Last week, Mrs. D’Maggio contacted the Mega-Consulting Group and commissioned to write a SWOT report on Walmart located at 2610 N Prospect Ave in Champaign. It was agreed that the Mega-Consulting Group would conduct a SWOT report of Walmart and submit a full report at the end of July. The SWOT report will be sent to Mrs. D’Maggio’s address, 3745 Oleander Boulevard, Chrisman, ME, 10100, when finished. This is the report of the results of the SWOT analysis.
Walmart is a multinational retail company with chain supermarkets, discount stores, and grocery stores. The general headquarters is in Bentonville, Arkansas. It was founded by Sam Walton on July 2, 1962. As of January 31, 2018, Walmart has 11,718 stores in 28 countries and more than 1.2 million workers in America. In recent years? the annual revenue has reached 500 billion US dollars. It is not only the largest retailer in the world but also the largest corporation.
Mrs. D’Maggio’s Walmart is the one located at 2610 N Prospect Ave in Champaign. In 2000, she took over the company. Mrs. D’Maggio is an absentee owner who only visits her stores about once a week. She hired a manager to represent her on behalf of the company. Her desire is to make the company more profitable.
Walmart’s mission is: ‘We save people money so they can live better.’ It provides a customer-centric experience, allowing customers to shop anytime, anywhere via mobile devices and stores. With the Everyday Low Price strategy, it operates stores mainly for the middle class and lower-middle class. Using its economies of scale, Walmart provides high-quality goods and fresh nutritious food at a low price every day. From grocery and electronics to pharmacy and furniture, Walmart tries to meet the daily needs of every customer.
First, Mrs. D’Maggio’s Walmart is located in a densely populated area where people can easily get there. There are a lot of apartments and residential areas around. The convenient location guarantees Walmart’s large customer base and high profit potential. It is the first choice for nearby neighbors to go shopping.
Second, Walmart has the largest market share and dominant market power over suppliers and competitors in the marketplace. With its economies of scale, especially in terms of sales volume, Walmart can allocate fixed costs over a variety of products to control costs and manipulate prices. As a price maker, Walmart also can set obstacles for potential new competitors to enter the market.
Third, Walmart has a well-known brand name that has a reputation for its convenience and a wide range of products worldwide. The brand has already gained a large customer base and customer loyalty. When customers think of large supermarket, Walmart comes to their minds.
Fourth, Walmart has developed a variety of sound policies, principles and rules to guide and supervise employees as well as to focus on customer service. For example, the Sundown Rule stipulates that employees should respond to all customers’ questions in a professional manner on the same day they receive the problems. The Open Door Policy states that the doors of managers are open to all employees. These policies have laid a solid foundation for a cooperative corporate culture.
First, Walmart’s employee turnover rate is high because Walmart cannot guarantee employees’ basic welfare and only gives them a minimum wage. According to reports, Walmart pays employees below the average wage level. It can be detrimental to the company’s productivity if skilled workers often leave and existing employees lack motivation. New employees need time to adapt to the working procedures and need to be led by experienced staff.
Second, Walmart lacks product differentiation. Walmart is only one of the retailers with similar products and has to compete with stores such as Target and Amazon. In addition to the cost leadership strategy, Walmart has no other core competencies. Thus, Walmart only relies on large sale volume to make a profit.
Third, Walmart’s security systems are very poor. The old security systems are not very effective at identifying crimes. The cameras that are not clear to recognize thieves lead to many unnecessary economic losses. This will not only make the shopping environment unsafe but also reduce customer satisfaction.
Fourth, the product layout is disorderly. Many products are so misplaced and unorganized that customers spend a lot of time looking for them, which is unhelpful for customer satisfaction. In addition, some products are of poor quality, especially fresh food. Some expired foods still backlog on the shelves.
Fifth, Walmart has had negative publicity and experienced many lawsuits in recent years. Walmart has been criticized for its practices, such as poor work conditions, unpaid overtime, and discrimination. The negative publicity damages its reputation.
First, Walmart has already become one of the leading retailers in the United States, and there is little space for further development to gain profit. Now Walmart’s focus is moving to developing countries. Walmart shifts its target market and conducts business in developing countries, such as India and China. Walmart can open up local markets by establishing strategic partnerships with local brands in the emerging markets.
Second, in order to keep up with the trend of the new shopping models, Walmart pays more attention to online shopping and provide customers with the convenience of shopping with mobile devices. Walmart use its regional warehouse to increase the efficiency of its distribution network. With its private truck fleet and skilled truck drivers, Walmart can move cargo between distribution centers quickly and guarantees free two-day shipping.
Third, people are getting more and more obsessed with healthy eating, focusing on nutritional balance and living standards. Walmart has the opportunity to launch its own brands associated with this trend, such as some organic food or gluten-free food. These healthy food can satisfy people’s needs for high-quality life. In addition, Walmart has processed some fresh food and fruits designed to make it easy for working people to carry.
Fourth, as the largest retailer, Walmart has large customer data online and offline. Walmart uses these data as well as technology-leading information systems to analyze customers’ needs and loves. With these information, Walmart can increase the volume of goods sold in large amount and reduce the backlog. Also, Walmart develops supply chain management to improve order tracking and customer relationship management.
First, the biggest threat Walmart faces is the fierce competition from similar brands nearby, such as Target, Walgreen and Costco. These retailers are working hard to give a reasonable price while offering a more enjoyable shopping experience. Sometimes they offer a few discounts, coupons and advertisements to draw customers’ attention. In addition, there are some stores with a focus, such as Harvest for fresh food, to capture the market share.
Second, Walmart’s online shopping is inferior to Amazon. People are more inclined to use Amazon.com for online shopping. Although Walmart has already developed many software, such as Walmart App and Walmart Pay, it is still a long way for Walmart to become a leader in online shopping.
Third, with the trend of online shopping, fewer and fewer people come to Walmart to go shopping. The space in Walmart is vacant and the daily operating expenses are expensive. Walmart turns some space into storage in order to maintain profits.
Fourth, the U.S government is working hard to increase the average salary to increase employees’ benefit. As one of the largest employers in the market, Walmart faces increasing labor costs. In addition, Walmart faces a lot of legal restraints. The government has developed a lot of guidelines and principles to form a market that is fairly competitive.
In general, the business is a successful company known for its low price and convenience. If some changes are implemented, such as focusing more on online shopping and expanding to developing countries, the company is likely to stand up in the fierce competition and make a profit. In addition, using big data to improve supply chain management is a helpful way to understand the market. More importantly, the company must follow its three basic beliefs and values: ‘Respect for the individual, Service to our customers, and Strive for excellence’.