Walmart Global Discount Retailer

Walmart has grown into a global retailer with more than 4,000 store in the United States and more than 6,000 internationally. Walmart is comprised of three business segments, Walmart US, Walmart International and Sam’s Club. Walmart, the world biggest name in the retail business is also the biggest and the fastest growing eCommerce organization. According to Internet Retailer, Walmart is the fourth largest global eCommerce retailer. Walmart Global eCommerce (WGeC) is responsible for all online and mobile innovations for all three business segments, it has the best and the brightest technologists including @WalmartsLabs. The following are some WGeC strategies of Walmart: investing in the “social gifting” market; the retailer got a better search engine; trying to lead the charge in same-day shipping; investing in its mobile app; excel in the fundamentals of e-Commerce; win in key markets; uniting and expanding the Walmart platform to do what no one else can do. WGeC strategies feed into Walmart’s overall strategies of: delivering on the productivity loop so Walmart to drive prices lower for its customers; being more disciplined about operating expenses and capital spending; investing to serve more customers globally and accelerating the vision of anytime, anywhere shopping; and benefiting its communities and having a world class compliance organization.

While Walmart’s strategies have lead them to overall very good profitability in the past, Walmart.com is struggling against Amazon, an eCommerce giant, and lagging behind Amazon and other online compeittors in sales. Walmart appears to be moving in the right direction with its mobile application, with Smartphone sales having outpaced personal computer sales in 2011. WGeC has improved Walmart’s previous online store was not user friendly and did not offer many products. Although some information provided in this paper pertains directly to Walmart, WGeC leverages Walmart’s physical locations, strengths and capabilities. Organizational Goal, Mission Statement and Business Objective The organizational goal of Walmart is “becoming in an international brand”.

The mission statement is “We save people money so that they can live better” The mission statement leads directly into WGeC goals which include combining online, social innovations with physical stores to give consumers “anywhere, anytime shopping experience” and its organizational sustainability goal of creating zero waste, using only sustainable energy and selling products that sustain the environment. Walmart’s business objective of maximizing shareholder wealth goal pertains to management maximizing the present value of future returns to the shareholders. These returns can either be in form of periodic dividend payments or the proceedings from stock. Walmart’s future can be evaluated through two different indicators: the share price trend and the historical dividend paid. Analysis of Stakeholders

Walmart Stakeholders include the stockholders, executives, employees, suppliers, customers, non-profit groups, non-governmental organization, the communities that Walmart serves, online retailers, brick and mortar retailers, labour unions, and the various levels of government. Corporate Governance

Walmart is governed by three basic beliefs that support a business integrity which include: Service to customers; Respect for the individual; and Striving for excellence. Walmart has a Global Ethics Office which is responsible for promoting Walmart’s culture of integrity. This includes developing and upholding their policies for ethical behavior for all their stakeholders everywhere they operate. Corporate Social Responsibility (CSR)

Walmart believes that it has an obligation to lead when it comes to CSR. Walmart is committed to using renewable energy, demonstrated by ensuring 21% of its electricity globally comes from renewable energy. Walmart created the Walmart Foundation which is responsible for many of Walmart’s CSR projects. The Walmart Foundation has a program in place to empower women around the world through training and career opportunities. The Walmart Foundation gives money to support local organizations worldwide. Value Chain Analysis – Walmart

The Figure can of Walmart’s Value Chain Analysis can be found at Annex A Primary Activities Operations

One of Walmart’s strategic overall goals is to offer a wide range of products at low prices so people can live better. Walmart carries its own Great Value label, other private labels and national brands (i.e. Apple, and Sony) tailored to local demand and online. Walmart has increased its Great Value label to include eco-friendly options that many customers want to purchase. Tailoring of products selection by local Walmarts and online strategy to offer a wide selection of products at lower prices. Walmart’s operational structure has decentralized store management which permits store managers to
make decisions relating to product range and pricing. This allows local store managers to respond to the local retail market and support Walmart’s strategy of providing low prices to customers supporting its goal to help people save money and live better. Inbound and Outbound Logistics

Walmart manages its transportation needs internally which reduces their transportation. Owning the entire distribution infrastructure has made it capable of using a more accessible way for the movement of goods to stores and distribution centers. Walmart.com had to use third party warehouses in order to expedite its business. Walmart is remedying the situation by building warehouses to accommodate its eCommerce business. These practices will not only help Walmart reduce expenses, but also give it more control and flexibility. Walmart practices the successful logistics practice called cross docking. By the usage of cross docking Walmart has been able to reduce the lead time, maintain a fast inventory turnover, reduction on the dependency of the distribution centre, and altogether maintain a healthy and an efficient supply chain.

Cross docking has helped in minimizing labor, the handling cost and the excess storage. Walmart has also led the market in technology supply chain systems. WGeC has been able to leverage Walmart’s Inbound and Outbound logistics to expedite its site to store, pick up today, ship from store shipping options which helps keep operating expenses lower which is then passed to customers in the form of lower prices. Walmart can replenish its shelves four times faster than its competitors. Walmart’s internal transport system providing high efficiency and ease in the operations creating value. Marketing and Sales

Walmart’s “Every Day Low Prices” (EDLP) appeals to its customers, because customers know that they can buy products at the lowest price all the time, since Walmart price matches its competitors. Once criticized for its ethical sourcing and environmental sustainability, Walmart’s annual report affirms its dedication and commitment to ethical sourcing and environmental sustainability. Customer Service

Walmart tries to focus on providing customers with the best experience in store and online. Walmart’s mobile app has made its customers capable of
using the in-store mode in more than 200 of its stores. This app has store maps, information about items that are in-stock and another app allows customers to scan and bag items on their own as they shop, then the app sends data on the scanned items to a self-checkout station where the customers pays. It is expected that Walmart will save millions on cashier salaries while making customers happy. Support Activities

Human Resources (HR): Walmart’s HR practices are based on communication which is clear, concise and relates Walmart’s principles, high expectations and ethics. These benefits come at a cost, which Walmart has tried to decrease by ensuring more employees are part-time and, therefore, not entitled to the benefits, although it appears that WGeC is not impacted by this the fulfillment centers have many part time low, paid workers. WGeC locations have Hack days, Meet-ups and Tech talks which are designed to create a culture of free-thinking, provokes and encourages new thinking and ideas. Technology: WGeC’s innovations include an in store app, a scan and go app, social gifting app (Shopycat), Open Source and “The Trending Page” which permits customers to browse items through “product pins” into a shopping experience called Spark Studio through Pinterest. WGeC built a contest, Get On The Shelf, which allowed entrepreneurs to submit videos pitches on line for their products. Technology integration is one of the primary focuses of Walmart, having played a vital role in its success.

This is pivotal for Walmart’s in store app and scan and go app, in addition to pick up in store capability for its online customers. Price transparency is one area where increase digital and mobile innovation will be felt more heavily. Customers are currently able to check prices at competitors while shopping at Walmart, on the go or at home. Walmart is financing its new search engine, Pangea, the global platform which has pricing tools enabling Walmart to find out where it stands in the online price perspective. The challenge here is to continue financing eCommerce activities while continuing physical operations in its almost 11,000 stores globally. Infrastructure: WGeC originally based in Silicon Valley, California now has offices in countries from Brazil to India. Walmart is operating eCommerce websites in ten different countries.

Walmart.com has 45 million visits each month with continuous growth every year. WGeC has made specific acquisitions with the goal to be out in front of eCommerce in addition to creating their own technology core competency rather than depending on other companies’ technology. WGeC is installing lockers in its retail stores which will permit customers to pick up online orders with no fees charged for delivery. Procurement: Walmart deals direct with manufacturers to leverage its buying power to obtain the best price possible. Walmart has instituted a Supply Chain Capacity Building program (SCCB) which support its strategy of benefiting its communities and having a world class compliance organization. External Environment Analysis

Industry Environment
Walmart’s can be described as a retailing empire and it is considered the champion of traditional retail business, but it is working hard to move into the online market through Walmart.com and its mobile app where Amazon is considered the goliath and other competitors (Target, Costco, etc) are also trying to capture the growing eCommerce market. Online competitors are also using lockers to facilitate delivery to customers. Global online retail sector revenues were $631.7B in 2012, which have grown 18.6% from 2008 to 2012. Political: Walmart.com is currently operates in 10 countries different banners. Walmart.com must follow government rules and regulations in each of its host countries. Political conditions that Walmart faces in its host countries include political instability, economic conditions, currency regulations, legal and regulation constraints, tax systems, etc. Economic: Economic conditions within host countries has the potential to dramatically impact WGeC. Walmart has faced high inflation rates and currency devaluations. In US and Canada, Walmart is dealing with the challenge of higher fuel and energy costs, inflation, high levels of unemployment, excessively high consumer debt, and high tax rates. The global economic slowdown has hit many companies including Walmart. Socio-cultural: Walmart’s international operations operate according to local culture of its host countries.

Consumers are demanding that companies be cognizant of where and how their products are produced, since unsafe working conditions and child labour makes world news. This has been made very evident after recent fire/building collapses in the garment industry. Technological: Walmart has recently invested heavily in its eCommerce, so it can compete with other eCommerce companies, such as Amazon. The world is quickly shrinking due to social networking and online interactions. Walmart is currently investing in a social gifting app which reviews friends online social networking presence and suggests appropriate gifts which can be found at Walmart. Ecological: Previously criticized for its company’s view on sustainable resources Walmart is moving to become more sustainable. Legal: Walmart Global Compliance Action Steps. Walmart is an international company, therefore it is addressing 14 compliance subject matters in every market. Competition: Walmart’s direct competitors who maintain similar positions, strategies experience similar resource constraints include: Amazon, Target, Kmart, Costco, BJ Wholesale Club, Sears, The Bay, etc. As web based companies sell products online via social media and websites, they can be also be considered competitors abeit not at the same scale as Walmart. Walmart.com’s primary competitor is Amazon. Internal Environmental Analysis

WGeC is responsible for all online and mobile innovations for Walmart. Walmart is a powerful retail brand with a reputation of value for money, convenience and wide range of products in a single store or online. Consumer understanding of low price, information technology competence and wide distribution network are Walmart’s greatest strengths. These strengths in addition to price leadership has made Walmart a retail giant. Walmart’s buying leverage is the power which keeps it dominating the market as it maintains market clout. Walmart leverages bulk buying in order to obtain the best possible price since suppliers are often dependant on Walmart’s purchases to keep their businesses running. Cross docking and Walmart’s computerized warehouse allow products leave before they are shelved. Walmart is aiming to be the leader in the global convergence of digital and physical retailing. It has already brought this goal to life in the US. Walmart building multi-channel capabilities and investing in its global unit of eCommerce specifically the @Walmartlabs to aid its online initiatives.

Walmart has launched an in store app and scan and go app which will help keep prices lower for customers, a key online and in store strategy. Walmart caters to its various clientele through different store formats, supercenters, discount stores, neighborhood markets and express markets. Creating multiple eCommerce access points for its customers in the US is the key element of Walmart’s strategy. ‘Tethering’ which is developing initiatives around shared functions, supply chains and product offer within a locally defined market. Usage of supercentres to cross dock deliveries for smaller stores, sharing staff among multiple store formats, and usage of large stores to cater the online orders. Walmart is having difficulty in determining how to keep delivery costs down while competing against its competitors who are doing it for less. Walmart’s public image is one of their biggest of opportunities is the public image. Walmart’s policy on part time, low paid workers has given it a poor public image. Employees receive low pay and many are part time which means there is no entitlement to healthcare or other benefits.

Furthermore, Walmart often faces legal issues with labor unions in court and have been known to close stores rather than dealing with unions. Walmart is known as being a bully, unhealthy for local communities. Many communities have asked their governments to stop Walmart from moving into their towns for many reasons which include: paying low wages; putting smaller stores out of business; providing cheap imported goods; increased traffic levels; problems with unions and consumerism. Consumers are beginning to question Walmart’s business model of always low prices, since customers are looking for significantly lower prices. Walmart.com has had issues with its website pricing where items which lead some to believe that it was hacked. Walmart appears to be moving in the right direction with its mobile application, with Smartphone sales having outpaced personal computer sales in 2011 which feeds into Walmart’s strategy of anytime anywhere shopping experience. Walmart is enjoying record years in terms of financials and it moved to the top of fortune 500 listing in 2012. SWOT Analysis

StrengthsWeaknesses
•Supply chain with integrated technology
•Customers are price sensitive
•Walmart has made key mobile, social media and eCommerce acquisitions
•Multiple eCommerce access points for its customers in the US
•Offers wide range of products both online and in its retail stores
•Customers are price sensitive
•Walmart.com may have been hacked

•Lagging behind other eCommerce competitors
•It is costly to ship products to online customers
•Negative publicity is also damaging reputation
OpportunitiesThreats
•Added store formats: supercenters, discount stores, neighborhood markets and express stores
•Innovations: The Trending Page, Open Source, in store, scan and go, social gifting apps and its contest, Get On The Shelf
•Walmart operates in 17 countries which do not have online stores
•Developing economies: Mexico, South Africa, Brazil, China, and India
•Low barriers to entry are a constant threat in eCommerce
•Hackers

•High fuel, currency fluctuations, commodity prices and inflation in the different countries
•Local communities do not want another Walmart
•Core competency of price leadership
•Substitutes
Strengths
Supply chain with integrated technology which enables it to operate effectively and efficiently provide online customers delivery options: lockers, site to store, pick up today, ship from store shipping options which supports Walmart’s strategy of exceling in the fundamentals of eCommerce. WGeC’s innovations empower customers to choose how they wish to shop online and in store. Walmart’s EDLP appeals to its price sensitive customers. WGeC’s has developed pricing tools which enable Walmart to find out where it stands in the online price perspective, so it can deliver on its strategy of driving prices lower for its customers. WGeC is aggressively growing its technology infrastructure through acquisition of technology startups which are building Walmart’s core technology competency rather than depending on other companies. Walmart carries a wide selection of goods including its own private label. Private label product sales has increased more than 40% over the last ten years. This shows that customers are interested in the supermarket products compared to those branded products. Weaknesses

Many Walmart customers are price sensitive and are looking for the best overall price regardless of whether these are online or in store. Consumers
are beginning to question Walmart’s business model of always low prices, since customers are not just looking for a somewhat lower price, but significantly lower prices. With the technology to check prices online customers are choosing to shop where it is convenient and they can save significantly. Walmart.com has had issues with its website pricing where items which lead some to believe that it was hacked, all transactions were reversed which negatively impacted Walmart’s reputation. All online businesses run the risk of being targeted by hackers which has negative impacts on their reputation. Walmart is the fourth largest global eCommerce retailer.

Walmart.com is struggling against Amazon, an eCommerce giant, and other traditional retailers who turning to online retailing. Amazon has built core competencies for its online order fulfillment and deliver which Walmart is only now developing. Shipping can be expensive, it can be costly to ship products to customers which impacts whether a customer purchases a product from Walmart or another competitor who can deliver it for less. People worldwide are becoming more conscious of a company’s reputation on many aspects to labour practices, ethics, and how eco-friendly a company is. Negative publicity is damaging Walmart’s reputation. Walmart is known as being a bully, unhealthy for local communities and having poor labour practices. Opportunities

Walmart has changed its store format to include four formats: supercenters, discount stores, neighborhood markets and express stores. Walmart is tethering shared functions, and supply chains by using supercentres to cross dock deliveries for smaller stores, sharing staff among multiple store formats, and usage of large stores to fill online orders to be delivered to express marts or neighborhood markets which allows Walmart to penetrate urban centers where it did not have a presence. The overall online retail sector grew by 6.7% in 2012 reaching about $200B. Walmart’s innovations: The Trending Page, Open Source, in store, scan and go, social gifting apps and its contest, Get On The Shelf are allowing customers to choose how they shop online and instore and connect customers with products.

Walmart can leverage its retails stores for in store pick-up of an online order. Walmart.com operates in 10 countries under various banners, however Walmart operates in 27 countries. Walmart has the opportunity to grow its international online stores into the other 17 countries where Walmart operates and continue to leverage Walmart’s retail stores. Walmart international’s expansion is the key to increase its earnings further. Walmart is moving into developing economies: Mexico, South Africa, Brazil, China, and India. It is expected that customers in these countries will move from manufacturing most of Walmart’s goods to purchasing them. Moving into developing will allow Walmart’s income to grow as it enters these countries through retail and online stores. Threats

Walmart is facing serious threats from Amazon who was a pioneer in e-tailing.com. Low barriers to entry are a constant threat in eCommerce. Anyone can sell items via Facebook or eBay without the need to have their own websites, since social media sites provide free or low-cost promotions to all. Hackers are a threat to all online activity, as an online retailer, Walmart is a potential target of hackers. Rise in the gas prices, currency fluctuations, taxes andcommodity prices decrease Walmart’s marginal advantage reducing its profits and eroding its competitive advantage. Walmart is facing competition online from Amazon, Costco and others. These competitors are doing everything to eliminate Walmart’s price advantage. These same competitors offer comparable products online and in store. Recommendations

Walmart should continue on its current path of acquiring startups for @Walmartlabs to develop new apps and technology which will enhance and encourage customers to choose to shop at Walmart.com for its ease of use, tools and convenience. Walmart should develop a plan to enter the 17 countries where Walmart operates, but does not have an online presence. It is also recommended that WGeC should expand and promote its apps, online shopping experience and its contest in order to connect customers with products. It is further recommended that WGeC continue to lead all online and mobile innovation for Walmart to ensure that no one segment will fall behind. Walmart must continue to improve its public image. Considered a bully and a tyrant in the retail industry Walmart should adopt the an alternative strategy showing a friendly corporate attitude who is willing to work with communities labour unions and businesses. Organization structural change needed for implementing the recommendations Walmart has already implemented a key strategic organizational change which is essential to WGeC’s success where Walmart’s eCommerce is run as a separate business unit giving it its own CEO and leadership.

Walmart need to create a comprehensive blueprint to grow its online business, which should include the following: Walmart will need to create one or more divisions who would be responsible to lead eCommerce growth for Walmart in the other 17 countries where Walmart has a retail presence, but does not have an online store. These divisions would be responsible for developing regional strategies to leverage and build upon its retail stores and potential of the markets in those regions. Jeremy King, Senior Vice President and Chief Technology Officer and Gibu Thomas, Senior Vice President of Mobile and Digital will need to work together to ensure that the scan and go and in store apps are launched in all stores, since this will lead to lower costs which directly support Walmart’s strategy to increase efficiency, lower operating cost and keep customers happy by streamlining their checkout experience. In addition to enhancing customers online experience which is what will strengthen Walmart’s multi channel strategy. WGeC should continue to promote and leverage Walmart’s move into neighborhood markets and express marts as a convenient location to pick up online orders which has the potential to decrease Walmarts delivery costs.

This is particularily important in urban areas where many do not have vehicles for transport. Walmart should continue to install lockers in Walmart’s retail stores for online order pick up. It is important for Walmart to continue enhancing the online experience of its customers which will allow customers to choose their online shopping experience which will strengthen their multi channel strategy. Now when they have a well made blueprint to grow their online business, its time to leverage their size and global footprint to take advantage of this enormous growth of customers. In order to do so they should make the organization channel, agnostic especially in the merchandising and marketing. Who should lead the implementation?

Like the implementation of any strategy, the CEO, Neil M. Ashe, should be leading this initiative, however due to Walmart and WGeC’s unique relationship the CEO of WGeC will need to work closely with the CEOs of all Walmart’s business segments. The success of This will bring the credibility factor as people and the stakeholders look up to CEO’s for the serious matters pertaining to the welfare of the company and the other issues related to it. He is the captain of the ship, if he says to implement something it has the weight age behind it and the entire system will immediately be acting upon the strategies proposed by the CEO himself. Later on the top management can take the lead and get on with it. What “staff” does the implementation phase need? Why?

Walmart needs to engage its top of the line managers to implement these strategies in order to make the lower staff and the public realize the seriousness of the company in the implementation of these strategies. One of the step at its basic level can be sending its store managers and executives into local communities and contribute in the community affairs in a meaningful way. To look good in this strategy they should look after that the managers spend that time out of their job time and not of their own. Control the implementation phase and how to evaluate the implementation phase Walmart can set up a temporary task force to make sure that these strategies are properly implemented. They would need to spend more money and more time to implement above mentioned strategies and then control this strategic move.

They can also involve the local governments with them promising them public welfare this way this phase can better be controlled and looked after. They can show and prove themselves to be culture sensitive instead of going against the local community, this way they can gain their support as well. It can evaluate this phase through conducting different extensive surveys in the local communities as the foremost reason of these changes is to build a good positive image in people. One other way is the internal scrutiny at the stores, checking from the bottom whether these implementations are being followed or not. By following these recommendations they would not only excel in the foreign market but they would also be able to defend themselves better against these very mouthy critics.

References
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