SWOT analysis of Wal-mart
This SWOT analysis examines global retail giant Wal-Mart, a U.S.-based multinational company with locations all over the world. The company specialises in food and non-food items offered at significantly lower prices than the competition with an extreme variety of goods located in large stores and through its online store. This company has many admirers and critics as well as has faced competition on all sides, so it must consider its strengths and weaknesses as well as look to the available opportunities and threats to reshape its strategy for the future. The SWOT analysis provided here can serve as a framework to making changes for a sustainable strategy.
- Wal-Mart has an established brand name that is recognised throughout the world as it is considered to be the largest retailer with the most stores and revenue.
- The scale of operations afforded by Wal-Mart means that it can achieve better economies of scale, especially in terms of the volume of products it sells. This can then be passed onto the customer in the form of a lower price, which makes it difficult for the competition to beat.
- Wal-Mart is admired for its technologically advanced information system for order tracking, inventory, customer relationship management and sales that can be tracked in real time for better decision making and more efficient supply chain management. This means that it can ensure that shelves are stocked at all times in order to maximise sales.
· Wal-Mart offers the widest array of products among retailers, including well-known brand names and its own private label brand, which enables customers to get the most for their money as well as enjoy the best selection possible. With a better chance of finding it all at Wal-Mart and not having to then visit multiple retailers to complete their list, customers will be more likely to return to Wal-Mart.
· Wal-Mart has strength across its entire operation rather than just relying on U.S. stores or one specific region. Its sales figures show that international locations are growing faster than the U.S. market.
· Wal-Mart has experienced numerous lawsuits related to its treatment of employees, including discrimination, unequal wages, unfair promotions, unpaid overtime, poor benefits and poor work environments. This has caused the retailer significant money as well as tarnished its brand reputation.
· The company has high employee turnover and a lack of motivation among existing employees due to this lack of social responsibility towards its workers. This also reflects on the company's image.
· There is a no frills experience in shopping in Wal-Mart with no ambiance or enjoyable service experience unlike other retailers that make the experience more enjoyable or that offer more than just a large warehouse feel to its operations. There is also no differentiation between stores.
· Some of the products sold are of inferior quality, which reflects on the brand in a poor way.
- Wal-Mart has the opportunity to offer more western goods to developing countries that have more disposable income to buy the products now that their economies are growing while still catering to developed countries by offering the value for money during recessionary periods where consumers are seeking bargains.
- Wal-Mart can do more with its other formats, including those larger stores with a full grocery store as well as compete with other supermarkets by offering new grocery formats.
- It can also do more with its private label products as acceptance grows for these products as a quality alternative to big national brands. This would create a higher profit margin for the company and give it more bargaining power with the national brands.
- As the trend toward healthier eating continues, Wal-Mart has the opportunity to introduce special products related to this trend, including more organic and gluten-free options.
- Whilst they have McDonalds in many of their locations, they could consider having their own cafes in the retail locations as well as expand their other services like optometry, spa and beauty services, and banking.
- Wal-Mart has the opportunity to expand its online store and presence, including more of the emerging economies that are considering how to do their shopping online. This low overhead strategy can further the retailer's revenue.
- Wal-Mart is facing more threats from the competition, including global retailers like Target, Costco, Amazon, TESCO and Carrefour. These retailers are working on making their organisations more efficient to shrink the price difference between them and Wal-Mart whilst offering a more enjoyable shopping experience with friendlier service and amenities as well as higher quality products and a similar level of variety.
- The recessionary periods are still a threat because customers still tend to spend less and not purchase so many items even from a retailer like Wal-Mart, including fewer electronics and entertainment purchases.
- There is increasing social threats from local communities that do not like that Wal-Mart comes into their area and hurts the small business owner, essentially shutting them down because they cannot compete on price and selection. This backlash continues throughout the world and also can lead to a tarnished brand reputation.
- Another threat is the rising commodity product prices due to increased labour costs for manufacturing the products, increased raw materials costs, and other regulatory issues that are driving up the price, thereby eroding Wal-Mart's profit margin and competitive advantage.