Walmart is a multinational retail giant corporation that came to success through Sam Walton’s exceptional marketing strategies. The core of Walmart’s management combined proficient discounting techniques, neighborhood store format, impeccable market research, and practical encouragement of initiative workers. Due to these factors, Walmart became one of the biggest American companies and a highly recognized brand loved by millions of people.
Walmart has many weak points and issues holding the company back from growing and quickly expanding to international markets. The first set of problems is connected to the negative publicity that started forming an image of a cheap, unsafe, and discriminatory place. Walmart has a long list of various lawsuits regarding employee treatment, working conditions, gender and racial discrimination, and the destruction of culturally significant historic sites (Ofori-Nyarko, Wang & Annoh, 2020). In addition, Walmart tried to bribe foreign authorities to secure its international expansion (Bank Munoz, Kenny & Stecher, 2021). Despite attractive prices and a wide product range, the brand’s negative image significantly influences customer decisions.
The second set of problems is based on Walmart’s business model, which is not unique and can be easily replicated by the competitors. Moreover, the marketing strategy is oriented toward the US market and works perfectly for Americans, but when Walmart tried to implement it worldwide, it experienced difficulties. Even though copycat companies do not have the size advantage, they also do not have negative publicity and have a chance to attract clients using Walmart’s favorite low prices strategy.
The strategy of low prices is a basis of Walmart’s marketing and economic model; it is beneficial for both customers and the company. On the one hand, the customers are attracted by the lowest prices on the market and additional saving programs because they get the same quality for less money. On the other hand, the corporation uses discounting to maximize the volumes of sales and, consequently, the profit. Aggressive discounting usage brought more visitors, and the producers became more interested in shipping more goods at a lower price. Thus, Walmart scaled up so much that it could purchase goods for a lower cost than other retailers, making competition almost impossible.
Investing in a new neighborhood store format made Walmart extremely popular and competitive. As usually for Walmart, this strategy aims to attract buyers and gain a competitive advantage over other sellers. There are so many Walmart stores in the country that most Americans live within a 10-minute walk from Walmart. Furthermore, due to a large number of stores and storehouses, Walmart provides such a fast delivery that even Amazon is hard to compete with it. This level of convenience for the customer makes it hard to quit using Walmart, despite its flaws.
Walmart started its active international expansion in the 1990s, but they are still more oriented toward the US market. The company faced serious challenges that led to selling its assets in Brazil and exiting several countries (Germany, Brazil, and South Korea). Many factors complicated Walmart’s expansion abroad, such as – cultural, social, legal, infrastructural, etc. The main problem was that Walmart tried to adapt to non-American customers underestimating or misunderstanding national specifics.
For example, in Brazil, Walmart failed to understand the cultural difference between Americans and Brazilians on all levels of strategic planning. First, Walmart did not know that Brazilians associate low prices with low quality; that is why the discount policy did not work as well as in the USA. Second, people in Brazil did not use e-commerce much and preferred saving money by not buying rather than buying in advance and saving on special offers. Third, Walmart’s management structure is built on independence and taking extra responsibility, whereas the Brazilian job hierarchy is vertical because society is less individualist and more collective (Bank Munoz, Kenny & Stecher, 2021). Therefore, Walmart failed to research the Brazilian market and develop a strategy targeting the Brazilian market, thinking that the American system would work in any market and nothing needed to be changed.
Bank Munoz, C., Kenny, B. & Stecher, A. (2021). Walmart in the Global South: Workplace Culture, Labor Politics, and Supply Chains. New York, USA: University of Texas Press. Web.
Ofori-Nyarko, N. S., Wang, F., & Annoh, W. O. (2020). SWOT Analysis: Wal-Mart Stores Inc. International Journal of Recent Research in Commerce Economics and Management (IJRRCEM), 7(3), 32-35.