Wal-Mart is the world’s largest retailer (Soni, 2015) and owns the largest share and segment of the retail market within the United States. Wal-Mart offers a broad range of products including home furnishings, car services and equipment, electronics, clothing and more all at a generally discounted retail price, a point on which it prides itself often. Wal-Mart’s success has allowed it to dominate the market, although it faces stiff competitions from other mass merchandisers retailers such as Target and Sam’s Club, supermarkets, small department and grocery stores, warehouse clubs and online retailers, the last of which are especially making headway in the burgeoning e-commerce industry. Pushing its offering of “always low prices,” Wal-Mart has remained at the top of its game in both strategic and competitive advantage along with its discount offerings and integrity- and diversity-based corporate culture.
Innovation and productivity are both crucial to the long-term survival of Wal-Mart, even with its current grandstanding position. At the company’s Annual Shareholders Meeting in 2013, Wal-Mart’s CEO Doug McMillion stressed the importance of innovation and how the company needs to be at its forefront. He ensured that Wal-Mart would stay true to its company culture of integrity and being customer-driven. With the growth of e-commerce continuing, Wal-Mart’s own growth is central to being able to command that market the way it has for department stores within the retail industry. Innovation, technological or not, should be based on providing the best experience for customers. As it has been attempting to do, Wal-Mart is set on combining the benefits of digital consumerism and its physical stores into one by introducing features to its mobile app by Fall 2017, the first of which would allow customers to refill and manage their prescriptions in the store’s pharmacy division by skipping the line and the wait, a move made in response to traffic declines in Target’s own pharmacy department.
Tomorrow’s stores are not shaped by the stores themselves, but by new consumer behaviors, needs and the demands of shoppers. Generational cohorts will continue to age, enter and leave the workforce, and then retire. This decade has seen the biggest disruption of retail in this shared economy. The retail industry may see a continuation of the closing of brick-and-mortar stores as e-commerce will continue to pull shoppers away for several reasons. As retail changes, consumer expectations concerning cost, choice, convenience and the overall shopping experience will evolve, challenging and forcing the industry to meet customers where they are, which will drive growth in digital commerce. The retail industry is not obsolete by any means, but like other industries affected by technology, is rapidly changing.
Wal-Mart’s success stems from having not just one competitive advantage, but several. The biggest one, however, is one of Wal-Mart’s strategies that has worked for decades: the promise of “everyday low prices,” cutting out the expenses of other retailers. As large of a store as Wal-Mart is, it has found several ways to meet consumer needs in several sectors of the retail industry. For years, Wal-Mart has successfully merchandised its wide range of items, with less sitting in inventory and high product turnover. Customers can buy branded products at highly discounted prices, a philosophy that founder Sam Walton fiercely believed in. By doing this, they cut the prices and the middlemen out and reinforce partnerships with vendors and suppliers, which keeps the products at low prices as well as the manufacturing. Wal-Mart is also adept at differentiating its stores from its competition by being open for 24 hours (on holidays as well) and offering several goods and services within one large location. The two factors combined are the source of its market dominance (Romero, 2005, p. 1). Wal-Mart has successfully created a “low-cost culture” (Romero, 2005, p. 1), another one of its competitive advantages.
Judging by its competitive advantages, Wal-Mart has the tools and capabilities to maintain that advantage as well as make way within the retail industry by adapting to and being ahead of the curve on industry trends. To meet consumers’ needs, companies have to meet them where they are—where that is now is online. The way people act online is changing; ten years ago, only a little more than 2 percent of retail sales took place online. Now, that number is about 8.5 percent, signaling a huge $300 billion change (Katsenelson, 2017). While most of the credit is given to Amazon for this change, it is moreso due to the changes in consumers’ consumption needs and preferences. The digital age also ushered in an age of instant gratification, as the Internet makes available any and all things at the touch of a button. The rise of e-commerce, where people can have anything they want delivered to them in 2 days (or less) without having to leave the house, has created a new customer experience.
For the benefit of Wal-Mart, it is important to know that e-commerce allows for profound insights into customer engagement. As a customer-driven company, Wal-Mart can influence customer action online by understanding their behavioral patterns and attitudes. The biggest reasons that consumers have shifted to online shopping is the ability to shop 24/7, ability to compare prices, seeing better prices and saving time. To create all of these benefits for Wal-Mart’s customers, it has to offer them something aside from its wide product selection to compel them to shop online. For customers wanting a custom, curated experience, they often look to subscription boxes. Typical to beauty and food industries, those types of products benefit from sampling. Wal-Mart attempted a food subscription model, but then abandoned the effort. It would do well for the company to revamp it, especially after seeing the success of Birchbox and Graze. It would add a new capability to its portfolio, as well as providing somewhat personalized services to its consumers amid its many products. It allows for specification and personalization, which is what consumers want. The downside is understanding the possible limited or low discretionary income of Wal-Mart’s consumers who look to the store because of its low prices. The subscription boxes may not be adapted to as well because of its monthly fee. Another strategy that Wal-Mart could employ to excel at e-commerce is storytelling. Wal-Mart’s stores and websites are full of products, yet the company boasts functionality instead of telling a story. Its acquisitions, like Moosejaw and ModCloth, tell a brand story; Wal-Mart rarely does, instead using customers in a commercial to tell a story. Wal-Mart can bring some of its products to life as well as the people and companies that created them. However, because of Wal-Mart’s wide range of products, it may be hard to nail down a story to tell, which is also dependent on the company’s relationship with the brands that it sells.
The strategy that I recommend is the subscription boxes for Wal-Mart. The store has plenty of its own product categories to choose from to create a subscription box for food, baby products, etc. At the core of Wal-Mart’s operations is, as it says, its customers and as a customer-driven company, it should look to play to the wants and needs of the consumer. Subscription boxes are easy and inexpensive; both factors that are very important to this consumer generation. Doing this can put Wal-Mart at a competitive advantage over other mass merchandiser retailers by being the first of its kind to compartmentalize its wide product offerings into one box, ensuring a new and unique box for each customer every month.
- Katsenelson, V. (2017, July 26). Op-Ed: It’s not just Amazon’s fault. Changing consumer habits are killing old retail biz. Retrieved August 17, 2017, from https://www.cnbc.com/2017/07/26/op-ed-its-not-just-amazons-fault-changing-consumer-habits-are-killing-old-retail-biz.html
- Romero, E. J. (2005). Leadership, culture and competitive advantage. Journal, Compete Outside The Box.
- Soni, P. (2015, February 18). Competitive Forces: Why Walmart dominates the grocery industry. Retrieved August 03, 2017, from http://marketrealist.com/2015/02/competitive-forces-walmart-dominates-grocery-industry/
- Walmart CEO Outlines Company’s Future: Being Customer-Driven, Investing in its People, Leading at the Forefront of Innovation and Technology. (n.d.). Retrieved August 17, 2017, from http://corporate.walmart.com/_news_/news-archive/2014/06/06/walmart-ceo-outlines-companys-future-being-customer-driven-investing-in-its-people-leading-at-the-forefront-of-innovation-and-technology