M RahmanSWOT analysis of Walmart (Walmart SWOT)
This is a detailed SWOT analysis of Walmart. It aims to examine the strengths and the weaknesses of Walmart. It also aims to explore some of the opportunities and the threats facing the company. Walmart Inc. is a multinational retailer, headquartered at Arkansas in the USA.
Strengths of Walmart
Walmart is the largest retailer in the world. It operates in 27 countries under 55 different names and has 11,400 stores. For instance, it operates as Walmart in the USA and Canada, Walmex in Mexico, and Flipkart Wholesale in India. It also has e-commerce websites. Over 265 million customers and members visit Walmart each week (Walmart Inc, 2021). Such a big operation certainly enables it to achieve better economies of scale.
Walmart’s revenue was $524 billion in the 2020 fiscal year. It employs approximately 2.2 million associates worldwide, out of which 1.5 million are in the U.S. alone (Walmart Inc, 2021). It is also noteworthy that approximately 200,000 people were promoted to positions with more responsibilities and higher pay packages in 2017.
Walmart has invested a huge amount of money over the years on technology and the development of its stores. This was instrumental to make it No.2 to Amazon U.S. e-commerce. In fact, almost 66% of its global net sales in 2020 were generated by its U.S. division (Statista, 2020).
Walmart did very well in 2020 when many companies were struggling due to economic lockdowns. Its focus on selected markets such as India and China has been effective as well. It was ranked No. 1 in 2020 in the Fortune 500’s list of America’s largest companies (Fortune, 2021).
Walmart focuses on low prices on broad assortment to beat competition. Every Day Low Price (EDLP) is the central focus of its strategy. It is also famous for its commitment to corporate social responsibilities. It has a $2 billion commitment to fight hunger in the U.S. It also provides grants to thousands of organisations worldwide for social causes.
Weaknesses of Walmart
Weakness is the next issue to discuss in the SWOT analysis of Walmart. While Walmart has a number of great strengths, it is of course not without some limitations. For example, it has faced high employee turnover over the years. However, to combat this, it has raised starting hourly pay for new team associate role to $12 from $11 in around 500 U.S. stores (Thomas, 2020).
Although Wlamart is the largest retailer in the world, its corporate image has been put into question because of numerous legal challenges. It faces a huge number of lawsuits every year concerning issues such as discrimination, unequal pay, and unfair promotions.
Walmart failed in some markets having tried to strengthen its position for a long time. For instance, it entered in the UK in 1999 with an aim to becoming the market leader. However, it could not dethrone the market leader Tesco. Eventually, it decided to sell its UK business in 2020 (Gray and Eley, 2020). Likewise, it decided to sell its majority stake in its Japan supermarket chain Seiyu.
Opportunities for Walmart
Walmart operates in 27 countries. Further expansion into those countries is a very good opportunity. It can also explore in other countries, particularly emerging economies in Asia and Europe for market development. Developing strategic partnerships with other global retailers could be useful to enter a new market.
Introducing e-commerce websites in more countries is also worth exploring. It should be mentioned that Walmart’s e-commerce sales in the U.S. grew by 41% in the third quarter of 2020 (Repko, 2020).
Improvement in HR practices is also a good opportunity. As mentioned earlier, Walmart faces challenges in employee turnover and employee relations. Both of these issues are very important and challenging for the company. Therefore, improving HR practices will not only improve the company’s image, but also help it minimise some of its operating costs.
Threats to Walmart
The last element to address in the SWOT analysis of Walmart is the threat/s facing the company. Theoretically, competition from rivals is a threat. Walmart faces a fierce competition from Tesco, Amazon, Carrefour, and others in both the domestic and many of its international markets.
The Kroger Co, Albertsons, and Ahold USA are the key rivals of Walmart in the USA. Likewise, Tesco, Sainsbury’s and Morrisons are its key rivals in the UK. In fact, Tesco is the market leader of the grocery market in the UK. To learn more about the top supermarkets in the UK, please read Top 10 supermarket chains in the UK.
Legal fines and costs could turn out to be big destabilising factors as well. For instance, Walmart agreed to pay $282 million in 2019 to settle a global corruption probe concerning the behaviour of its operations in Mexico, Brazil, China and India (Bose, 2019).
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Last update: 05 February 2021
References:
Bose, N. (2019) Walmart to pay $282 million to settle seven-year global corruption probe, available at: https://www.reuters.com/article/us-walmart-fcpa-idUSKCN1TL27J (accessed 04 February 2021)
Fortune (2021) Fortune 500, available at: https://fortune.com/fortune500/ (accessed 04 February 2021)
Gary, A. and Eley, J. (2020) How Walmart’s UK invasion fizzled out, available at: https://www.ft.com/content/b80f73e9-336d-49e0-980a-e17635e7cb26 (accessed 04 February 2021)
Repko, M. (2020) As Walmart grows in e-commerce, investors look for a plan to stem the losses, available at: https://www.cnbc.com/2020/02/14/as-walmart-ramps-up-e-commerce-analysts-wait-to-see-or-watch-to-see-if-losses-will-rise-or-shrink.html (accessed 04 February 2021)
Statista (2020) Share of Walmart’s net sales worldwide in 2020, by division, available at: https://www.statista.com/statistics/269415/share-of-walmarts-net-sales-by-division/ (accessed 01 February 2021)
Thomas, L. (2020) Walmart raises starting hourly wage to $12 in 500 stores, as part of a test, available at: https://www.cnbc.com/2020/01/24/walmart-raises-starting-hourly-wage-to-12-in-500-stores.html (accessed 01 January 2021)
Walmart Inc (2021) Our Story, available at: https://corporate.walmart.com/ (Accessed 04 February 2021)
Photo credit: Walmart Canada
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.
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