Wal-Mart is one of the largest multinational retailing corporations operating in North America and globally. The company was founded by Sam Walton in 1962. Today, the company’s headquarters are located in Bentonville, Arkansas. The corporation developed from a small chain of stores in Arkansas, and now Wal-Mart operates more than 7,000 stores which are located round the world (Ingram, Yue, and Rao 55; “Walmart”).
Wal-Mart’s operations are organized in a specific way to cover the needs of such divisions as the US stores, Wal-Mart Sam’s Club, and international stores located globally (“Walmart”). Wal-Mart stores propose a variety of food products, drugs, and general goods. To analyze the corporation’s retailing strategy and to state the perspectives for the corporation’s future development, it is necessary to focus on examining the Wal-Mart strategy’s strengths, weaknesses, threats, and opportunities.
The Analysis of the Industry and Wal-Mart’s Strategy
The retailing industry in the United States is highly competitive, and Wal-Mart has to compete with such rivals as Kmart, Target, Meijer, and Safeway directly. The most challenging competition is observed in the sphere of general retailing where supermarkets compete in proposing a range of goods, stating low prices, and developing discounting strategies for customers. However, Wal-Mart also competes with Costco in the sphere of warehouse club activities (Pradhan 567).
To compete within the industry effectively, Wal-Mart developed a successful retailing strategy which should be discussed with references to the concepts of target market and retail positioning (Levy and Weitz 110). Wal-Mart’s target customers are diverse in their needs and interests that is why the company orients to satisfy the demands of the different population’s categories, including women, elder persons, and children.
Wal-Mart’s retail positioning depends on the ways of how the company can be differentiated from the other retailers within the industry. Wal-Mart chooses to attract different customers while proposing them a variety of products and innovative approaches to researching and analyzing their preferences (“Walmart”).
To provide customers with the products which are interesting for them while following the low-cost strategy, Wal-Mart also develops the strong relations with suppliers, and these relations are beneficial for both the retailer and customers.
This approach should be discussed with references to the company’s retailing mix which includes the focus on product, price, place, and promotion. Wal-Mart establishes strong relations with suppliers to provide customers with a variety of products satisfying their demands and meeting their local preferences.
The great assortment in Wal-Mart stores provides customers with the opportunity to make the right choice. Moreover, Wal-Mart pricing policies are based on the principle of low-cost retailing, and stores propose different discounts daily and weekly to cover all the groups of customers. It is important to note that Wal-Mart stores are located not only in the US metropolitans but also in small towns in the country’s states.
In addition, the retailer focuses on addressing the customers’ needs that is why Wal-Mart stores located globally are developed to respond to the local expectations (Ingram, Yue, and Rao 60; “Walmart”). The company’s promotion strategy is based on declaring the principle of proposing better products for lower costs, and it is modified regarding the needs of the local public globally.
Wal-Mart Strategy’s Strengths and Weaknesses
Wal-Mart remains to be one of the most successful multinational corporations in the sphere of retailing because of a range of strengths associated with the company’s strategy. The first strength is the effective pricing policy. The company is the price leader within the industry because of proposing lower prices basing on the cost-effective relations with suppliers. The next strength is the focus on the wide assortment proposed to customers.
Selling a range of products which customers need, Wal-Mart stores address all the customers’ daily demands. Furthermore, concentrating on using technologies to collect the data about the customers’ needs, Wal-Mart develops the most effective distribution and delivery systems (Pradhan 567).
In addition, Wal-Mart opens stores in many cities in the USA and in many foreign countries, and the company operates as one of the largest retailers in the world while developing the brand image and customers’ loyalty (“Walmart”). Wal-Mart responds to the modern trends and uses social media and mobile technologies to meet the customers’ interests and to develop the work with customers’ orders.
However, there are also weaknesses in the retailer’s strategy which are the focus on traditions rather than on changes; the lack of the effective differentiation strategy to compete within the industry; and the focus on monopolistic strategy to develop the business within the industry. Having become the largest and most recognizable retailer within the industry, Wal-Mart concentrates on supporting the image rather than on expanding the areas for meeting the customers’ interests (Pradhan 568).
Opportunities for Wal-Mart’s Further Progress
The opportunities for Wal-Mart’s further successful competition within the market depend on the effective use of the strengths related to the corporation’s strategy. Operating internationally, Wal-Mart can focus on the further expansion of the corporation’s presence in the global market. Moreover, focusing on the use of technologies and innovation, the company can also pay more attention to the opportunities of online retailing.
Today, the company uses different mobile apps and develops strategies to operate in the sphere widely (“Walmart”). Thus, the focus on online retailing and using digital strategies is a good opportunity for a company to attract more customers.
In spite of the fact that Wal-Mart as the retailer is attractive for customers during the decades, more attention should be paid to improvement the retailer’s brand image because it is necessary to focus on new approaches to formulating the company’s mission and vision to reflect the customers’ values.
The Threats Challenging for Wal-Mart
Although Wal-Mart employs more than two millions of people globally and its revenues are more than $450 billion, there are several threats which the company can face within the industry because of the increasing competition among the rivals (Pradhan 569). Wal-Mart management strategies and policies do not attract employees, and these strategies are often discussed as discriminating in terms of payments and conditions.
Negative feedbacks related to the company’s policies regarding Wal-Mart employees also influence the customers’ attitude to the retailer, and they can be discussed as challenging for the brand image and customers’ loyalty. As a result, more attention should be paid to improving the company’s corporate strategies to affect the corporation’s development and public’s visions positively (“Walmart”).
The other threats are associated with retailer’s international operations. In spite of the fact that Wal-Mart proposes a wide range of products for customers globally, local competitors can also become a threat to the retailer’s activities because of their focus on responding to the market latest tendencies. More attention should be paid to the strategies followed by Wal-Mart stores globally.
Wal-Mart’s Performance, Position within the Market, and Prospects for the Future
The effectiveness of the retailer’s performance depends on many factors which include the retailing strategy and the positive image as the employer (Levy and Weitz 24). If Wal-Mart’s retailing strategy focused on the customers’ needs and brand image is rather effective to increase the retailer’s competitive advantage, the company’s image as the employer is not effective to contribute to the customer’s loyalty because of the ineffective management strategies and policies.
Nevertheless, Wal-Mart aims to follow the strategy of the sustainable development to respond to the communities’ needs globally (“Walmart”). High levels of sales support the idea that Wal-Mart’s performance is based on the effective fundaments, and the chosen retailing strategy to meet the local customers’ needs globally contributes to the retailer’s strong position within the market.
That is why, the prospects for the future of Wal-Mart stores can be discussed as rather positive because of the customers’ recognition of the brand and Wal-Mart’s effective operation of the retailing mix.
To provide strong financial returns in the future, it is necessary for the company to focus more on expanding the international segment and on improving the relations with suppliers in the United States and round the world. These actions are necessary to expand operations and to increase revenues because it is the way to increase advantage in the situation of the new rivals’ entry.
Being one of the largest multinational retailing corporations in the world, Wal-Mart focuses on responding to the interests of all the customers in the United States and globally. The company’s strategy is rather effective to contribute to the future development of the retailer because Wal-Mart develops its leadership cost strategy, expands the assortment of products, and focuses on opening more stores meeting the demands of the local customers.
Ingram, Paul, Lori Qingyuan Yue, and Hayagreeva Rao. “Trouble in Store: Probes, Protests, and Store Openings by Wal-Mart, 1998–2007”. American Journal of Sociology 116.1 (2010): 53–92. Print.
Levy, Michael, and Barton Weitz. Retailing Management. USA: McGraw-Hill Education, 2011. Print.
Pradhan, Swapna. Retailing Management: Text and Cases. USA: Tata McGraw-Hill Education, 2009. Print.
Walmart. 2014. Web.