Strategic questions and analysis for Walmart

Where we are now with Walmart is at a critical juncture in retail. Amazon and e-commerce has continued to dominate the retail space once led by brick-and-mortars. Walmart has had to shift its focus from being a primarily brick-and-mortar store chain to having an online presence as well in order to fight for market share.
We are in the retail market: we sell virtually every type of retail item and offer several services, such as gas fill-up, oil change, car repair, etc. Our company began as a discount outlet, but with most retailers now acting as discount outlets, we try to stay competitive with prices.
Our customers and markets are all over the world. We have nearly 12,000 stores in over 25 different countries and serve over 200 million customers every day (Karbastera, 2016; Jurevicius, 2018). We have attempted to expand into some countries and found little success, but in many cases our retail outlets have been embraced by a range of customers in different parts of the planet (Rao, 2014).
Our competitors consist of other retailer chains like Target in North America, Costco, Dollar General, IKEA around the world, and Amazon and Alibaba online (Pearson, 2015; Jurevicius, 2018).
Our financial strengths include an increasing year-over-year revenue of 485.873 billion USD in 2017, nearly a 1% increase from 2016. However, our weakness is evident in declining net profits: 13.643 billion USD in 2017 versus 14.694 billion USD in 2016—a fall of more than 7% (Jurevicius, 2018).
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Walmart started out in the 1970s by providing customers a discount outlet option through which our company beat the prices of competitors in the market. We acquired several companies along the way and expanded rapidly over the years so that we quickly climbed to the top of the retail industry and became a top-tier Fortune 500 company. Strategic acquisitions have helped the company to secure its foothold. The company is currently looking to penetrate emerging markets, having reached a saturation point in most developed markets by now. India remains closed off, but the option to purchase Massmart in South Africa attracted our interest in 2010.
The critical steps that we took in the beginning were to keep focused on our business’s core concepts: 1) offering a great product at discount prices for consumers while still guaranteeing a profit for the company, 2) developing and maintaining a shopping environment that is appreciated by the marketplace, and 3) offering good jobs to employees with competitive pay and benefits (Rao, 2014).
What we have done right so far has been our ability to negotiate excellent contracts throughout our supply chain. By controlling the supply chain effectively, we have been able to minimize costs. However, as more and more discounters—especially online retailers—enter into the market, margins have been squeezed so that there is little room to go any lower given the restrictions of our supply chain.
Over the years, we have made some mistakes. For example, when we attempted to expand into South Korea and Germany, we failed to adapt to the local cultures and for that reason, we were ultimately rejected by consumers in these countries. What we learned was that our style of retail is not suited for every consumer and in cases where consumers are used to a different type of shopping experience, we must either adapt to the consumer’s wishes or not attempt to penetrate that market.
What has changed since we began this business has been the nature of the business itself. Online shopping is gathering steam by leaps and bounds and numerous brick and mortar retailers have been forced out of the business because of their inability to stay competitive (CBS News, 2017). Unless something happens in the future to make e-commerce no longer viable—such as massive destabilization of the Internet or online security failure—e-commerce will have to be more and more the focus of the industry and of our company going forward.
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Creating our perfect future will depend on several action steps that allow us to increase our online presence and become a go-to source for Internet consumers while also finding the right appeal for our brick and mortar stores in emerging markets. We want to be a dominant player in e-commerce as well as in brick and mortar retail both in developed markets and in emerging markets.
In one year from now, we want to advance our exposure online so as to chip away at Amazon’s and Alibaba’s market share of e-commerce. This will require increased advertising in order to get consumers to come to our website first before going to competitors’. In two years, we want to be able to establish our brick and mortar presence in new emerging markets in Africa, such as in South Africa and Nigeria. In five years, we want to be toe-to-toe with Amazon in terms of online sales. In ten years, we want to be beating Amazon in e-commerce and dominating the brick and mortar retail industry domestically and abroad.
With this company, in the future, I want to be showing how to use innovative and cost-cutting methods to attract consumers, adapt our strategy, and implement methods that will enable us to be the number one source for consumers seeking discount products both online and from brick and mortar retail spaces.
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Increasing web traffic and boosting web sales will depend on how implanted in the everyday consciousness of the online consumer we can get. To this end, Walmart must focus on branding and on developing its brand for 21st century consumers. As the next generation of shoppers is less likely to be driven by brand loyalty and more likely to be driven by information (which is so readily available online today), we must develop our brand by being information-oriented: the more info-friendly we can make our website, the more likely it will be to attract consumers.
In this regard, adapting our brand from being a mainly discount-oriented place to shop to being an info-oriented place to shop can help Walmart to overcome the e-commerce hurdle that has been positioned in front of us by Amazon and Alibaba. Thus, the first action we need to take is to focus on what information consumers want to know when they begin looking to shop online. The second action we must take is being able to convert clicks into sales.
Customers who shop online want to be able to read about the product before they buy—and that includes both information provided by the producer as well as information provided by consumers. Customer reviews play a big part in how consumers shop—and Amazon has been very good about allowing customers to leave reviews and showcasing those reviews on its web pages.
Walmart must do the same by cultivating its online site so that customers are incentivized to leave reviews in order to help other customers shop better. Incentives can include offering a discount to online shoppers once they have left 100 reviews for items that they have purchased. Other online strategies for developing the brand and turning clicks into sales is to start a rewards program and to implement a subscription service that allows shoppers to place orders for faster shipping at zero cost after becoming a Walmart online shopping member.
Advertising during high profile shows on television can help to raise awareness of our increased presence online. Using creative commercials that focus on humor and innovative approaches to the new generation of shoppers will help to show how Walmart’s brand is refocusing itself to appeal to them and their needs. Commercials should highlight the info-oriented approach of the company that shoppers will like on the online stores’ pages.
As for developing our brick and mortar presence in emerging markets, strategic acquisitions will continue to play a part but so too will understanding the culture of the emerging markets’ consumers and how Walmart can appeal to them. The lessons learned from failures in Germany and South Korea will help: Walmart must study the culture before opening a store there and must be willing to adapt if possible so that the store has appeal for the local shoppers.
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The checklist needed to ensure that our future goals are reached will include the following points:
· Web strategies
· Front-end and back-end computer services must focus on design features that put information up front and make navigating sites easy
· Turning clicks into sales is a priority: online sales should be steadily growing month-over-month
· Implementing the incentives for leaving the customer reviews should be accomplished by year-end
· Redeveloping our image and brand so that it is appealing to 21st century, info-oriented consumers
· Highlighting new designs, new approaches, and a new identity in commercials and online advertising that will attract the next generation of consumer
· Brick and mortar strategies in emerging market
· Cultures in Africa, Asia and South America must be studied and analyzed to see which fit our business model and which we can adapt our business model to
· Finding other firms that are available for purchase and assessing whether or not purchase will help obtain a foothold in the market
· Entering at least one new emerging market per year over the next 10 years will help us to develop our business around the world still more completely
· Renegotiating contracts with suppliers so that our costs can be reduced even further, enabling us to stay competitive with companies like IKEA that are in-house and thus very cost-efficient
· Looking into creating in-house products that can reduce our overhead even more substantially: should be completed by year end
· Partnering with governments to ensure success in emerging markets
References
CBS News. (2017). Retailers That Have Filed for Bankruptcy in 2017. Retrieved from
https://www.cbsnews.com/news/retailers-that-have-filed-for-bankruptcy-in-2017/
Jurevicius, O. (2018). Walmart SWOT analysis 2018. Retrieved from
https://www.strategicmanagementinsight.com/swot-analyses/walmart-swot-analysis.html
Karbastera, K. (2016). Walmart and IKEA. Retrieved from
http://216108.edicypages.com/blog/walmart-and-ikea-which-is-better
Pearson, B. (2015). Re-assembly required: What Target, Walmart could learn from
IKEA’s expansion. Forbes. Retrieved from https://www.forbes.com/sites/bryanpearson/2015/03/27/re-assembly-required-what-target-walmart-could-learn-from-ikeas-expansion/#7841339a4693
Rao, A. (2014). Wal-Mart in Africa. ICMR.