Walmart: A Case Study
Walmart is one of the most successful and well-known companies in the world, with a long and storied history that dates back more than half a century.
From its humble beginnings as a small retail store in Arkansas, Walmart has grown into a global behemoth with over 11,000 stores in 27 countries, and annual revenues that exceed $500 billion.
Let’s see how it all happened
History
The story of Walmart begins in 1945, when a young man named Sam Walton returned from World War II with a vision to create a retail empire. In 1962, Walton opened the first Walmart store in Rogers, Arkansas, with a simple mission: to offer a wide variety of products at low prices, and to treat customers with respect and dignity.
Over the years, Walmart’s business model has remained largely unchanged. The company’s focus on low prices has allowed it to dominate the retail landscape for decades, and has made it a household name across the globe.
Of course, Walmart isn’t just a low-price retailer. It’s also known for its massive selection of products. You can find just about anything at Walmart, from groceries to electronics to clothing. This combination of low prices and extensive selection is what has made Walmart one of the biggest retail giants in the world.
Notable Figures
So who are the key figures behind Walmart’s success? Well, of course, there’s Sam Walton himself.
He was the driving force behind the company’s early success, and he set the tone for Walmart’s commitment to low prices and customer satisfaction. But there have been plenty of other key figures over the years, too.
One of the most notable is Lee Scott, who served as the CEO to Walmart from 2000 to 2009. Scott oversaw a period of tremendous growth for the company, and he made a number of important organizational shifts during his tenure.
For example, he pushed Walmart to become more environmentally sustainable and to embrace e-commerce more fully.
Another key figure is Doug McMillon, who took over as Walmart’s CEO in 2014. McMillon has continued to push the company forward, with a focus on expanding Walmart’s e-commerce capabilities and improving its in-store experience.
Under McMillon’s leadership, Walmart has also made a number of major acquisitions, which we’ll get to in a moment.
Market Share and Pricing Strategy
But before we do that, let’s talk about Walmart’s market share. Walmart is the largest retailer in the world, with a market share of around 11%. That might not sound like a lot, but when you consider that Walmart operates over 11,000 stores in 27 countries, it becomes clear just how dominant the company is.
One of the keys to Walmart’s success has been its ability to set and maintain low prices. The company is known for its “Everyday Low Prices” guarantee, which promises customers that they will never have to pay more than the lowest advertised price for any given product. This pricing strategy has allowed Walmart to attract budget-conscious shoppers who are looking for the best possible deal on everyday essentials. To achieve this, Walmart negotiates directly with suppliers to secure the lowest possible prices and passes those savings on to customers.
One example of Walmart’s pricing strategy in action is its approach to private label products. Private label products are products that are manufactured specifically for Walmart under the company’s own brand name. By offering private label products, Walmart is able to cut out the middleman and negotiate even lower prices from suppliers. This allows the company to offer these products at a lower price than comparable national brands, while still maintaining a healthy profit margin.
But Walmart’s low prices haven’t come without controversy. Critics have accused the company of engaging in predatory pricing practices, where it sets prices so low that it drives smaller competitors out of business.
According to a 2015 article in The New York Times, Walmart has been accused of using its market power to negotiate lower prices from suppliers, which in turn allows it to charge lower prices than its competitors.
Despite these criticisms, Walmart has continued to thrive. Its massive scale and extensive distribution network have allowed it to offer a wider selection of products than almost any other retailer, and its commitment to customer satisfaction has made it a trusted and reliable destination for shoppers around the world.
Mergers & Acquisitions
In addition to its pricing strategy, Walmart has also been known for its aggressive expansion and acquisition strategies. In the 1990s and early 2000s, the company went on a buying spree, acquiring a number of major retail chains, including Sam’s Club, Asda, and Jet.com.
These acquisitions allowed Walmart to enter new markets and expand its reach, but they also came with their fair share of challenges. For example, Walmart’s acquisition of Asda in the UK was met with resistance from both consumers and regulators, and the company was ultimately forced to sell off some of its stores to appease competition concerns.
Despite these challenges, Walmart’s acquisition strategy has largely been a success. The company’s purchase of Jet.com in 2016, for example, allowed it to bolster its e-commerce capabilities and better compete with online retail giant Amazon.
Acquisition of Jet.com
Walmart’s acquisition of Jet.com in 2016 was a strategic move aimed at boosting its e-commerce business and competing more effectively with Amazon. After the acquisition, Walmart integrated Jet.com’s technology and leadership team into its own operations and used the platform to expand its online offerings.
One of the key benefits of the acquisition was the addition of Jet.com founder Marc Lore to Walmart’s executive team. Lore, who had previously founded Quidsi (parent company of Diapers.com and Soap.com) and sold it to Amazon, brought valuable e-commerce expertise and a fresh perspective to Walmart.
Under Lore’s leadership, Walmart has made significant investments in its online business, including acquisitions of other e-commerce companies like Bonobos and Moosejaw.
The Jet.com acquisition also gave Walmart access to advanced technology and data analytics capabilities that have helped it improve its supply chain efficiency and better understand customer behavior.
For example, Jet.com’s dynamic pricing algorithms allow Walmart to offer personalized discounts to customers based on their shopping history and preferences.
Overall, the acquisition of Jet.com has been largely successful for Walmart, helping it to grow its online sales and compete more effectively with Amazon. In its most recent earnings report, Walmart reported a 69% increase in e-commerce sales, driven in part by the integration of Jet.com’s technology and expertise. However, some analysts have criticized the high price Walmart paid for the acquisition, which was reportedly around $3.3 billion, and questioned whether the company will be able to generate a sufficient return on its investment over the long term.
Acquisition of Flipkart
Walmart’s acquisition of Flipkart in India in 2018 gave it a foothold in one of the world’s fastest-growing retail markets.
Walmart’s acquisition of Flipkart, India’s largest e-commerce platform, in 2018 was a major move by the retail giant to expand its presence in the rapidly growing Indian market. The acquisition gave Walmart a 77% stake in Flipkart for $16 billion, making it the largest-ever deal in the Indian e-commerce sector.
Here are some of the key outcomes of the acquisition:
1.Market presence: The acquisition allowed Walmart to enter the Indian e-commerce market, which is projected to become one of the largest in the world. Flipkart has a significant presence in India, with over 200 million registered users and a broad range of products.
2.Technology and expertise: Flipkart’s technology and e-commerce expertise have helped Walmart to enhance its online capabilities and compete with other major e-commerce players. Flipkart’s platform offers a range of innovative features, such as mobile payments, product recommendations, and data analytics, which have helped Walmart to improve its customer experience.
3.Supply chain and logistics: Flipkart has a strong supply chain and logistics infrastructure in India, which has enabled Walmart to improve its delivery and fulfillment capabilities in the region. Walmart has also leveraged Flipkart’s expertise in areas such as last-mile delivery and supply chain automation.
4.Competition with Amazon: Walmart’s acquisition of Flipkart was seen as a major move to compete with Amazon, which has been rapidly expanding its presence in India. The acquisition gave Walmart a significant foothold in the Indian e-commerce market and helped it to challenge Amazon’s dominance.
5.Financial performance: The acquisition of Flipkart has helped Walmart to boost its financial performance in recent years. In its fiscal year 2021, Walmart’s international net sales increased by 1.3%, driven in part by strong growth in India.
Overall, the acquisition of Flipkart has been a significant move for Walmart, allowing it to expand its presence in the Indian market and compete with other major e-commerce players. The acquisition has also helped Walmart to enhance its technology, logistics, and supply chain capabilities, and to improve its financial performance.
As of 2021, Walmart had a 9.3% share of the global retail market, compared to 2.3% for Amazon and 1.6% for Costco, according to a report by eMarketer.
Controversies
But Walmart hasn’t been without its share of controversy and criticism. In recent years, the company has faced allegations of labor abuses and low wages, with many employees speaking out about poor working conditions and inadequate compensation. Walmart has also faced legal challenges, including a massive gender discrimination lawsuit that was filed in 2001 and ultimately settled for $11 million.
Walmart has continued to evolve and adapt. In recent years, the company has renewed its focus on e-commerce, investing heavily in online capabilities like curbside pickup and home delivery. It has also made a commitment to sustainability, with a goal of becoming a “regenerative company” that prioritizes environmental and social responsibility.
According to Forbes, Walmart’s renewed focus on e-commerce has paid off in a big way. The company’s online sales have seen steady growth in recent years, with a 69% increase in e-commerce sales in 2020 alone. This growth was driven in part by the COVID-19 pandemic, which forced many consumers to shift their shopping habits online.
But Walmart’s dominance has come at a cost. The company’s low prices and aggressive pricing strategies have been blamed for putting small businesses out of business and contributing to the decline of traditional shopping districts in many communities.
In a 2018 article in Harvard Business Review, researchers found that Walmart’s entry into a new market often leads to a decline in the number of small businesses in that area, as well as a decline in wages for workers in the retail industry. The study also found that Walmart’s presence in a market can lead to a decline in the quality of public services like schools and libraries.
Despite these challenges, Walmart remains a major player in the retail industry, and its impact on the global economy is undeniable.
According to Forbes, the company’s net revenue for 2020 was $524 billion, with a net income of $13.5 billion.
And with a workforce of more than 2.2 million employees worldwide, Walmart is one of the largest employers in the world.
What Businesses Can Learn From Walmart
Here are some of the key takeaways that businesses can capitalize on:
1.Customer-centric approach: Businesses can learn from Walmart’s customer-centric approach, which involves putting customers at the heart of every decision. This means understanding customer needs and preferences, and using that information to drive product development, marketing, and sales strategies.
To implement a customer-centric approach, businesses can conduct market research, gather customer feedback, and use data analytics to gain insights into customer behavior.
2.Low-cost strategy: Walmart’s low-cost strategy has been a key driver of its success, allowing it to offer competitive prices and gain market share. To implement a low-cost strategy, businesses can focus on reducing costs through operational efficiencies, negotiating with suppliers for better pricing, and streamlining processes.
By keeping costs low, businesses can offer more competitive pricing and gain a competitive advantage in the market.
3.Technology and innovation: Walmart has always been at the forefront of technology and innovation, investing in new systems and processes to improve efficiency and customer experience. Businesses can learn from Walmart by investing in technology and innovation to improve their own operations and customer experience.
This might involve adopting new systems or software to automate processes, implementing data analytics to gain insights into customer behavior, or using social media and digital marketing to reach new customers.
4.Mergers and acquisitions: Walmart’s success with mergers and acquisitions demonstrates the value of strategic partnerships and expanding into new markets. Businesses can learn from Walmart by identifying potential merger or acquisition opportunities that align with their strategic goals.
This might involve expanding into new geographic regions, entering new industries or markets, or acquiring companies with complementary products or services.
5.Employee empowerment: Walmart’s emphasis on employee empowerment and development has been a key factor in its success. Businesses can learn from Walmart by investing in their employees through training and development programs, creating a positive work environment, and giving employees a voice in decision-making.
This can help to improve employee engagement, retention, and productivity, leading to better business performance.
By implementing some of these strategies and lessons learned from Walmart, businesses can improve their operations, better meet customer needs, and ultimately achieve greater success in the market.
Final Thoughts
Looking to the future, Walmart faces a number of challenges and opportunities. The company will need to continue to adapt to changing consumer habits and preferences and to invest in new technologies and innovations to stay ahead of the competition. It will also need to continue to address issues like sustainability and labor practices, in order to meet the evolving expectations of consumers and stakeholders.
But with its long history of innovation and adaptation, and its commitment to low prices and customer satisfaction, there is little doubt that Walmart will continue to be a major force in the retail industry for years to come.
Walmart’s success story is one that has been marked by innovation, adaptation, and controversy. From its humble beginnings as a small retail store in Arkansas, to its current status as a global leader with over 11,000 stores in 27 countries, Walmart has remained true to its core mission of offering low prices and high-quality products to customers around the world.
While the company has faced its fair share of challenges and criticisms over the years, its ability to evolve and adapt to changing market conditions has allowed it to remain a dominant force in the retail industry, and a household name around the globe.