Walmart SWOT Analysis 2024: An Ultimate Report With Advice

Walmart is the world’s leading brand in revenue, with over $600.11 billion generated in 2022. The company attracts its large customer base by providing a wide selection of cheap but quality products. To figure out the secrets of this retail corporation, we will go through the Walmart SWOT analysis and understand its business strategies.

Walmart: Company Overview

Walmart was founded as Wal-Mart in 1962 by Sam Walton in Rogers, Arkansas. The company cleverly operated in rural areas during its initial growth to avoid competing with giant retailers such as Kmart. Cold mailing, cost control, and regional warehousing allowed the company to become the largest retailer in the U.S. by 1990. By 1991, the company expanded into Mexico City, opening its first international retail store.

Now Walmart is the world’s leading multinational retail corporation by revenue, and it’s been the leading U.S. retailer since 2021. Its headquarters are in Bentonville, Arkansas, and it employs 2,300,000 people worldwide. In 2022, the company had a market cap of $379.00 billion, and its stock price was $140.54.

Product & Services of Walmart
Retail Store | Financial Services | Health Services | Money Services | Auto Services | Auto Services | Photo Services | Tech Services

Walmart Competitors
Amazon | Costco | Target | Home Depot | Kroger | eBay | Walgreens | Alibaba

Did You Know?

Walmart has an official museum that contains records of its history and heritage. It’s located at 240 S. Main Street in Bentonville, Arizona. The museum is officially known as The Walmart Museum Heritage Lab.

Strengths – Walmart SWOT Analysis

Dominant Store Brands: Since 2011, consumers have been reported to save over 33% by buying store brands, which has slowly drawn attention away from national brands. Walmart’s benefitting immensely from this change, as it has over 30 store brands for a plethora of product lines, including apparel, food, cleaning supplies, healthcare, pet food, kids’ toys, gardening tools, and more. By marketing affordability and quality, the company’s selling at higher profit margins with less manufacturing costs.

Adaptability: Walmart’s hypermarket or supermarket chain strategy was based on the brick and mortal business model. In 2023, the company will have over 10,586 retail stores in 24 countries. However, Walmart has anticipated the need to integrate the e-commerce business model into its operations since 2009. Thanks to creating a hybrid business model, Walmart has managed to tap into consumers with opposite preferences.

Large Scale Operations: Walmart can expend resources and operate on a scale unimaginable to its competitors. The company was struggling to move $1.5 billion worth of inventory in August 2022. While this may seem troublesome, it results in old stock, which can be used to attract consumers, and also get tax savings. Thanks to having a mostly non-perishable large inventory, Walmart will profit regardless of consumer trend shifts.

Leveraging Food Products: Amazon has 8 times more product offerings than Walmart. However, the company still managed to generate $97.921 billion more revenue than Amazon in 2021. A key reason behind this was Walmart’s larger selection and reserve of food products. While Walmart is forced to adjust pricing more and makes small margins on food, it’s always selling, and consumers become more focused on it in economic downturns.

Reliant, Powerful Customer Base: Walmart’s average customer makes $80,000 annually. This is $20,000 or so above most states’ median household salary, only being nearly the median or less in 12 states. Also, most customers have had big financial expenditures and want to save money, and over 30% are loyal to Walmart. So, Walmart’s customers are loyal, subscribe to Walmart’s philosophy, and have high purchasing power.

Weaknesses – Walmart SWOT Analysis

Steep Investment Cost: Business giants such as Walmart cannot immediately respond to external change drivers without repercussions. Constructing an online infrastructure, training, educating, and paying staff have caused Walmart’s ROI to fall to 7.30% by December 2022. The company’s high revenue is coming at a higher cost, and even with a 60% increase in online sales, it’s not making enough for rapid growth.

Poor Response To Shifting Economy: Although Walmart markets itself as a cheaper but quality living, its customer base is well-off and has high purchasing power. With inflation and destabilization taking hold of the global economy, Walmart now has consumers with a negative 3.07% purchasing power growth and frugal spending habits. Each customer will generate less revenue and cause profit margins to lower.

Limited International Presence: Walmart currently has 5,266 international retail stores, but the company still made over 95.45% of its revenue from U.S. operations in 2022. The company opened its 1st global Sam’s Club in Mexico City in 1991 and still hasn’t been able to expand meaningfully in international markets. The company is sorely lacking in developing an impactful international presence, which deprives it of growth and revenue.

Criticized Labor Practices: Walmart has fallen behind in terms of talent management practices and employee relations. In 2007, Walmart was accused of underpayment, discrimination against women, high insurance costs, and more. The company also resources around 50% of its goods from outside, and it’s been accused of using child labor and inhumane work practices to keep costs low. In 2017, workers accused Walmart of penalizing them for taking sick days and discriminating against pregnant women and nursing mothers.

Opportunities – Walmart SWOT Analysis

Preference For Blended Shopping: Customers have been showing a preference for blended shopping, where the physical stores will have the technology implemented for convenience. Walmart’s decade-long optimization of its digital platforms and updating physical stores have prepared it to take advantage of this market trend. The company can offer Q.R. codes for adding items to a virtual cart, which can be digitally paid instead of using a checkout counter. It can also offer customized deals in physical stores via phone apps, and draw in more customers this way.

Exploiting Anti-Amazon Markets: Amazon has been criticized heavily for labor practices, business ethics, and talent management in international markets for years. Countries like Germany and India are Amazon’s biggest customers, but bear negative impressions of the company. Walmart can invade these markets and entice Amazon’s staff to work for them. This will cripple Amazon while Walmart will gain access to large revenue pools.

Service Automation: Although Walmart’s self-checkout has been criticized by both workers and customers, it has been saving the company from large operating costs. Despite protests, Walmart can keep its prices low by ironing out the kinks and pushing for full automation. Labor costs are its biggest inhibitor of growth, and this will help cut it off entirely.

Threats – Walmart SWOT Analysis

Oversaturated Market: One of Walmart’s best-selling categories is groceries. But much of the company’s market share is being challenged by numerous subscription-based food services. Businesses such as Freshly, HelloFresh, and Love With Food either bring prepared meals or ingredients and recipes straight to consumers’ doorsteps. These cost around $50 monthly on average and offer conveniences that Walmart cannot.

Reliant On Perishable Goods: In 2022, over 55.7% of Walmart’s U.S. revenue was generated by selling groceries. While this puts the company ahead of its competition, it also causes it to waste unimaginable amounts of food products and produce per day. This is caused more because of blemishes, limited inventory space, and perception of freshness than expired goods. Being so reliant on this category can cause Walmart to overinvest frequently and waste a lot of resources and money.

Exploits And Thefts: In 2021, Walmart reported over 50% increase in shoplifting, and 28.5% of the thefts have been orchestrated by its employees. 37% of it was external and organized crime, and most of it was accomplished by exploiting the self-checkout system. 2 women even pretended to use digital payments and managed to steal over $100,000 worth of items. As Walmart moves towards full automation, more and more ways to exploit its system will be found, and the company can lose a significant amount of its resources.

[Bonus Infographic] SWOT Analysis of Walmart

Recommendations for Walmart

Although Walmart leads the world in terms of revenue, its international growth and employee management are lacking in comparison. To ensure that it retains the 1st spot for years to come, the company needs to reevaluate its policies and consider the following suggestions.

• Walmart should invest more in international markets and try acquiring local supermarket chains.
• Walmart can hire local employees and use their background knowledge to create market research for customers’ preferences and trends.
• The company should restructure employee relations and create channels to contact H.R. for issues.
• Walmart should hire I.T. experts to rigorously test any automated system for exploits before it pushes it commercially.
• Walmart should prioritize either automation or workforce base operations and communicate the choice with its existing workforce before pushing ahead.

Frequently Asked Questions (FAQs)

Final Words on Walmart SWOT Analysis

Walmart’s history is rich with great SME tactics and exploiting change drivers to grow into a retail giant. Its cheap product offerings and marketing strategies have dominated its competitors for decades. However, it’s come to a point where it’s abandoning all of its qualities and trying to hold on to its current model. To sustain itself, Walmart needs to ensure sustainable and responsible sourcing, lower labor costs, and enhance the consumer experience.

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