Walmart SWOT Analysis (Updated 2024)

Let’s read about Walmart’s SWOT analysis, examining its strengths, weaknesses, opportunities, and threats.

Sam Walton founded Walmart Inc. in Rogers, Arkansas, in 1962. The company operates hypermarkets, inexpensive department stores, and grocery stores under numerous labels. One of the world’s largest retailers, Walmart has over 10,500 locations in 19 countries, including the US, Canada, Mexico, and the UK. As of FY2023, Walmart had 2.1 million employees worldwide and 1.6 million in the U.S. The company is known for its cost leadership and sustainability, offering low pricing and a wide range of products.

Overview of Walmart

• Industry: Retail
• Predecessor: Walton’s Five and Dime
• Founded: July 2, 1962; 61 years ago in Rogers, Arkansas, October 31, 1969; 54 years ago in Wilmington, Delaware (incorporation)
• Founder: Sam Walton, Bud Walton
• Headquarters: Bentonville, Arkansas, U.S.
• Number of locations: 10,500 stores worldwide (2023)
• Key people: Greg Penner (Chairman), Doug McMillon (President, CEO)
• Revenue: US$611.3 billion (FY2023)
• Operating income: US$20.4 billion (FY2023)
• Net income: US$11.29 billion (FY2023)
• Total assets: US$243.45 billion (FY2023)
• Number of employees: 2.1 million (2023)
• Market capitalization: $442.25 Billion (January 2024)
• Website: walmart.com

SWOT Analysis of Walmart

Walmart Strengths

1. Brand Recognition

Walmart is the most recognized retail brand worldwide. The brand has established its presence with 10,500 stores in 19 countries and millions of daily customers.

2. Global Expansion

Walmart acquired UK retailer ASDA and Indian e-commerce giant Flipkart in significant global expansions. Walmart has 4,616 U.S. locations as of 2023. Walmart’s online store has over 60 million items for varied consumer needs. The company has a joint venture with Bharti, India’s largest retailer. Global initiatives have boosted the company’s growth.

3. Human Resource Management

Walmart invests significantly in training and managing its staff because employees are important. Nearly 1.6 million Americans work for Walmart, which has 2.1 million employees worldwide.

4. ‘Everyday Low Prices’ Strategy

Due to its economies-of-scale business model, Walmart offers inexpensive prices on thousands of products. Walmart attracts a wide client base with its low prices.

5. Cost Leadership Strategy

Walmart has always focused on cost leadership—making and selling items and services at the lowest cost. Thanks to this strategy, Walmart has become the world’s largest retailer and continues to develop in e-commerce.

6. Diverse Product Assortment

Walmart sells groceries, electronics, clothing, and household goods. Shopping for several necessities at this one-stop-shop saves time and effort. Wal-Mart has 75 million goods, the most in the world. Walmart has over 160 million products in stores and online.

7. Private Label Brands

Walmart can boost profit margins, offer cheaper products, and generate new revenue by supplying private label products like Great Value.

8. Supply Chain Management

Walmart’s effective worldwide supply chain and management system controls costs and ensures on-time delivery. Advanced technologies and data analytics help the organization track product flow, manage inventory, and optimize transportation.

9. Diversified Revenue Streams

Walmart operates wholesale and e-commerce in addition to retail locations. Diversification reduces risk and lets the organization seize market possibilities.

10. Strong Market Power over Suppliers and Competitors

Walmart’s scale and global reach give it market strength, powerful negotiation positions, and a competitive edge over suppliers and competitors.

11. Real Estate Holdings

Walmart has built a strong real estate portfolio by owning its retail land and structures. These assets can boost the company’s finances.

Walmart Weaknesses

1. Overdependence on the US Market

As of September 2023, Walmart had 4,630 global stores, with $110.90 billion in U.S. revenues compared to $611 billion globally. The corporation may be vulnerable to U.S. economic swings due to its overreliance on the market.

2. Employee Treatment and Working Conditions

Walmart has been sued for low salaries, bad healthcare, and horrible working conditions. Due to negative exposure, these occurrences suggest improved workplace policies and conditions.

3. Limited E-commerce Presence

Despite huge investments, Walmart’s e-commerce growth is restricted compared to that of Amazon and Alibaba. In today’s digital-first retail sector, these companies’ broad digital platforms offer easy, anytime purchasing, giving them an edge. Walmart’s smaller e-commerce footprint may create competitive disadvantages.

4. Extensive Inventory

Walmart’s large inventory could weaken the business and lower product quality and customer happiness. Lack of size diversity might also send customers elsewhere, hurting loyalty.

5. Thin Profit Margins

Walmart has tight profit margins due to its cost leadership philosophy. The company’s finances may suffer from this strategy, which attracts price-conscious customers.

6. Private Label Quality Perception

Walmart’s private-label items have quality difficulties despite increased margins. They often follow name brands in customer perception, hindering Walmart’s private-label range expansion.

7. Inconsistent Customer Service

Walmart, a hypermarket, has had customer complaints about inconsistent service. Customers complained about excessive wait times, unorganized storefronts, and trouble finding merchandise. Poor training and compensation may cause these inconsistencies, harming employee morale and customer satisfaction.

8. Racially Discriminatory Practices

Walmart’s procedures were reviewed in June 2020 over racial equality concerns. It was criticized for locking multi-cultural hair care products behind glass but not white products. Though the corporation changed the policy, the event caused tension with minority shoppers.

9. Large Span of Control

Walmart’s scale and control could cause weaknesses, communication issues, and decision-making issues, reducing efficiency.

10. Cultural Misalignment in Foreign Markets

Walmart has struggled to adapt its business operations and product offers to local cultures and preferences in several overseas areas, resulting in consumer anger.

11. Over-reliance on Supplier Partnerships

Walmart’s bargaining strength can strain supplier relationships, despite its benefits. This could cause long-term supply chain concerns if not managed properly.

12. Rapid Expansion Concerns

While rapid expansion offers development customers, especially in international markets, it can also lead to operational inefficiencies and market misalignment, hurting the organization.

Walmart Opportunities

1. Strategic Alliances

Walmart might cooperate with major companies or merge with other global shops. Walmart can earn money by acquiring smaller companies to increase its services and reach.

2. Enhancing Human Resource Practices

Walmart might benefit from innovative HR practices. Since the retail company relies on employees, HR innovation is essential to employee satisfaction and efficiency.

3. Strengthen Online Sales

Walmart should expand its online sales channels to serve digital customers better and capitalize on the fast rise in online buying.

4. Sustainability

Walmart can capitalize on consumer demand for eco-friendly products by offering a wide selection of sustainable options and encouraging eco-friendly practices. Walmart wants to cut greenhouse gas emissions and use more renewable energy. Increasing these initiatives would boost its brand image and attract eco-conscious customers.

5. Expansion into new markets

Walmart can expand into new areas while being in 19 nations. Walmart can grow, diversify revenue, save costs, and gain customers by entering new regions. In India, Walmart partnered with Flipkart to penetrate new markets with recognized brands, meeting local demands and providing a smooth shopping experience.

6. Diversification

Walmart could expand into healthcare and financial services to capitalize on fresh growth prospects. Offering more products in these categories could boost business.

7. Technological Advancements

Walmart can use supply chain optimization, AI, AR/VR, and IoT to cut costs, boost efficiency, and improve customer service. Data analytics can assist the organization in understanding customer demand patterns and optimizing inventory management for consistent shopping experiences.

8. Expanding Health Care Services

Walmart can expand its healthcare services to include four US health facilities to satisfy demand. Walmart’s recent formation of Walmart Insurance Services LLC shows its interest in healthcare growth.

9. Loyalty Programs

By introducing or improving reward programs, Walmart can boost customer lifetime value and profitability.

10. Localized Product Offerings

By tailoring products and assortments to cater to local tastes and preferences in various regions, Walmart can establish stronger connections with regional customers and improve its offerings in existing markets.

Walmart Threats

1. Intense Competition

Walmart, the world’s largest grocery retailer, competes with Target, which sells similar, high-quality products, and Costco, which sells in bulk. Both corporations have good employee relations and earn public favors.

2. Imitation

Walmart’s business model is easy to copy, and its only competitive advantage is its size.

3. Reputational Controversies

Walmart has had several problems. A $282 million settlement in 2019 followed accusations that the corporation bribed Mexican and Chinese officials. Walmart was criticized in 2017 for selling T-shirts with controversial slogans that promoted violence and for mislabeling ‘craft’ alcohol.

4. Intensifying Regulatory Scrutiny

Walmart also faces global regulatory scrutiny from governments due to worries about major firms’ power and influence. The corporation must follow these countries’ laws and may face taxes, tariffs, or other restrictions in some places.

5. Trade Tensions

Walmart is at risk of international trade conflicts with 19 nations and almost 400 stores in China as of 2023. Trade disagreements like the U.S.-China tariff battle could hurt the company.

6. Labor Union Demands

The growing power of employee unions may endanger the corporation. Advocates for greater wages, treatment, and working hours can cause union-management contact, damaging business.

7. Changing Consumer Behavior

Modern consumers, especially younger ones, prefer online shopping and fast delivery, challenging Walmart’s brick-and-mortar strategy. Meeting these goals requires constant company evolution.

8. Cybersecurity Threats

The large amount of customer data Walmart collects and stores makes it vulnerable to cybersecurity concerns, including data breaches and hacking, which might damage its reputation and legal standing.

9. Economic Downturns

Consumers may limit their spending during economic downturns, affecting Walmart’s sales and profitability. Thus, the company must be resilient in uncertain economic times.

Conclusion

Walmart’s solid business model, good financial performance, and competitive pricing support its worldwide retail leadership. Its strategic technology and digital transformation initiatives have improved operational efficiency, customer experience, and market reach. The SWOT analysis shows that the company must face rising competition, changing consumer preferences, and reputational concerns.

Walmart can continue growth and market dominance by constantly assessing and refining its strategy to leverage its strengths, capitalize on opportunities, reduce threats, and overcome weaknesses.

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