Walmart SWOT Analysis: Your Key to Retail Success

Company Details

Owner:	Walton family
CEO:	Doug McMillon (Feb 1, 2014–)
Revenue:	572.8 billion USD (2022)
Founder:	Sam Walton
Founded:	July 2, 1962, Rogers, Arkansas, United States
Headquarters:	Bentonville, Arkansas, United States
Subsidiaries:	Sam’s Club, Walmart Canada, Bodega Aurrerá, ….

Walmart does not need any introduction. It is one of the biggest and most diverse retail chains in the world. With over 11,000 physical stores in 27 countries and online operations in 10 countries around the globe, the company offers everything from groceries to hardware tools, electronics, and beyond.

The success of Walmart stores lies in its excellent business model that stresses low pricing for maximum customer satisfaction. That’s why around 300 million customers visit a Walmart each week.

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Walmart’s SWOT Analysis

Every company, no matter how small or big, enjoys its own set of advantages and faces unique challenges. Through Walmart’s SWOT Analysis, we can take a detailed account of what are the biggest strengths, weaknesses, opportunities, and threats.

A SWOT Analysis explains all these elements related to a company through internal and external factorization. Before we move on to the SWOT Table, let’s explore the details of its internal and external factors.

Walmart’s Internal Factors

The internal factors take into account all the advantages and flaws in the business model and operations that are in control of the company. These can be termed as strengths and weaknesses.

Here is a detailed look at both.

💪 Strengths

As one of the most successful retail businesses in the world, Walmart has the following comparative advantages over its competitors.

Brand Worth & Recognition

With over 60 million cataloged items and around 1960 million customers visiting a Walmart location every week, there is no doubt that Walmart holds immense brand recognition. In terms of financial brand worth, it is among the largest public companies in the world when it comes to sheer sales numbers – $524 billion in 2020.

Rapid Expansion

Walmart is continuing its expansion program. Recently, it has purchased a UK-based retail business, ASDA. In India, the company has successfully possessed Flipkart. Additionally, it has programmed a joint venture with another Indian retail giant, Bharti.

Global Footprint

Walmart is truly global in its business volumes and footprint. It has over 11,000 stores around the globe. Some subsidiaries are also operating under different names. All combined, it puts a great number in Walmart’s income statement every accounting cycle.

Competitive Pricing

Walmart is considered to be one of the cheapest places to do the shopping because of its “everyday low prices“. It has perfected economies of scale and vendor relations, which allow immense control over quality and pricing to the company.

Exceptional Supply Chain & Logistics Operations

Even though it is the largest retailer, Walmart does not shy away from introducing cutting-edge solutions to its operations for excellent supply chain and logistics operations. With central command control, it can monitor inventories in all 27 countries from one location.

Diverse Workforce

Since it is a retail business working out of a physical store, employees hold the central key to operations. In the case of Walmart, employees are around 1% of the US workforce, according to some estimates.

Control Over Suppliers & Vendors

Walmart exercises control over its suppliers and vendors due to its order sizes and influence. This lets the company dictate price and quality in many instances resulting in better consumer experience and profit margins.

Shift to Online Sales

The pandemic has clearly shown Walmart that the future belongs to online shopping. That’s why the company has successfully shifted and adopted the online sphere. Combining both streams, allowed Walmart to report record highs.

🤒 Weaknesses

Even though it is at the top of the food chain, Walmart’s weaknesses in its system and business model are pitting the retail industry giant with challenges. Key insights are given below.

Employees Issues

Walmart is constantly facing employee-related issues. Many platforms are accusing the company of imposing poor working conditions, inadequate health care, and so on.

Inadequate Central Command

Due to its sheer size and sporadic operations in 27 countries and multiple regions, Walmart is experiencing poor central control over business operations and supply chain activities in extended markets.

Thin Profit Margins

With its cost leadership strategy and low-cost products in the retail industry, Walmart is facing lower profit gains. If this continues unchecked, the company faces short-term cash flows which can hamper its operations.

Incidents of Racial & Gender Discrimination

Walmart has often found itself in incidents related to racial and gender discrimination. Many employees reported their concerns regarding gender stereotyping at the workplace.

Similarly, consumers were outraged when Walmart employees placed multicultural hair products under locked drawers compared to open white hair care products.

Dependence on US Market

Walmart has over 4,500 stores located in the US as compared to a total of 11,500 around the globe. Still, the revenue generated from local stores is far higher than those of overseas. There is over a $121 billion difference between sales of these two entities.

Bad Reputation

Walmart has faced a lot of backlash on many issues. Allegations surfaced that the retail powerhouse bribed officials to have its way in Mexico, China, and many more countries. Later, Walmart agreed to pay around $300 million to settle the case.

Walmart’s External Factors

The external strategic factors that are affecting or can affect Walmart’s business are also termed opportunities and threats.

🤑 Opportunities

These opportunities allow Walmart to not only champion its weaknesses but also weather the impending threats for both short and long-term benefits.

Walmart can cement its dominance further through foreign markets expansion, improved employee handling, and focusing on online sales.

Aggressive Expansion

Like every other large corporation, Walmart can extensively benefit by expanding its operations in foreign markets. These include China, the Middle East, and Latin America.

Business Alliances

Instead of building from the ground up in the new regions, Walmart can easily get into alliances and collaborations with regional companies. Acquisitions and mergers are not out of option, since it is a leader in the retail market.

Improved HRM

Walmart has been constantly lambasted by trade unions and employees for its LAX human resource management. The company can repair and even augment its image among peers and the public.

Quality Product Lines

Walmart retail stores have always focused on pricing over quality. This was great and working for a while but now consumers demand better products for even premium pricing.

Augmented E-Commerce

Before the pandemic, the retail market, including Walmart, heavily relied upon physical stores for making tremendous sales. Now, the company has successfully adopted an e-commerce model with discriminatory prices and ease of delivery.

This has opened a new chapter in the history of Walmart as it will take the retail giant in the next century.

Better Employee Relations

By improving working conditions and addressing issues faced by employees, Walmart can strengthen its ties with people from diverse backgrounds.

The late controversies have tarnished its image. Through social media and active campaigning, the company can reclaim the lost love from its customers and prospects.

😨 Threats

Walmart is facing a lot of threats in both commercial and social spheres. Here is a rundown of the most influential ones.

Controversies

Due to poor product control, Walmart was caught into yet another controversy – Impeach 45. The company sold t-shirts with printed words “Rope. Tree. Journalist. Some Assembly Required”.

Walmart saved its skin by contesting that these shirts were sold by third-party sellers and not by Walmart. Still, it damaged the company’s public image.

Other than that, controversies surrounding employee treatment, poor wages, fake products selling off of its shelves, and so on resulted in severe threats to the brand’s integrity and survival.

Competition

Being great has its drawbacks. In the case of Walmart, the company has been a constant target by its competitors. Companies like Target and Costco have adapted and perfected the same business model. They are continuing to give tough times to Walmart.

Political & Legal Issue

Walmart has often come under media scrutiny as well as political and legal issues. By employing a robust team of lawyers and media personnel, Walmart can weather its image issues.

Poor UI/UX

Since Walmart is new in the e-commerce sphere, it will take some time to perfect its online retail model. Recently, many customers have lodged complaints about poor website quality. They said that the site was slow and the products were not organized accordingly. This is another red flag as its online rival, Amazon, is known for its world-class website and relevant services.

Economic Recession

Retailers have a hard time adjusting to economic stability. This has been true for Walmart also, despite its large size and market cap. Among other threats, recession can also threaten the company as its sales are directly dependent on how much consumers are willing to spend.

Trade Tussle

Walmart can suffer a lot from the trade tensions between countries. For instance, it has over 400 stores in China. With the current tussle between the US and China going on, Walmart can face high tariffs which will ultimately affect its profit margins.

Walmart SWOT Table

Strengths

💪 Brand Worth & Recognition
💪 Rapid Expansion
💪 Global Footprint
💪 Competitive Pricing
💪 Exceptional Supply Chain & Logistics Operations
💪 Diverse Workforce
💪 Control Over Suppliers & Vendors
💪 Shift to Online Sales

Weaknesses

🤒 Employee Issues
🤒 Inadequate Central Command
🤒 Thin Profit Margins
🤒 Incidents of Racial & Gender Discrimination
🤒 Dependence on US Market
🤒 Bad Reputation

Opportunities

🤑 Aggressive Expansion
🤑 Business Alliances
🤑 Improved HRM
🤑 Quality Product Lines
🤑 Augmented E-Commerce
🤑 Better Employee Relations

Threats

😨 Controversies
😨 Competition
😨 Political & Legal Issues
😨 Poor UI/UX
😨 Economic Recession
😨 Trade Tussle

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