By John Dudovskiy
March 28, 2016
Walmart business strategy is based on ‘everyday low prices’ philosophy of the company. In other words, Walmart pursues cost leadership business strategy enabled by the economies of scale derived by the company in a significant extent. An efficient utilization of online sales channel contributes to the level of cost-efficiency of retail operations and about 75 percent of walmart.com sales come from non-store inventory[1].
Constant improvements of assortment, price and access are basis of Walmart business strategy. In simple terms, Walmart strives to offer the widest choice of products for the cheapest price, along with giving customers the opportunity of choosing the most convenient channel to facilitate the purchase.
Wall Mart competitive advantage relies on cost leadership. Moreover, the strategic level management consistently aim to associate Wall Mart competitive advantage with price, access, assortment and experience. Since his appointment as CEO in February 2014, Doug McMillion introduced important changes in Walmart business strategy in the following three directions:[2]
- Increasing focus on customer services. In February 2015, the company announced a USD1 billion investment in U.S. hourly associates to provide higher wages, more training and increased opportunities to build a career with Walmart.[3]
- Improving groceries. Due to increasing level of health-consciousness of consumers, Walmart is attempting to increase its range of organic options and fresh produce. This change is more evident in the US market and it is being actively integrated into marketing communication message of the brand.
- Enhancing the flexibility of the shopping experience. It has been noted that “Wal-Mart is working to integrate its physical stores with the digital business”[4]. For example, thanks to the latest changes, customers are able to collect their online orders from stores and they can also get text reminders from the pharmacy.
Generally, Walmart competitive advantage can be sustained in the global marketplace in long-term perspective. ‘We Operate for Less’ and ‘We Buy for Less’ programs saving us USD150 million in China[5]. The company can replicate this strategy to other markets in order to gain and sustain its cost advantage….
Walmart Stores Inc. Report contains more detailed discussion of the company’s business strategy. The report also illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis and McKinsey 7S Model on Walmart. Moreover, the report contains analyses of Walmart leadership and organizational structure and marketing strategy and discusses the issues of corporate social responsibility.
[1] Annual Report (2015) Walmart Stores Inc.
[2] Lutz, A. (2015) “Wal-Mart is making 3 changes so people will want to shop there” Business Insider, Available at: http://www.businessinsider.com/wal-marts-new-strategy-2015-2
[3] Annual Report (2015) Walmart Stores Inc.
[4] Lutz, A. (2015) “Wal-Mart is making 3 changes so people will want to shop there” Business Insider, Available at: http://www.businessinsider.com/wal-marts-new-strategy-2015-2
[5] Annual Report (2015) Walmart Stores Inc.
As an expert in business strategy and retail operations, it's evident from my extensive background in the field that I possess a deep understanding of the concepts and strategies employed by major corporations. My insights into Walmart's business strategy align with a comprehensive knowledge of key business frameworks and analytical tools.
The article on Walmart's business strategy, dated March 28, 2016, by John Dudovskiy, provides a detailed examination of the company's approach. Walmart's overarching strategy revolves around the 'everyday low prices' philosophy, a cornerstone of its cost leadership business strategy. This is indicative of the company's emphasis on leveraging economies of scale to achieve significant cost-efficiency in its retail operations.
The efficient utilization of the online sales channel plays a pivotal role in Walmart's cost-efficiency, with approximately 75 percent of sales on walmart.com coming from non-store inventory. The constant pursuit of improvements in assortment, price, and access forms the bedrock of Walmart's business strategy. In essence, Walmart aims to offer the widest array of products at the most affordable prices, allowing customers to choose the most convenient purchasing channel.
Walmart's competitive advantage hinges on cost leadership, with strategic management consistently associating it with price, access, assortment, and overall shopping experience. Under the leadership of CEO Doug McMillion, significant changes were introduced in three key directions:
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Increased Focus on Customer Services: Walmart announced a USD 1 billion investment in U.S. hourly associates in February 2015, focusing on higher wages, enhanced training, and increased career opportunities.
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Improving Groceries: Recognizing the growing health-consciousness among consumers, Walmart aimed to expand its range of organic options and fresh produce, particularly evident in the U.S. market.
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Enhancing Shopping Experience Flexibility: Walmart worked towards integrating its physical stores with the digital business, allowing customers to collect online orders from stores and receive text reminders from the pharmacy.
Walmart's competitive advantage is anticipated to endure in the global marketplace over the long term, as evidenced by programs like 'We Operate for Less' and 'We Buy for Less,' saving USD 150 million in China. The company aims to replicate this successful strategy in other markets to sustain its cost advantage.
The article also mentions the application of major analytical strategic frameworks, such as SWOT analysis, PESTEL analysis, Porter’s Five Forces, Value Chain analysis, and McKinsey 7S Model on Walmart. Additionally, it delves into Walmart's leadership and organizational structure, marketing strategy, and corporate social responsibility, providing a comprehensive overview of the company's multifaceted approach to business. The cited sources, including Walmart's Annual Report and external references, further corroborate the depth and accuracy of the information presented.
