Industry Walmart, which was established in 1962, has evolved over more than five decades to become the world’s leading retail chain.. By leveraging innovation, Walmart is crafting a unif
Introduce to Walmart
Industry
Walmart, which was established in 1962, has evolved over more than five decades to become the world’s leading retail chain Walmart has established a vast network of stores across the U.S and expanded its presence globally By leveraging innovation, Walmart is crafting a unified shopping experience that enables customers to make purchases whenever and wherever they prefer, both in physical stores and online The company is generating opportunities and providing value to its customers and communities all over the world Walmart runs more than 10,500 stores and a multitude of eCommerce sites across 19 countries It has a workforce of 2.1 million associates worldwide, with nearly 1.6 million based in the U.S alone [1]
Figure 1.1.1: Key Performance Indicators for Walmart [2]
Walmart has grown to become a dominant force in the retail industry, offering a wide range of products, including groceries, electronics, apparel, and more This company is known for its "Everyday Low Prices" and has built its reputation on offering quality products at affordable prices [1]
1.2 “Top of mind” in Walmart’s industry 1.2.1 In the world
Along with society's advancement, retail services have grown to be highly developed and well-known, with many well-known brands in addition to Walmart
These businesses have established strong names and positions in the community with lots of devoted clientele Several well-known figures in this field worldwide are:
• Amazon is an American tech giant, founded by Jeff Bezos in 1994, initially starting as an online bookstore Since then, it has expanded to become the world's biggest online retailer, selling everything from groceries and household goods to electronics, books, and groceries With its cloud computing platform, Amazon Web Services (AWS), multimedia streaming via Amazon Prime Video, and a range of electronics, including the Amazon Echo, the company is also well- known for its technological innovations Amazon remains a dominant force in the global market, focusing heavily on technological advancements and consumer convenience
• The Schwarz Group is a leading international retail company headquartered in Neckarsulm, Germany Recognized primarily for its low-cost supermarket brands, Kaufland and Lidl, the group is the biggest retailer in Europe by sales
From its humble beginnings as a food wholesaler in the 1930s, it has developed
Figure 1.2.1: Top of mind companies in retail chain on the world [3] into a major player in the retail industry, operating thousands of stores throughout Europe and beyond The company's strategy has proven successful in the competitive retail market as it focuses on offering customers high-quality products at affordable prices In addition, the Schwarz Group actively participates in community and environmental initiatives, aiming to incorporate sustainability and social responsibility into its business operations It is still growing its worldwide reach today, solidifying its standing as a major force in the market
• Costco is a global retail giant operating a chain of membership-only warehouse clubs known for offering bulk purchases at significantly discounted rates Costco was established in Seattle in 1983 and has expanded to rank as the fifth-largest retailer globally It's well-known for its extensive assortment of goods, which includes everything from electronics to groceries and clothes to outdoor living
Low prices and large volume sales are the cornerstones of Costco's business strategy A small range of privately labeled goods and a rotating inventory keep customers coming back to discover new things Additionally, the company has gained customer loyalty through its food courts, optical departments, and gas stations - all of which are well-known for their reasonably priced and delicious offerings
• The Home Depot is a publicly traded company based in Georgia, employing an estimated 471,600 individuals In the United States, it holds a significant market share in at least seven sectors: Retail Trade, Home Improvement Stores, BBQ &
Outdoor Cooking Stores, Online Hardware & Tool Sales, Online Small Electrical Appliance Sales, Online Large Kitchen Appliance Sales, and Lawn & Outdoor Equipment Stores Its most substantial market share is in the Home Improvement Stores sector, where it represents an estimated 51.6% of the total industry revenue The company is regarded as an All Star due to its superior market share, profit, and revenue growth relative to its competitors
Walmart and Amazon are pictured in the top two spots, reflecting the retail sales numbers for the United States in 2021 With astounding sales of $488.0 billion, Walmart leads by a wide margin, while Amazon comes in second with respectable but marginally lower sales of $398.8 billion This suggests that traditional retail giants like Walmart continue to hold significant market share, while e-commerce platforms like Amazon are strengthening their strong presence in the retail landscape, despite the highly competitive nature of the retail industry and the growing prominence of e- commerce
Amidst the wave of economic opening and integration, Vietnam's retail market has grown steadily in recent years, drawing the interest of numerous international
Figure 1.2.2: Leading retailers worldwide, 2021 chain retail sales in US [4] retail corporations Simultaneously, this market becomes appealing to even highly developing domestic brands due to its youthful population and rising average income
Some big names in this industry are:
• Central Retail in Vietnam was established in 2012 with only the Fashion business After more than 10 years, Central Retail has become the largest multi- format foreign retailer in Vietnam that owns the retail brands GO!, Big C; Tops Market…, with 300+ stores, 39 malls across the country with more than 1,000,000 total square meter of retail space across 40 out of 63 provinces and cities The company provides employment and career opportunities for nearly 15,000 employees in Vietnam In Vietnam, the success of Central Retail is not only the results of business, but also a commitment of contributing to Vietnam’s prosperity and enhancing the quality of life of the people
• Saigon Co.op, formally Saigon Union of Trading Co-operatives, is a leading player Since its founding in 1996, the cooperative has grown to become one of the largest in the retail industry, operating a vast network of supermarkets, convenience stores, and shopping centers under the different sub-brands Co.opmart, Co.opXtra, and Co.op Food Saigon Co.op, well-known for its steadfast dedication to community service and quality, prioritizes supporting regional producers and environmental sustainability in addition to providing a large selection of goods Saigon Co.op continues to be a major player in forming Vietnam's retail scene as it spreads throughout the country, meeting the constantly changing demands of the country's growing consumer base
• AEON Group, founded in 1758 in Japan, is one of the largest retail corporations in Asia The group is well-known for having a vast network of supermarkets, specialty shops, and shopping centers With a number of sizable shopping centers and a dedication to environmentally friendly business practices, AEON has made a name for itself as a major player in Vietnam's retail development The company is committed to promoting economic growth, improving the community, and offering a wide range of high-quality goods and services to satisfy the various demands of its clientele The distinctive quality of AEON's presence in Vietnam is its culturally sensitive approach, which combines bringing international retail standards and customer experiences to the Vietnamese market with local taste adaptation
• WinMart and WinMart+ are two retail chains owned by the Masan Group Since their inception in 2014, these brands have seen consistent growth, with over 131 WinMart supermarkets and close to 3,000 WinMart+ stores now operating across Vietnam They offer a wide range of products and services, catering to all customer needs and shopping preferences, from budget-friendly to luxury options This extensive and diverse offering ensures a satisfying shopping experience for all customers
• MM Mega Market Vietnam Company Ltd., a subsidiary of the BJC / TCC Group from Thailand, set up its first distribution center in Ho Chi Minh City in 2002
History
The Bentonville, Ark - based company traces its roots back to 1962 when it was founded by a local business man named Sam Walton, with the first location in nearby Rogers, Ark Those roots were embedded in highly rural areas, as Walmart chose its original path not in the big urban centers but in emerging suburbs and rural outposts that weren't being served by major retailers That was an opportunity Sam Walton aimed to leverage, and he wound up doing that on a monumentally successful basis, as he began to mold the Walmart brand into the consumer behemoth it has become today
In 1967, the Walton family operated 24 stores, generating $12.7 million in sales By 1969, the business was formally incorporated as Wal-Mart Stores, Inc The 1970s marked a period of remarkable growth, with “Mr Sam” expanding Walmart on a national scale, demonstrating the broad appeal of his vision In 1970, Walmart went public, with the first stock selling at $16.50 per share The following year, the first distribution center and Home Office were established in Bentonville, Arkansas
By 1972, Walmart was listed on the New York Stock Exchange (WMT) and with 51 stores, Walmart’s sales reached $78 million In 1979, the Walmart Foundation was created Walmart’s sales hit the 1 billion USD mark per year, earning global admiration From that point forward, Walmart has grown to become the largest retail empire in the United States
Figure 1.3.1: Sam Walton speaks to the community at opening of the first
Figure 1.3.2: Walmart's growth in the 1970s
In the 1980s, the first Sam's Club opened, serving small businesses and individuals, and the first Walmart Supercenter opened, combining a supermarket with general merchandise At that time, Walmart had 276 stores and employed 21,000 associates In 1983, The first Sam's Club opened in Midwest City, Oklahoma and Walmart replaced cash registers with computerized point-of-sale systems, enabling fast and accurate checkout By 1987, the company installed the largest private satellite communication system in the U.S., linking the company's operations through voice, data and video communication A year later, the first Walmart Supercenter opened in Washington, Missouri, combining general merchandise and a full-scale supermarket to provide one-stop shopping convenience and David Glass is named chief executive officer
Figure 1.3.3: Walmart's growth in the 1980s
By 1990, Walmart was the nation's No 1 retailer As the Walmart Supercenter redefines convenience and one-stop shopping, Everyday Low Prices goes international In 1991, through a joint venture with Cifra, a Mexican retail company, Walmart went global In 1993, Walmart celebrated its first $1 billion sales week A year later, Walmart expanded into Canada with the purchase of 122 Woolco stores
Next, Walmart opens its first stores in China During the period 1997-1999, the enterprise achieved its first $100 billion sales year, the Neighborhood Market format was introduced with three stores in Arkansas and entered the United Kingdom with the acquisition of Asda
Figure 1.3.4: Walmart's growth in the 1990s Walmart enters the new millennium dedicated to offering customers a seamless shopping experience, whether they are online, in a store or on a mobile device In 2000, Walmart.com was founded, allowing U.S customers to shop online and Walmart employs more than 1.1 million associates in 3,989 stores and clubs worldwide In 2002, for the first time, Walmart topped the Fortune 500 ranking of America's largest companies In 2005, Walmart played a significant part in disaster aid, donating $18 million and 2,450 truckloads of supplies to those affected by hurricanes Katrina and Rita Additionally, Walmart pledged a strong commitment to environmental sustainability, setting objectives to produce no waste, utilize only renewable energy, and offer products that are beneficial to both people and the environment By 2007, Walmart.com launched its Site to Store service, enabling customers to make a purchase online and pick up merchandise in stores
Figure 1.3.5: Walmart's growth in the 2000s
In the 2010s, Walmart committed to serving customers in a changing retail environment, leveraging both associates and technology to make it happen In 2011, Walmart expanded its business into South Africa by acquiring 51% of Massmart Holdings Limited and with the acquisition of Massmart in South Africa, Walmart surpassed 10,000 retail units around the world Walmart acquires 100% stake in Yihaodian, an e-commerce business in China, up from the 51% stake since 2012 In 2017, Walmart launched free two-day shipping on more than 2 million items, no membership required, Walmart acquired Moosejaw, ModCloth, Bonobos and Parcel
Jet acquires ShoeBuy.com, which is later renamed Shoes.com and Walmart launches Project Gigaton, asking suppliers to help reduce greenhouse gas emissions from its supply chain by 1 gigaton By 2018, Walmart acquires Eloquii, Bare Necessities, and Art.com In 2019, First Walmart Health Center opens, Walmart launches InHome Delivery and free NextDay delivery from Walmart.com and Walmart insources its advertising business, now known as Walmart Connect [6]
Figure 1.3 6: Walmart's growth in the 2010s
From 1962 until now, Walmart has changed its logo 6 times to reflect many of its strategic goals and objectives
Figure 1.3.7: The history behind Walmart's logo from 1962 - Now [7]
Mission, Vision, Strategy, and Operation
Figure 1.4 1: Overview about mission, vision and core values of Walmart [8]
The mission statement of Walmart, which is “to save people money so they can live better,” encapsulates the company’s objective and the principles of its founder, Sam Walton Essentially, the company’s mission statement embodies a pledge to provide cost-effective solutions that improve the living standards of its customers
This concise declaration serves as a strategic guide that propels Walmart to persistently innovate and adopt effective business strategies Their goal is to make superior products available to a broad customer base at a reasonable cost Their extensive product range, consistent value propositions, and customer-focused operations enable Walmart to actualize this mission daily
Nonetheless, Walmart’s mission extends beyond just providing inexpensive products It aims to enhance its customers’ lives, indicating a commitment to societal welfare By offering accessible and economically viable retail solutions, Walmart contributes to improving living standards, demonstrating a dedication that transcends mere commerce
The mission statement’s wider global impact is also worth mentioning With Walmart’s global footprint, the goal of ‘helping people save money’ equates to promoting economic stability in the regions where they operate This mission shapes their approach to various aspects of their international operations, from product procurement and supply chain management to store operations and employee engagement
This mission has enabled Walmart to rise as a reliable and beloved retail behemoth that consistently prioritizes its customers’ needs By advocating for value for money and continually aiming to positively impact their customers’ lives, they have succeeded in establishing lasting relationships that are crucial to their business expansion
Walmart’s mission statement is more than just a formal proclamation of their corporate objective; it’s a daily commitment - a vow they continually endeavor to meet in their pursuit to help people enhance their lives by saving money By ceaselessly seeking ways to provide added value for their customers, they effectively bring their mission from theory to practice, standing as a beacon of corporate excellence [9]
Every company aims to reach its long-term objectives, and to do so, it needs a guiding principle - a beacon that influences every strategic choice it makes
Walmart’s vision statement is a reflection of this principle.
Walmart’s vision statement is: “To become the best at delivering value to our customers, to learn how to sell for less, and to provide the best customer service possible.” These three elements of their vision highlight their strategic path - toward providing value, affordability, and exceptional customer service
Delivering value goes beyond merely offering products at low prices It involves supplying a broad range of high-quality products, consistently ensuring positive shopping experiences, and upholding a steadfast commitment to sustainability Walmart aims to meet its customers’ varied needs and continually surpass their expectations
When Walmart talks about learning to “sell for less,” it underscores their dedication to operational superiority They are constantly on the lookout for new methods and technologies that can enhance efficiency and reduce costs without sacrificing quality Their commitment to affordability is a fundamental aspect of their brand, and they tirelessly strive to realize this through innovative supply chain management, logistical efficiencies, and cost-effective business practices
"Providing the best customer service possible" reflects Walmart’s ambition to establish new standards in customer satisfaction It’s about fostering a shopping environment where customers feel appreciated and listened to They aim to cultivate a culture of exceptional customer service among their employees - from store associates to top-level management Every facet of the customer journey - from product discovery to checkout - is crafted with great attention to detail
These elements of Walmart’s vision statement serve as a blueprint for their strategic planning They synchronize the efforts of their worldwide workforce to achieve this common vision In doing so, they ensure that every decision - whether it relates to merchandising, store layout, digital services, or sustainability - contributes to becoming “the best.”
Walmart’s vision statement acts as their guiding light - a compass directing their path towards a future where they stand unmatched in delivering value, reducing costs, and setting the benchmark in customer service The realization of this vision demands consistent effort, strategic insight, and an unwavering dedication to their principles - a challenge that Walmart is more than ready to take on [9]
The strategy of Walmart pays attention to has a transition to an omnichannel market by having a various network of stores, and also deal with customers with the promise of Everyday Low Prices (EDLP)
Walmart extends an operational strategy where they charge ahead with digital transformation to become a more complete Omnichannel Marketplace to compete with competitors such as Amazon They involve the strategic placement of distribution and fulfillment centers, they can maximize the operational excellence, meet the needs of customers, and get the competitive retail landscape
With the Every Low Prices (EDLP) strategy Walmart can provide customers with unbeatable prices in the wide range of products Because of the lower average price for common goods compared to competitors about 15% [10] This keeps customers loyal and also offers the best deals with them
They also get the Multiple Discounts adds for pricing strategy Through seasonal promotions, clearance sales, or bundled deals, Walmart provides various avenues for saving customer’s money
Walmart ’ position
Figure 1.5.1: Walmart Revenue in Fourth Quarter Report in 2023 [15]
Walmart's third quarter 2023 results show strong revenue growth An increase of 7.3% over the same period last year, total revenue in the quarter reached 165 billion USD E-commerce revenue at Walmart U.S continued to be a bright spot with growth of 17% in the fourth quarter [16]
Figure 1.5.2: The 10 largest companies in the world ranked by revenue in 2023 [17]
Walmart topped the rankings with revenue of $638.78 billion, far exceeding the revenue of Amazon, the second-ranked company, with $554.02 billion And there's a big gap in revenue between Walmart and the other companies in the 10 largest companies This shows that Walmart is the world's leading retail corporation with a revenue scale that surpasses direct competitors as well as large corporations in many different fields [17]
The huge workforce is another factor that affirms Walmart's position as a large employee team with about 2.1 million people working globally This number represents Walmart's enormous influence on the world economy [18]
With huge revenue, superior to competitors in the same industry, wide scale of operations and powerful workforce [19], Walmart deserves the position of “King of retail" on a global scale
Figure 1.5.3: Top 10 world’s most valuable retail brands [20]
Although far away from Amazon in terms of brand value, this gap is still much larger than other retail brands in the top 10 such as The Home Depot (61.1 billion USD), Costco (46.6 billion USD) or Lowe's (31.6 billion USD) [20]
As the only brand in the top 3 that belongs to a retail media company, this affirms Walmart's competitiveness and adaptability to the e-commerce wave [20]
With its large scale, brand and potential, Walmart is expected to continue to maintain the No 2 position, while also paying attention to innovation and improving customer experience to match Amazon [20]
Products and services
As a giant in global retail, Walmart offers a vast selection of products and services to customers worldwide They provide a one-stop shopping experience, meaning you can find a wide variety of items all under one roof, including:
• Animal o Animal includes: pet, equestrian, livestock and animal products Animal housing and carriers including strollers, toys, pet clothing, collars, leashes, crate liners, o Animal Health & Grooming includes: health supplements, nutritional supplements, pharmaceutical, grooming accessories, waste removal accessories, animal house-breaking sprays, food, pet food, snacks, training treats
• Art & Craft o Art & Craft includes: crafting, sewing, knitting supplies, collectibles, display accessories, glues, gift/craft tape, modeling paint, paint applicators and tools
• Baby o Baby Diapering Care & Other includes: baby and toddler products o Baby Food includes: baby formula, food, nutrition o Baby Furniture includes: high chairs, booster seats, cribs, baskets, seats, beds, changing tables, swings, accessories etc o Baby Toys includes: pre-walker, toddler toys (e.g teethers, rattles, mobiles,…). o Baby Transport includes: child seats, strollers, vehicle seats, carriers
• Carriers & Accessories o Carriers & Accessories includes: holders, luggage, travel accessories o Cases & Bags includes: handbags, backpacks, wallets, electronics and camera cases
• Cleaning, Safety & Other o Household, Industrial Cleaning & Other includes: home/domestic cleaning, professional cleaning, janitorial, office cleaning, pest control, petroleum, butane, propane, solid, gel, oil, lubricants, de-greasers, redeemable gift cards and certificates o Safety & Emergency includes: personal safety equipment, safety protection equipment, emergency signaling devices, non-lethal personal defense, firefighting products, emergency escape products, chemical and spill mitigation
• Clothing o Clothing includes: outer/underwear, swimwear, headwear, neckwear, sportswear, protective clothing, fashion accessories, umbrellas, hand-held fans o Baby Clothing includes: baby/toddler clothing, socks, booties, walkers
• Electronics o Electronics includes: consumer electronics, traditional phones (non- cellular/non-smart), smart watches, audio, video, office, networking equipment, video game consoles, cell phones and smartphones, video projectors o Computer Components includes: hard drives, internal hardware, desktops, laptops, tablets o Electronic Accessories includes: accessories for primary consumer electronics, input devices, headphones, cell phone accessories, computer accessories, blank media, video game accessories o Electronics Cables includes: cords and cables for electronics, power cords, video and audio cabling, computer cabling, video adapters, extension cables o Printers, Scanners & Imaging includes: printers, scanners, fax machines o Software includes: software, apps, operating systems o TVs & Video Displays includes: TVs, monitors, projectors, imaging devices.
• Food & Beverage o Food & Beverages includes: food, beverage, sport nutrition (if categorized by FDA and not a supplement), soft drinks and non-alcoholic mixers o Alcoholic Beverages includes: beer, wine, distilled spirits, fortified wines, coolers, pre-mixed cocktails, non-alcoholic beer and wine
• Footwear o Footwear includes: footwear, insoles, accessories, sporting footwear, fashion shoes, baby shoes, ski and snowboard boots
• Furniture o Furniture includes: home, office, religious, outdoor, patio, dining, bistro, pub furniture Bookcases, tables, beds, frames, futons, mattresses, sofas, chairs, benches, stools, ottomans, TV consoles, entertainment centers, utility tables
• Health & Beauty o Health & Beauty Electronics includes: electronic/battery-powered health/beauty/cosmetic products Hair dryers, electric razors, toothbrushes, fitness/health/activity monitors.
• Home o Home includes: homewares, home appliances, accessories, kitchen, dining, portable HVAC units (air conditioning, heating, air purifiers), beverage chillers, water dispensers, small appliances, food storage, rugs, clocks, curtains, linens, mirrors, home fragrance, oils, candles, art prints, statues, wall art, hangings, vases, suits of armor, sheets, mattress pads, blankets, pillowcases, duvets, duvet covers.
• Jewelry o Jewelry includes: fine jewelry, precious gems and stones, fashion and costume jewelry, body jewelry.
• Tools & Hardware o Tools & Hardware Other includes: general contractor and handyman products
• Financial Services: o Debit cards o Money transfer services o Credit cards o Prepaid cards o Gift cards
• Auto Care Centers: Basic maintenance services like oil changes, tire rotations, and battery replacements
• Home Services: Include assembly, home improvement, and installation services for furniture, appliances, and even HVAC systems
• Tech Services: Help with electronics setup and troubleshooting
• Health and Pharmacy Services: o Refills for prescriptions o General health and wellness advice
• Walmart Restored: Offers refurbished electronics and appliances at discounted prices
• Electronic Waste Recycling: Provides a way to dispose of old electronics responsibly
In addition, Walmart also has many other products and services to meet the needs of customers, providing them with quality products and affordable prices [22]
Walmart 5 Porter’s Forces Analysis
Traditional Competitors
The global retail industry is undergoing major changes influenced by advances in technology, changes in consumer behavior and the influence of economic and social factors One of the main trends is the explosion of e-commerce, requiring companies to apply digital solutions to meet rising demand for online shopping
Furthermore, emphasis is being placed on customizing goods and services to offer clients individualized experiences Concurrently, consumers prioritize sustainability and social responsibility, compelling brands to adapt their operations and production techniques
Big businesses in the sector, like Alibaba, Walmart, and Amazon, are all adjusting to these developments Alibaba uses technology to further integrate its services into customers' daily lives, Walmart boosts investment in online retail to compete with rivals, and Amazon keeps growing and promoting the use of AI technology to improve delivery efficiency To put it briefly, in order to maintain growth and success going forward, the retail sector is constantly innovating through the use of technology and adjusting to shifting consumer trends
According to the chart, Walmart leads the chart with a significant revenue of
$601 billion, indicating its dominant position in the global retail market With $233 billion in revenue, Amazon comes in second, demonstrating both its growing presence in physical retail and its robust e-commerce presence Costco's $163 billion in revenue is reported, indicating the success of its membership warehouse-focused business model Kroger's $148 billion in revenue highlights its position as one of the biggest supermarket chains in the US Last but not least, The Home Depot's $146 billion in revenue confirms its status as the industry's top retailer of home improvement products
Figure 2.1.1: The Biggest Retailers in the U.S by Revenue in 2022 [23]
This ranking demonstrates the size and economic power of these retail behemoths and shows how well each has used its own special approach to draw in and cater to a sizable customer base These businesses are still greatly influencing the retail industry, whether it is through their innovations in digital shopping experiences or their investments in supply chain efficiency
2.1.2 Identify competitive advantages of the industry and how competitors deal with them
One of the crucial aspects that companies must consider is competitive pricing
Retail businesses cannot overlook price as up to 80% of customer decisions are influenced by it, according to Finance magazine Businesses not only aim to reach out to the global market, but also develop multi-channel businesses, particularly in the current integration and development context Consequently, one must rely on competitive prices to draw in customers and encourage them to purchase products
Walmart is well-known for being a company that focuses on offering products at discounted costs Walmart's brand strategy has always been to satisfy customers by offering the least expensive products, even from the outset Offering name-brand products to customers at everyday low prices seems to have remained Walmart's core value proposition, despite the company going through significant changes over the course of more than 50 years The components of Walmart's brand strategy that support that are as follows o Scale advantage: Walmart sells cheaper than any other traditional retail brand Walmart also has more stores and sells more products than any other traditional retail brand They produce economies of scale for Walmart's brand strategy collectively Furthermore, Walmart's scale advantages account for nearly all of the factors it uses to maintain low prices Economies of scale, to put it simply, happen when a company lowers costs by raising production volume Walmart's ability to sell a wide range of goods enables them to cut supplier acquisition costs, resell at a profit, and drive out competitors Sam Walton made a number of astute choices throughout the business process, which added up to the scale advantage in Walmart's brand strategy It also strengthens Walmart's position against other pressures from the competition o Competitor: While Walmart's expansion offers many benefits to its customers, there are drawbacks as well Walmart's market dominance is one of them People frequently assume that when Walmart opens in a new place, they will visit there to make purchases and enjoy the atmosphere of a Walmart store Walmart's low prices will entice customers to visit the store repeatedly and come to the conclusion that it is the best option Even though other retailers aren't happy about this, they still have to bow to Walmart's influence Walmart reduces local small businesses' ability to compete o Operating costs: Low cost equates to cheap price Sam Walton uses a variety of strategies to constantly keep Walmart's operating costs as low as possible We still live by this motto today Inventory levels and supply chain management skills make up the first factor The Walmart brand strategy's supply chain management is predicated on electronic product information, direct communication with manufacturers, and warehouses situated no more than 130 miles from retail locations Walmart can determine which items, how much, and when they are needed by using this method Additionally, Walmart's fleet of vehicles aids in cost reduction for the business o Supply: Suppliers want high price, retailers want low prices This turns into the "unwritten" guideline for any talks between the parties But from the start, supplier pressure had less of an impact on Walmart's brand strategy Walmart began with suburban locations for its initial stores They have avoided crowded places and made their riches in less-frequently- visited markets This keeps manufacturers from pressuring Walmart, making it the most well-liked suburban retailer Walmart maintained the upper hand in negotiations with product suppliers until they rose to the top of the American brand hierarchy Walmart benefits greatly from this factor in order to keep their prices for their products low Stated differently, Walmart, being the biggest global retailer, possesses significant negotiating leverage when interacting with suppliers.[24]
Retailers will value it if they can set themselves apart from the competition and offer something better to their customers Every company, therefore, has unique strengths o Walmart: Walmart is well known for offering a wide range of goods at reasonable costs, serving customers from all walks of life, including groceries, apparel, and household goods Walmart has a size and distribution advantage due to its vast store network spanning multiple states and nations o Amazon: Amazon is well-known for having a strong online presence and for providing convenient and quick delivery options through Amazon Prime In addition to selling goods online through its platform, Amazon also maintains exclusive brands like Kindle and Echo and offers cloud and artificial intelligence services via Amazon Web Services o Costco: With a membership policy and a wholesale warehouse business model, Costco offers competitive pricing for large purchases In comparison to its rivals, Costco usually has a smaller selection of products, but it maintains stringent quality control measures that ensure value and cost savings for its patrons o Kroger: Large supermarket chain Kroger offers a variety of fresh food items, locally made products, and private-label products Because of their proprietary brands, such as Simple Truth, which provide customers with a wide range of options in the organic and non-GMO product category, they are especially strong in the food and beverage market
Customer experience is one of the equally important factors in giving businesses in the retail sector a competitive advantage, along with price and product quality Consumers place a high value on retailers' assistance, fervent counsel, and positive customer service experiences o Walmart:
− Improved systems for managing inventory to shorten wait times for customers
− Implemented curbside pickup or home delivery options for online shoppers without requiring them to get out of their cars
− Optimized their mobile app to bring together online and offline components in a seamless shopping experience o Amazon:
− Personalized the shopping experience by using AI and big data to make product recommendations based on each customer's unique behavior and preferences
− Quickly increased the speed of delivery services with Amazon
− Heavily invested in technology, particularly in Alexa, their virtual assistant, to improve the effectiveness of customer service o Costco:
− They were able to maintain a competitive price and high product quality because of their wholesale business model
− Rather than focusing on product variety, it offered a small number of high-quality items, which made it easier for customers to make decisions
− Enhanced customer service and return policies to boost client satisfaction o Kroger:
− Expanded the use of scan-and-go technology to cut down on checkout counter wait times
− Supplied non-GMO and organic products under their own brands, like Simple Truth, in response to consumer demand for healthier options
− Created a loyalty program and mobile app to offer discounts and customize the shopping experience based on past purchases made by customers
➔ Based on the factors analyzed above, it can be seen that Walmart and its rivals face MODERATE competition Each of these companies has a well-known brand and a unique selling point to attract clients.
New market entrants
Walmart's barriers include high capital investment, economies of scale, strong brand identity, and customer loyalty.[25]
• High capital investment: Walmart has a huge scale of operations and extensive network of stores and distribution centers [26] Creating a similar infrastructure system would require huge investment capital and a lot of time, making it difficult for potential competitors to keep up with the scope of operations and operational efficiency of the company
• Strong supplier relationships: Walmart has established close relationships with a large network of suppliers These connections give Walmart access to a diverse source of goods at competitive prices, creating another barrier to market entry
New competitors are forced to invest considerable effort and resources to establish comparable supply networks and negotiate favorable terms [27]
• Brand recognition and customer loyalty: The company has affirmed its position as a familiar and trustworthy retail destination for millions of customers [26] Building brand reputation and customer loyalty takes a long time and large investments in marketing and customer service - a big challenge for new competitors [27]
• Economies of scale: Operating at scale helps Walmart optimize costs in sourcing, distribution and inventory management activities Thanks to its cost advantage, Walmart can offer competitive prices, making it difficult for new competitors to compete on price [27]
2.2.2 Analyze the switching cost of industry
• Reduced Convenience: Finding a new brand's physical stores can be difficult, especially for customers accustomed to Walmart's ubiquity Additionally, competitors may not offer the same variety of products online or offline
• Potential Price Increase: Walmart is known for competitive pricing Switching may mean paying more for comparable products at other brands Customers need to weigh this "switching cost" against the benefits of the new brand
• Loss of Distribution Benefits: As a major retailer, Walmart offers suppliers wider product distribution and bulk purchase agreements, guaranteeing consistent business Suppliers switching distributors might lose these advantages
• Sacrificing Loyalty Benefits: Long-term customers may lose out on price breaks, promotions, or discounts they receive due to loyalty programs offered by Walmart
• Switching Costs for Suppliers: Suppliers incur costs when changing distributors These include finding and evaluating new partners, setup fees, and staff training There's also the uncertainty of performance and potential negative consequences associated with switching Communicating information and requirements to new partners can also be time-consuming and expensive
Although the threat from new competitors appears LOW due to the above barriers, Walmart still needs to maintain vigilance and adaptability in the face of potentially disruptive forces like e-commerce To maintain its position, Walmart has proactively invested in e-commerce capabilities and multi-channel sales strategy.
Substitute products and services
Even though some Walmart products can be substituted, many of them are essentials that people use regularly, like bread, milk, drink, paper towels, or diapers
If alternatives are available for these essentials, they may be available at Walmart
However, for items such as sporting goods, technology, electronics, luxury goods, etc Customers can go to specialized stores to search for more diverse products
The rapid development of e-commerce Buying and selling products or services on the Internet, including purchases made online on websites, mobile applications, and online marketplaces, is gradually becoming more popular among consumers E- commerce brings speed and convenience Makes customers less likely to visit retail stores This is an alternative service and a threat to large companies in the retail industry such as Walmart
2.3.2 Identify Characteristics of Substitute Products and Services
• Substitute products from other retailers:
Walmart offers a vast variety of products and item categories - from groceries to appliances, electronics, clothing, furniture, auto accessories, and more There are few substitutes for these commodities A product and all of its substitutes are likely to be available at Walmart In addition, the company sells some goods and provides services at lower prices than its competitors, so consumers are less likely to replace those products with more expensive ones
• Substitute products from specialized stores:
These stores have more diverse products, prices also become better for some products These include Louis Vuitton, Gucci, Chanel for high-end fashion products, Index Living Mall, Concorder in the interior design industry, or Adidas, Nike in the sports industry,
The trend of online shopping originates from the development of technology when people apply information technology to their sales activities E-commerce brings convenience and time-saving to consumers, and it has changed many of their buying habits The trend of e-commerce is also gradually encroaching and taking customers away from direct sales channels, including traditional markets as well as supermarkets and trade centers
Walmart entered the e-commerce market pretty late Only when they purchased Jet.com in 2016; Walmart made fresh waves in e-commerce Meanwhile, Walmart's competitors such as Amazon and Alibaba, which are tech retailers, have achieved high levels of sales growth in the retail industry through e-commerce After e- commerce sales surged because of the COVID-19 pandemic, Walmart has stepped up to boost its ability to compete with heavyweights such as Amazon and Alibaba in this area
The emergence of producer-owned distribution channels presents a significant challenge for companies within the industry This model allows customers to bypass traditional retailers and purchase products directly from producers, provided these producers have established their own distribution systems While this approach offers a potential threat to established retailers, it also requires considerable investment and infrastructure on the part of the producers
For producers to effectively sell products directly to consumers, they must develop extensive warehouse facilities, transportation networks, and sales systems
These components are essential for managing inventory, ensuring timely delivery, and providing satisfactory customer service However, the costs associated with establishing and maintaining such infrastructure can be substantial, posing a barrier to entry for many producers
Despite the potential benefits of bypassing traditional retail channels, the logistical challenges and financial investments required may limit the widespread adoption of producer-owned distribution channels As a result, while this model represents a notable shift in the industry landscape, its full impact on established retailers remains to be seen
2.3.3 Differentiation between Walmart’s product s and substitute products
Walmart’s products Substitute Products and Services
Walmart is one of the largest supermarket chains in the world
Walmart has a large network of stores across the United States and many other countries around the world.
Competitors include large enterprises and small and medium-sized stores
Walmart's biggest competitors such as Amazon, Target, Costco, all have diversity in business models, industries and scope of operations In addition, small retail stores selling specialized items also provide some competition for Walmart.
Provides a variety of products, especially essential items, to meet consumer needs.
Alternative stores could be specialty stores, organic food stores, electronics stores, sporting goods stores.
Price The prices of products at
Walmart are often known to be quite competitive and suitable for consumers Walmart is famous for serving the needs of both families and individuals with its low price strategy, regular discounts and offers to attract customers.
In some cases, for large product quantities, businesses similar to Costco have lower prices than Walmart Meanwhile, small stores find it difficult to compete on price because of costs, human resources, technology,
Walmart offers a diverse and comprehensive customer service, including multiple communication channels online through its website and mobile app, as well as in physical stores They have a flexible returns and refunds policy and are committed to resolving customer complaints quickly and fairly.
Competitors' customer service may have its own strengths and weaknesses Some may focus on personalized customer service or special policies aimed at attracting and retaining customers.
Table 2.3.1: Comparison of Walmart's products substitute products
➔ Walmart's formidable presence in both online and offline marketplaces affords the company a unique advantage in terms of flexibility and innovation By operating across multiple channels, Walmart can adapt to changing consumer preferences and market trends more effectively than competitors with a singular focus This flexibility allows Walmart to continually innovate its offerings, ensuring that it remains competitive in the ever-evolving retail landscape Furthermore, Walmart's extensive reach and diverse product portfolio reduce the likelihood of significant threats from product and service substitution With a wide range of products available both online and in physical stores, customers are less inclined to seek alternatives elsewhere Additionally, Walmart's emphasis on providing value to customers through competitive pricing and convenience further strengthens its position against potential substitutes These are the conditions that keep the impact of substitute products on Walmart LOW.
Customers
Figure 2.4.1: Demographic statics of Walmart customers in 2023 [28]
Walmart primarily targets low to middle-income groups and rural, suburban families who value convenience in shopping They are particularly interested in prices and discounts Walmart takes pride in its ability to offer goods at a relatively low cost due to its “Everyday Low Prices” strategy Rather than desensitizing their customers to prices, they attract shoppers to Walmart because of its cost-effectiveness, thereby reducing their customers’ price sensitivity.
Figure 2.4.2: Number of Walmart stores in the USA in 2024 [29]
Another element influencing their price sensitivity is their loyalty to the brand and the convenience it offers As a dominant player in the retail sector, Walmart operates over 10,600 stores nationwide [30], particularly in the US, Walmart has 4,618 stores as of April 15, 2024 The company is capitalizing on a devoted customer base and significant brand recognition, with 90% of the U.S population residing within 10 miles of a Walmart store This brand recognition encourages repeat business, with one-third of customers stating they continue to shop on Walmart.com because they have a history of shopping at Walmart (32%), and because they are familiar with Walmart’s products and stores (33%) [31]
Figure 2.4.3: 2019 Retailer's shopper profiles, based on age [32]
Figure 2.4.4: 2019 Retailer's shopper profiles, based on generation [32]
Figure 2.4.5: 2019 Retailer's shopper profiles, based on gender [32]
Figure 2.4.6: 2019 Retailer's shopper profiles, based on income [32]
Based on data collected by Business Insider, Walmart’s customers typically fall within the 25-34 age range, and often older, as they frequently shop for groceries there When broken down by gender, the distribution is nearly equal, with a less than 10% difference between male and female shoppers, slightly favoring women The same article reveals that while a majority of Walmart customers have an annual income exceeding $100k, this group represents the smallest percentage compared to the other five brands in the chart, indicating that Walmart’s shoppers have the lowest average income
Figure 2.4.7: Best seller Walmart Items in 2023 [33]
An additional report by lit-commerce, which ranks the top 11 items sold at Walmart, indicates that Walmart has achieved significant success in the sale of primarily household appliances and everyday items The report places babycare products at the top of the list for best seller Walmart items
According to these statistics, the typical Walmart customer in Vietnam is likely to be price-conscious and tend to save money They may have a preference for baby care products By taking into account demographic, behavioral, and psychographic traits, we can construct a buyer persona for Walmart:
• Psychographics: o Being mindful of costs and inclined towards frugality o Practicing responsible consumption by opting for eco-friendly items and endorsing local societies o Desiring a seamless blend of digital and physical retail experience o Preferring a shopping method that is efficient, swift, and hassle-free o Seeking a dependable one-stop-shop for a wide range of necessities, from groceries and apparel to home goods
• Challenges: o Concerns about inconsistent product quality when shopping online o Worries about time wasted due to slow delivery and lengthy checkout processes o Anxiety over information security
2.4.3 From Buyer Personal, define how Customer can affect the company
Walmart, as a market leader, offers goods at competitive prices and provides services such as home delivery and an online shopping platform This significantly diminishes the customers' ability to negotiate for lower prices Furthermore, Walmart's market leadership allows it to dictate market trends, further reducing customers' bargaining power
While customers can easily switch to other stores, the sensitivity to price changes makes Walmart their preferred choice The company's wide range of products, unbeatable prices, and convenient locations make it less concerned about potential substitutes
Several factors contribute to Walmart's ability to minimize customers' bargaining power These include its status as a market leader, its competitive pricing, its strong presence in both physical and online retail markets, and the robust and loyal customer base it has built over the years As a result, customers' bargaining power in both online and offline retail stores is LOW.
Suppliers
As a seller of an incredibly wide variety of products, Walmart has cultivated a massive supply chain that consists of well over 100,000 suppliers worldwide To fuel its constant growth, Walmart actively expands this network They achieve this through a combination of methods, including hosting an annual Open Call event where potential suppliers can showcase their products directly to buyers
Additionally, they leverage partnerships with online platforms like RangeMe, which connects them with a network of nearly 200,000 suppliers This multifaceted approach allows Walmart to maintain a diverse and ever-expanding supplier base It's important to note that while some of Walmart's biggest suppliers include well-known names like P&G, Nestle, and Unilever, the vast majority are smaller companies that benefit from Walmart's vast reach Furthermore, Walmart prioritizes building strong relationships with all its suppliers, ensuring they can consistently deliver high-quality products at competitive prices for its customers
Real Estate and Warehousing: With hundreds of warehouses across the US, Walmart collaborates with companies like Duke Realty and Prologue to manage these crucial facilities
Renewable Energy: Committed to a sustainable future, Walmart partners with suppliers like Duke Energy Renewables and Tesla Energy to achieve its goal of 100% renewable energy use by 2035[34]
Transportation: Walmart boasts one of the world's largest private truck fleets, but also collaborates with established transportation providers like UPS, Ryder, and JB Hunt to ensure efficient product movement across its supply chain [35]
Network Infrastructure: Reliability, security, and innovation are key factors when Walmart selects partners for network equipment, telecommunications networks, and internet infrastructure Verizon, Cisco Systems, and AT&T are just a few of the companies that help keep Walmart's systems running smoothly and securely [36]
2.5.3 Switching cost (switching costs of suppliers)
The switching costs for Walmart are low and it can switch from one supplier to another without having incurred any major costs Moreover, it is easier for Walmart to try backward integration than for its suppliers to integrate forward A few of its suppliers are large companies which gives them some bargaining power Walmart's massive supplier network, while advantageous, presents a hurdle when considering changes Switching suppliers incurs significant costs in several areas New equipment, technology, and staff training can be substantial financial burdens
Operational disruptions also arise, requiring investment in managing the conversion process, collaborating with new partners, and adapting to different product handling
Retail giant Walmart, renowned for its convenience and quality, relies heavily on its vast network of suppliers to maintain its success These partners play a critical role in several ways:
• Guaranteed Product Availability: A steady stream of products is essential to meet customer demand, and reliable suppliers ensure Walmart's shelves are always stocked
• Cost of management: Competitive pricing from suppliers allows Walmart to keep its own costs down, ultimately benefiting the customer with lower prices
• Quality Assurance: Partnering with reputable suppliers ensures the materials and products used by Walmart meet the necessary quality standards
• Innovation Catalyst: Suppliers can be a driving force behind Walmart's innovation They provide access to new products, technologies, and services, keeping Walmart at the forefront of the retail industry
• Building Partnerships: Strong supplier relationships allow Walmart to forge connections with other businesses, further solidifying its position in the market
Walmart's vast supplier network exceeding 100,000 companies and the ease of switching between them grants Walmart significant leverage in negotiations This, combined with the importance of suppliers but not a critical dependence on any single one, so the bargaining power of suppliers is LOW
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