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What Are The Sources of Walmart'S Competitive Advantage in Discount Retailing?

Walmart's competitive advantages in discount retailing include focusing on providing value to customers, operating in smaller markets with less competition, bulk buying and low costs. Walmart keeps expenses like operating costs, advertising and rentals lower than competitors. Its "everyday low prices" and satisfaction guaranteed policies help maximize sales volume and inventory turnover. Sustainable strategies include differential pricing, superior technology, empowered store managers and a unique management style building loyalty. Diversifying into Sam's Clubs and supercenters has been profitable, with Sam's Club sales growing rapidly. Future recommendations include sustaining the low cost strategy, expanding overseas, improving social image, and continued investment in outlets and technology.

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Anand G Kurup
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93 views9 pages

What Are The Sources of Walmart'S Competitive Advantage in Discount Retailing?

Walmart's competitive advantages in discount retailing include focusing on providing value to customers, operating in smaller markets with less competition, bulk buying and low costs. Walmart keeps expenses like operating costs, advertising and rentals lower than competitors. Its "everyday low prices" and satisfaction guaranteed policies help maximize sales volume and inventory turnover. Sustainable strategies include differential pricing, superior technology, empowered store managers and a unique management style building loyalty. Diversifying into Sam's Clubs and supercenters has been profitable, with Sam's Club sales growing rapidly. Future recommendations include sustaining the low cost strategy, expanding overseas, improving social image, and continued investment in outlets and technology.

Uploaded by

Anand G Kurup
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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What are the sources of WalMarts

competitive advantage in discount retailing?


Core principle focused on providing value.
Market not very competitive. Only two major competitors

in the form of Kmart and Target


Strong base in smaller cities and towns. Market unexposed
to other existing brands
Flexibility - 70% space of store space leased.
Own Warehouse enabled bulk buying at discounted prices
The expenditure on buying was ensured to be minimum
targeting 1% of the total purchase
Easy returns policy leading to high consumer satisfaction
Competitive prices everyday prices were low.

Operating expenses -18.1% as compared with

24.6 % for its competitors


Offered minimal (13) circulars annually as
compared to competitors.
Expense on Advertising - 1.5% of store sales
as compared with 2.1% for its competitors
Rental expense - 3% of its store sales as
compared with 3.3 % for its competitors

How sustainable is their


position in discount
retailing in the future??
Satisfaction guaranteed policy

- maximize sales volume and


inventory
turnover
keeping
expenses
as
minimum
as
possible.
Differential pricing 2-4% as
compared to competitors
Expense on Advertising - 1.5%
of store sales whereas its was
2.1% for its competitors.
Competitor locations taken into

Implementation

of superior Electronic Data


(EDI)
systems
and
niche

Interchange
technology
Easier and Low cost Transportation Stores
grouped together on the basis of proximity to
improve and optimize transportation
Always low price provided great influence
and a stronghold in the market
Unique management style for empowering
associates
and
building
loyalty
among
associates, customers and suppliers
Store-Managers empowered with the right to
decide the prices

How effective is their diversification


strategy?
Sams clubs
Currently competing with Price clubs , and
expected to be leading within few years
Sales growth up to 19.5% : achieved highest sales
in national warehouse club chains.
Aggressive acquisition : Acquired 99 of Kmarts
113 Pace club.
Super centres
Profitability - 66% as compared to an average
supermarket profitability of 33.3%.
Discount stores, wholesale clubs and supercentres.

What are your strategic


recommendations for WalMart for the future?

Strength

Cost advantage
Low price
Customer loyalty
Strong supply chain and integration with technology
Empowered work force

Weakness
Stores very plain, not attractive enough
Too many sectors leading to lack of focus

Opportunity
Build own brand
Improve social image
Expand to overseas Market

Threat
Other upcoming and existing competitors
Inability to maintain price advantage

Sustain the low cost strategy to establish and

maintain competitive advantage


Expansion into overseas markets can be
explored
Increased engagement in social activities and
CSR activities to improve social image
Continued investment in increasing outlets
and other diversification strategies
Continued integration with technology to
improve performance.

Thank you!!!!!

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