Canadian retailer has segmented the market in an attempt to achieve the best results. For instance, the firm markets specific products to young children and youths. Women are also targeted using quality cosmetic products. Proper marketing approaches are used depending on the needs of the specified audiences. Online users are currently being targeted to purchase different materials and products from the retailer (Copeland & Labuski, 2014). The approach has made it possible for Wal-Mart Canada to achieve its business goals.

Positioning strategy

Wal-Mart Canada markets itself as the leading provider of quality products. Such products are also marketed using friendly prices. The firm projects this image into the minds of different consumers through the use of a powerful mission statement. Adverts are also used to inform more consumers about different products. The current image of the retailer is that of a leading marketer of different household goods. Many consumers believe that Wal-Mart is the most trusted business partner and retailer. This image has been working positively for the company (Copeland & Labuski, 2014). However, the above competitors use similar approaches to attract more customers. This fact explains why the level of competition has increased.

Technology

Modern businesses are focusing on different technologies to achieve their business potentials. Wal-Mart Canada is embracing the use of different technologies to deal with competition. To begin with, the company has a website that supports its online business practices. The firm also focuses on the benefits of e-commerce (Strauss, 2015). Supply chains are managed using modern information systems. Data handling and analysis is also executed using various information systems. Customer transactions and loyalty programs are managed using different technology systems. The use of technology supports Wal-Mart Canada’s business operations. As well, the use of advanced technology makes it easier for the retailer to monitor the purchasing behaviors of different consumers. Technology improves how information and stock are managed. These practices have improved the retailer’s competitive position.

Human Resources

This retailer uses adequate human resource (HR) practices to remain competitive. The employees are hired from diverse backgrounds. Such workers are then given competitive remunerations (Strauss, 2015). Their concerns are addressed in a timely and effective manner. As well, employees are involved in various decision-making processes. These practices address most of the challenges and problems affecting the retailer. The HR manager collaborates with different leaders to produce the best results.

Customers

Wal-Mart Canada has understood how to recruit and manage its customers. The retailer’s brand image continues to attract more potential customers. Powerful adverts are used to inform more people about its low prices and quality products. The firm also uses loyalty programs to establish long-term and profitable relationships with different customers. The customers are also encouraged to present their complaints. Such grievances are “used during every decision-making process to improve the quality of services availed to the increasing number of customers” (Copeland & Labuski, 2014, p. 39). This approach continues to make Wal-Mart Canada a leading competitor in the country’s retailing industry.

Merchandising Strategy

The success of this Canadian retailer is attributed to its merchandising strategy. The firm “touches the hearts of its shoppers through the use of appropriate layouts, numerous assortments, quality products, and reduced prices” (Copeland & Labuski, 2014, p. 18). The firm also collaborates with responsible suppliers to deliver sustainable services to its customers. The retailer also uses a real-time inventory control system to monitor various supplies and products. This control system ensures that various products are available to targeted customers promptly. The company’s financial strategy focuses on new expenditures that can improve the experience of every customer. This approach makes it easier for the retailer to reinvent its merchandising strategy.

Atmospherics

Wal-Mart Canada is known by many customers as the leading provider of quality customer experience. The firm uses the best store atmosphere to improve the trust of targeted customers. Interior layout is characterized by elegant displays and colors thus increasing the confidence of different customers (Strauss, 2015). Merchandise is displayed conveniently. This practice encourages more customers to purchase more products from Wal-Mart’s stores.

Pricing

The retailer uses the concept of reduced prices whenever marketing its products. This pricing strategy has made it easier for the retailer to win the trust of more customers. The pricing strategy encourages more customers to purchase different products from the firm. The strategy attracts more customers thus increasing the retailer’s level of sales (Strauss, 2015). As a result, Wal-Mart continues to record more profits than ever before.

Promotion

The other important observation is that Wal-Mart Canada uses effective promotional strategies. To begin with, the company uses various platforms to advertise its products. Celebrities are also hired to create eye-catching ads that can attract more customers. Sales promotions are also used to support the company’s goals. Promotions are also characterized by seasonal price reductions (Copeland & Labuski, 2014). Personal selling is embraced whenever the retailer plans to market various commodities to specific groups. These strategies have been effective in supporting the retailer’s business objectives.

Location

Wal-Mart did not devise a specific location strategy for doing business in Canada. This is the case because it started its operations in the country after acquiring Woolworth Canada’s Woolco division. This fact means that the retailer uses most of the locations identified by Woolworth Canada. However, the firm has been opening new stores in regions with many potential customers. It has also been identifying specific locations that can support its long-term business goals. However, this strategy “faces numerous challenges such as changing demographics, economic changes, and cultural dimensions” (Roberts & Berg, 2014, p. 121). The best thing is that the retailer’s brand image is appreciated and respected by many people in different parts of the country. This situation explains why the retailer will remain profitable in the future. The issue of demographics appears to work positively for the company. This variable is making it easier for the retailer to attract more customers.

Other Issues

Return Policy

Wal-Mart Canada uses its “No Receipt” policy to support the needs of more customers (Roberts & Berg, 2014). The “policy applies to every item returned in a store” (Roberts & Berg, 2014, p. 78). Several options “such as cash refunds, gift cards, and exchange for the products are availed to the customers” (Roberts & Berg, 2014, p. 78). These options explain why the company’s return policy supports the needs of more consumers.

Financial Analysis

Wal-Mart Canada has been performing positively within the past few years. The company’s revenues have increased by 1.8 percent in 2015 (Wal-Mart, 2015). The retailer’s ROA stands at 7.70 percent. The company’s Gross Margin is around 3.2 percent. The firm’s Gross Margin Return on Investment (GMROI) is around 13.3 percent. The retailer’s projected inventory turnover is 2.4 percent. One of the retailer’s leading competitors is Sears Canada Incorporation. The company’s revenue has been increasing by around 1 percent. The firm’s ROA is estimated to be -5.41 percent. Statistics show that the company’s Gross Margin is -2.9 percent (Strauss, 2015). The firm’s GMROI is -34 percent. The firm’s inventory turnover is 1.85 percent. The second leading competitor is Costco Wholesale Canada Limited. Costco’s ROA is 7.5 percent. The firm’s revenues have been growing by a rate of 3 percent. Costco’s Gross Margin stands at 2.1 percent. The company’s GMROI is estimated to be 13.7 percent. Inventory turnover is 3.5 percent.

The above analysis shows clearly that Wal-Mart Canada faces threats from different competitors such as Costco Wholesale Canada Limited. As well, the firm is profitable because its business operations have been successful (Strauss, 2015). The firm can also open new stores and use powerful promotional strategies to attract more customers. The approach will increase the firm’s revenues and eventually make it profitable. These strategies will also address the issue of competition and eventually make the firm successful.

Global

Wal-Mart Incorporation is “a global company with its presence in different countries such as the United States, Mexico, Canada, India, the United Kingdom, and Japan” (Roberts & Berg, 2014, p. 3). The company has continued to record more profits in these nations. The firm has been using customized practices to address the changing needs of many customers in the targeted nations. The use of effective leadership makes it easier for Wal-Mart to succeed in the global market. However, some obstacles such as “cultural differences, political environments, changing demographics, and increased competition have continued to affect Wal-Mart performance in different foreign countries” (Roberts & Berg, 2014, p. 21). The best thing is that the firm is using powerful efforts to deal with competition. The firm is also embracing the use of social media to have a successful global strategy.

Wal-Mart Canada’s Future

This analysis shows clearly that Wal-Mart Canada will remain profitable in the coming years. The Chief Executive Officer (CEO) will have to embrace powerful strategies to support the retailer’s future business goals. The first strategy should focus on the most profitable business segments, stores, and locations. New stores should be opened in different locations. The CEO should also capitalize on new opportunities arising from the current demographic changes. The firm can also embrace the power of modern informatics to support the needs of more customers. The use of e-marketing can also improve Wal-Mart’s performance. The retailer should use online tools to satisfy the changing needs of more customers (Kotler & Keller, 2012). The practice will eventually make the retailer successful.

Reference List

Brea-Solis, H., Cadadesus-Masanell, R., & Grifell-Tatje, E. (2012). Business Model Evaluation: Quantifying Wal-Mart’s Sources of Advantage. Harvard Business School, 1(1), 1-46.

Copeland, N., & Labuski, C. (2014). The World of Wal-Mart: Discounting the American Dream. New York, NY: Routledge.

Kotler, P., & Keller, K. (2012). Marketing Management. New Jersey: Prentice Hall.

Roberts, B., & Berg, N. (2014). Wal-Mart: Key Insights and Practical Lessons from the World’s Largest Retailer. New York, NY: Kogan Page.

Strauss, M. (2015). Wal-Mart Canada profit falls despite boost in grocery sales. Web.

Wal-Mart: Save Money, Live Better. (2015). Web.