Walmart is one of the largest retail chains in the United States. The secret to the success of the world's largest wholesale and retail chain is its versatility and affordability. Walmart outlets offer a huge range of products for various purposes. It is difficult to name a product category that is not in the company's stores.
Walmart sells electronics, goods for sports and outdoor activities, toys, products, furniture, medicines, cosmetics, jewelry, clothes, shoes, household goods and even car tires and more.
Walmart has one of the most advanced and reputable sourcing and transportation systems characterized by high-end technologies and strategic processes. Walmart is a large-scale global retailer with stores in over 25 countries in the world and over 11, 000 stores. Consequently, it employs over 2 million employees and operates with revenue above $20 billion as of 2018. Also, Walmart retails a wide range of products manufactured and distributed by different companies and manufacturers. Besides the extensive nature of Walmart operations, it is a store centered on offering low prices to customers and allowing their clients to save on significant amounts by shopping in the stores.
Walmart's competitive advantage thus lies in cost-effectiveness that allows them to offer competitive prices in the market. Walmart attains cost-effectiveness by instituting higher level, advanced supply chain and logistics management techniques that enable it to cut on inventory costs, transport costs and supplier costs. Walmart attains cost efficiency by sourcing over 80% of its products directly from the manufacturer and utilizing its transport to get the products to its stores. The process of sourcing, transportation, and distribution is managed through advanced and contemporary supply chain management strategies which ensure efficacy and thus enable Walmart to coordinate its processes towards its cost efficiency objectives. Ultimately, Walmart sourcing and transportation are among the top best in the global market drawing significant attention from other companies.
Walmart is the world’s largest retailer and at the top of the Fortune 500 listing, it keeps expanding its market to new countries at a fast pace. The company is quite clear that it’s successful as a business. But, although Walmart still faces challenges with its human resource management. Currently, it has about 2.2 million employees worldwide and about 11,695 stores throughout the world. With this huge number of employees, Walmart should leverage its human resources by invest time and money in developing and managing them because they are the key assets of the company it also leads to higher profit. As (Armstrong, 2006) says if employees are not satisfied in their workplace they cannot meet the company’s goals they will lose their productivity for the workload.
Recommendation
• There is a significant amount of dissatisfaction that is observed when it comes to relationships with the managers. So Walmart can arrange for regular feedbacks been taken from the employees regarding the relationship with superior and accordingly take measures to improve the relationship through group focus and other team building activities
• Give attention more for the morale of the workplace cause it’s essential for the productive performance that is crucial to the success of a company. Employees with low morale are usually suffering from and they feel that they are not appreciative of the hard work and their intense efforts at the workplace. A single unsatisfied employee is capable of disrupting morale in a department or throughout the company.
• The creation of Job Satisfaction is not an easy job for the management. It requires effort and arrangements. So, Walmart should conduct a job satisfaction survey of their employees at least once a year for continuous improvement and according to that, they should take necessary steps to improve because motivated employees work with pride deriving a sense of satisfaction in their work to contribute to the success of the company.
As Walmart is trying to find a growth engine to increase its sales and revenues, after deep analysis, the business development team came up with the express format strategy; a small-format store found in densely populated areas that offers the size, efficiency, and convenience needed for the customers. However, the express format is not simple to implement. A Walmart Supercenter is usually a 180,000 square foot store. Whereas a Walmart express store would be between 12,000-15,000 square foot store. Due to how small the express format will be, Walmart is going to face many challenges with capacity and high costs.
In order for Walmart to operate successfully in a low-capacity store, Walmart could create a new purchase system that allows customers to place orders at any given time but deliver their products all at once. When orders are placed by different customers, those orders can be combined into one big outbound delivery shipment to deliver to its customers only once a day. So, instead of delivering small quantities multiple times a day, Walmart could schedule one specific timing for their outbound shipments to go out for delivery. That way Walmart can utilize all the available truck space it has which will significantly decrease the transportation costs.
In addition to the “once a day” delivery strategy, Walmart could invest in purchasing equipment that helps carry heavy loads as well as fill all loads in the truck more efficiently. Doing so will significantly reduce labor costs since human effort is less efficient than machinery.
As mentioned above, the two options that create a more scalable and efficient replenishment system for the express format would be designing a new purchase strategy for the customers and investing in equipment and machinery. Both options will be supported and opposed by many factors. One factor that might oppose implementing those options would be the high costs. The new purchasing strategy will allow a one-time delivery (once a day) for its outbound trucks rather than delivering small quantities in small tracks. This concept will require the purchase of new equipment and machinery that can be expensive.
In our case, Walmart would want to purchase large delivery trucks that could hold loads triple the amount a regular delivery truck would hold. The bigger the number of packages needed to be loaded on a truck the more time a worker would need to complete loading a shipment. That is why, in addition to purchasing large trucks, Walmart needs to invest in purchasing forklifts that could hold heavy equipment. This proposal might not be supported by the finance team due to the high costs associated with purchasing the equipment.
However, this option might be supported by the logistics team because reducing manual work by replacing workers with machinery can increase the efficiency level of the loading process.
Walmart Stores - the largest retail network not only in the US but also in the world. The company Walmart includes more than 10 000 stores around the world. The format of stores is supermarkets which you can buy both food and home products - the company maintains the maximum range in its stores. Due to the huge turnover of Walmart Stores, the prices in its stores are much lower than the average market and almost equal wholesale (Mujtaba, 2007). Walmart Stores as the world's largest operator of retail stores, the largest company in the world in terms of revenue use of network strategy includes such terms as “the maximum range and the minimum, aspiring to wholesale, prices” (Marcilla, 2014). The company operates through three segments: Walmart USA; Walmart International; Sam's Club. Walmart also provides financial and related services, including money transfers, prepaid cards, bank transfers, currency exchange, and bill payment (Ostrander, 2011).
The business model of Walmart is synergy. It is a 'strong side' in the network is considered to be 'synergy of infrastructure' (Yang, 2009). Thanks to the presence of 4,600 stores throughout the country, as well as full-service centers and distribution centers, the network can offer the customer or pick up the order from the nearest point to his place of residence, or deliver the goods from a nearby store. None of the competing companies was able to invest such funds in their business. As far as I’m concerned, the key to the success of Walmart was the aggressive expansion combined with low prices.
The success of Walmart is largely due to the pricing policy of the company. Firstly, the principle of 'low prices - every day' is declared. For the buyer, this means the ability to purchase cheap goods at any time, instead of purchasing only at periodically held sales. Walmart also has achieved success in distribution and transportation due to the fact that the management of the company considers these activities as a source of competitive advantages, and not as secondary functions like other companies. In addition, they support these activities with the necessary investment and funds. Many companies do not want to spend money on distribution until they are forced to by circumstances. Walmart is not going to such expenses, because we see and constantly demonstrate to the others that this reduces our costs.
However, there are also some factors of failure for Walmart. The main reasons for the failure of Walmart were the high saturation of the market with local discounters and the inability to adapt to the characteristics of consumer tastes. Walmart was also repeatedly harassed by unions, as well as Christian and green organizations. According to APWU, Walmart has accused the network of violating environmental standards, mistreatment of personnel (low salaries, poor medical care), unfair business practices, discrimination against women, and national and sexual minorities. In recent years, the Walmart network has been constantly criticized by representatives of various public organizations. So, one of the claims is that the company for many years now does not allow the presence of trade unions at its trade enterprises. As a rule, the management of the corporation forces employees to vote against the creation of a trade union, threatening to close the corresponding supermarket and, thus, deprive them of their work.
In my opinion, Walmart will not yet have such a strong position in five years as for now, but it is believed that the company will win sooner or later, for which it will have to invest heavily in improving services, advertising and customer bonuses. However, there is also an opposite opinion that existed: that the retailer will not be able to adapt to a more flexible market due to its colossal size.
The old large offline retail brand, one of the biggest on the planet, is desperately trying to stay in demand in a world that is rapidly moving towards online commerce and various additional services. Amazon was a pioneer in this business model. It had been losing money for many years, gradually crowding out competitors in order to win a dominant share in various markets. It as one of the biggest online shopping sites has really done some incredible marketing works to win the consumers. In this digital-driven society, the existence of Amazon really provides consumers convenience. With simply one click, people will have food or groceries delivered the next day if you are an Amazon Prime. Also, for students, you can have a Prime discount, which seems to be attractive for a student who has fewer allowances.
Smart supermarkets are far from the only front on which Walmart is preparing for a battle with Amazon. The other day, it announced plans to turn her daughter Vudu into a full-fledged rival Prime Video by the end of this year, with lots of movies and TV shows to choose from. They will help her create personal services to help with purchases, as well as “smart” drones and baskets to help customers with finding and choosing products. Walmart has announced a strategic partnership with Microsoft. Walmart, the largest US supermarket chain, has long been tough on the tough competition with Amazon on all fronts and now plans to compete in a completely new territory. The company will create its own video service as opposed to Amazon Prime, reports The Information (Toonkel, Dotan & Anand, 2018). In competition, the retailer also teamed up with Microsoft. The parties entered into a five-year partnership, within which Walmart will get access to the company's cloud services and groundwork in the field of artificial intelligence, says The Verge. In addition, Microsoft is now discussing the possibility of using in the company's supermarkets the developments in the field of autonomous trade, which Microsoft is developing in opposition to Amazon Go (stores without cash registers).
The firm’s prospects for the future are optimistic. Walmart relies on the development of the e-commerce segment, which will act as a catalyst for sales growth in the medium term. To date, this segment is a small part of the company's revenues, but it shows impressive growth. The attraction of online buyers is crucial for Walmart, as its largest competitor in e-commerce, Amazon, is constantly increasing market share. It is recommended to buy Walmart shares for long-term investors who want to receive a growing dividend income and who do not panic in case of individual quarterly failures. The company has an impressive track record when it comes to generating cash flows for its investors.
Marcilla, L. (2014). Business analysis for Wal-Mart, a grocery retail chain, and improvement proposals. Retrieved from https://riunet.upv.es/bitstream/handle/10251/44289/Business%20analysis%20for%20Walmart%20FINAL%20TFC%20Laura%20Barber%C3%A1%20Marcilla.pdf?sequence=1
Mujtaba, B. (2007). Wal-Mart In The Global Retail Market: Its Growth And Challenges. Retrieved from https://www.researchgate.net/publication/228477402_Wal-Mart_In_The_Global_Retail_Market_Its_Growth_And_Challenges
Toonkel, J., Dotan, T., & Anand, P. (2018). Walmart Plots Rival to Netflix, Amazon Prime Video. Retrieved from https://www.theinformation.com/articles/walmart-plots-rival-to-netflix-amazon-prime-video
Ostrander, A. (2011). THE EXPANSION OF A RETAIL CHAIN: AN ANALYSIS OF WAL-MART LOCATIONS IN THE UNITED STATES. Retrieved from https://digital.library.unt.edu/ark:/67531/metadc68027/m2/1/high_res_d/thesis.pdf
Yang, F. (2009). Strategic Analysis of Wal-Mart. Retrieved from http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.900.7982&rep=rep1&type=pdf
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Bentonville, AR
Doug McMillon (Feb 1, 2014–)
Owner: Walton family
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