The Business Strategy of Walmart A Case study

Walmart has continued to retain the top position on the Fortune 500 list consecutively for several years. The brands growth is driven mainly by its everyday low prices strategy. Its online sales in the United States have also grown fast. The brand that started as a small discount retailer in Rogers, Ark in 1945 has spread throughout the U.S. and to several other parts of the globe. It is investing heavily in technology so its customers can shop from anywhere anytime. It is in a bid to win market share away from its rivals Amazon, Target and Costco. While its Sams club has kept struggling with Costco, the earlier investments that the brand made in groceries seem to have started paying off. At the core of Walmarts business model is price leadership. The brand has led the U.S. retail market through its lowest prices. Today, it operates more than 11,300 physical stores and several e-commerce websites under 58 banners in more than 27 countries (Walmart Annual Report, 2019). The focus of Walmart is now on creating a seamless experience for its customers whether they are shopping from their mobiles or in the stores. The brand employs around 2.2 million workers whom it calls associates. 1.5 million of them are working in US. This is a discussion of the business strategy of Walmart and how this strategy has helped the brand prosper.

Everyday Low price

The cornerstone of Walmarts business strategy is its everyday low prices. The brand sells a very large range of products and its focus always remains on selling products at the lowest prices in the market. The millennial customers are interested in three things. They are convenience, low prices and product quality. From grocery and entertainment to several more, Walmart provides a large assortment of products. The strategy is to attract the customers with low prices and keep them engaged with discounts and shopping convenience. Its low prices strategy is really great in terms of customer retention and the reason is the obsession of American shoppers with low prices. Many of them will not shop unless there is a discount or sale attached. The millennial customers are even more addicted to lower costs and shopping convenience. They would like to shop at their own terms and would not shop unless there is a big discount like 50 or 70%.

With time, Walmarts obsession with lower prices has grown deeper. Now, Walmart is looking for more growth and a larger share of the retail pie. To acquire more growth, it is aggressively investing in customer experience. However, the way it has managed to keep its prices as low is the biggest challenge before its competitors. In 2017, it has invested even more into lowering its prices and that has helped it generate better revenue, more than $485 billion. Again in 2018 and 2019, Walmarts growth story has continued. It grew its distribution network to bring more convenience to its e-commerce customers. Net revenue grew to $500.3 billion in 2018 and $514.4

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billion in 2019. It reduced prices on key items in select markets. Consumers have grown addicted to lower prices and the retailers offering least prices are enjoying immense growth. All these factors have resulted in price deflation and further drop in prices across the retail industry seems inevitable. Overall, the level of competition is going to be tougher and since some non-U.S. brands have also entered the industry with low cost offerings, there will be more competition. Walmart is in the lead position and it is now even aggressive about prices and sales. Walmart has decided to fight not only on the basis of prices but to get an even bigger share of the pie, it will focus more on customer convenience. It is why the company has placed extra focus on operational flow and customer service across its stores. Among the several things that have helped Walmart grow its business is also its reputation for being the most customer friendly brand. The question is what are the most important factors that are driving Walmarts growth?

Important factors driving growth of Walmart

Investopedia notes four factors that have driven the growth of Walmarts modern retail model. While the philosophy is still the same that was there since the foundation of the brand, the retail giant has kept modernizing its operations whose role in the efficient model of Walmart has grown bigger with time.

Source: Examiners online adaptation

Case study 1.

Question 1

Refer to the case study above and answer the following question:

Elucidate and justify the systematic, efficient strategic cost process that Walmart could apply to optimise its profit maximisation perpetually in its supply chain in this global increasingly dynamic competitive environment

Provide pictures and relevant examples to support your answer.