Explore Walmart's strengths, weaknesses, opportunities, and threats through SWOT analysis with plenty of insights.
Are you a fan of Walmart?
It’s always in the news or the butt of online jokes. People go for the low prices, but they rather not stay. Despite Walmart being a household name, regarded all over the world, mentioned in movies, and discussed openly online, it has its fair share of strengths and weaknesses.
This Walmart SWOT analysis discusses the company’s strengths, lesser-known weaknesses, growth opportunities, and unyielding threats.
Walmart Strengths
Global Recognition
Walmart is well-known around the globe. It’s the largest retailer in the world with millions of loyal customers. It’s even expanded overseas, recently purchasing the United Kingdom retailer, ASDA.
Low Product Prices
It became a household name because of their low product prices. Customers pay less at Walmart than other stores, like Target, because Walmart is able to purchase their products in large quantities. The larger the quantity, the bigger the discount.
Expansive Product Selection
The selection of products is expansive. You can pick up camping gear but also hair dye all just a few aisles over. Many people pop in to pick up jeans but leave with a cart full of groceries. It’s basically a mini-mall offering the convenience to get everything you need in one place.
Online Expansion
Now, they’re putting in the big dollars to expand their online catalogue. Not only can you order to the shop (to pick up yourself) but you can also ship products directly to your home. Many products are only available online as a way to encourage shopping. This appears to be a strategic move to enhance customer experience, but it’s also to battle against Amazon, an online-retail giant. Whether this will be a smart financial decision is still up in the air.
Walmart Weaknesses
Limited International Presence
Despite purchasing the United Kingdom’s massive retailer, Walmart has only expanded to few countries worldwide. Even though people know the name, they don’t know the products firsthand.
Negative Brand Perception
Another problem is their brand. Again, it’s recognizable, but so much of it is negative. They’re regarded as a company who doesn’t treat their employees right. They’re more likely to hire part-timers over full-time employees. If their questionable ethical guidelines weren’t enough, they’re known to put smaller stores out of business, building hostility among the townspeople it affects.
Store Management Issues
Additionally, the stores themselves have issues. Often, it’s bursting with customers but not enough employees. It’s common to only have a few cash registers open, but an endless line of people waiting, especially during busy seasons like back-to-school.
Quality Perception
Some products are cheaper than others because the quality itself is cheap. That’s why companies like Target are sometimes referred to as “the higher-end Walmart” and similar variations. Walmart is the butt of many jokes, especially online, for having a colorful selection of customers who tend to fall into categories like “redneck”, “obese”, and “trashy” — as said by the internet hecklers.
Outdated POS System
Unless you’ve worked there yourself, you might not know that their Point of Sales (POS) system is archaic. Accidentally scanning a product twice can be an entire ordeal, involving the manager, just to remove it. Cashiers can’t do it themselves because they don’t have the authority (depending on the price of the item). But this makes the whole transaction process much longer and frustrating than it needs to be.
It’s clear that for customers and employees alike, Walmart needs to step up its performance, offerings, and selections.
Walmart Opportunities
Market Expansion
Walmart could focus more on expanding to markets not yet ventured such as Latin America and China. So far, they’ve been extremely limited in physical locations, but that could change with their online offerings. By expanding on the store, the offerings, and shipping, they could spread their wings worldwide, similarly to Amazon.
Automation and Robotics
Automation and robotics represent significant opportunities for Walmart to enhance operational efficiency and reduce costs.
By integrating advanced technologies such as Artificial Intelligence into their supply chain and warehouse operations, Walmart can streamline processes, improve accuracy, and minimize human error. Automation can help manage inventory more effectively, ensuring that products are always in stock and reducing the time it takes to replenish shelves.
Additionally, robotics can handle repetitive and physically demanding tasks, freeing up employees to focus on customer service and other value-added activities. This technological advancement can lead to faster turnaround times, lower labor costs, and ultimately, a better shopping experience for customers.
As a result, Walmart can maintain its competitive edge in the retail industry and continue to offer low prices and a wide selection of products.
Example:
In 2024, Walmart is investing heavily in automation and robotics to streamline warehouse operations. They plan to spend $200 million on self-driving forklifts, known as “FoxBots,” to automate their distribution centers. This move aims to enhance efficiency, reduce labor costs, and compete with Amazon. Successful implementation of these technologies could significantly boost Walmart’s profitability and operational capacity.
Analysts predict that these automation efforts could add $20 billion to Walmart’s profit before interest and taxes by fiscal 2029.
Health-Conscious Offerings
They can also join the health-conscious movement by offering more healthy food alternatives in their grocery section, further encouraging the growing wellness trends. Certain diets, like keto, are growing in popularity. They could capitalize on offering foods perfect for people on these popular diets, aiming to offer something other stores don’t.
Partnerships with Larger Companies
There’s also the opportunity to partner with larger companies to branch into other services such as health insurance, coffee stores, and travel agencies. It’s another way to dominate the worldwide market without having to drop stores in new locations. Most big-name companies branch out, like Pepsi and Doritos or IBM, providing analytics for The Weather Company.
Walmart Threats
Employee Wage Issues
Employees want to make a livable wage. They complain about not getting enough hours or made to work overtime without pay. Walmart’s brand image is hit harder and harder the longer they ignore the growing cries of their workers. Not to mention they’ve increased the amount of self-checkout machines. It appears to be a positive way to improve the transaction process, but it also a way to cut back on hiring more employees.
Intense Competition
The competition is always biting on their heals too. There’s Target, similar to Walmart but known for “higher quality” items. And Costco, where you can buy massive amounts of food in bulk. They’re also known to treat their employees well. Both companies are happily supported by the public, less so for Walmart.
Online Shopping Challenges
And even though Walmart is putting more funding into their online shop, it might not yield expected results. It requires a mental shift for customers. They’re used to coming in and buying their stuff, but now Walmart is asking them to buy from home. It doesn’t help that their website was always slow, hard to organize, and often unhelpful.
Amazon, on the other hand, is known for its online shopping, quick deliveries, and huge selection of items. No mental shift is required.
Changing Consumer Preferences
People are looking for an alternative to the long lines, the lack of employee help, and crammed stores. Walmart wants it to be their e-commerce site, but we already have it Target and Costco. Not to mention, people are likely to support smaller grocery store chains over Walmart.
Dependence on Automation
While automation presents opportunities, it also poses threats. The reliance on robotics like FoxBots may lead to significant adjustments and require a controlled environment, whereas humans can adapt faster.
If the technology fails to meet expectations or causes operational disruptions, it could result in substantial financial losses. Moreover, increasing automation might exacerbate employee dissatisfaction if perceived as a threat to job security.
If Walmart put more effort into clearing their name, treating employees and customers better, rather than throwing funds into website redesigns, they could turn much of their threats into strengths in this SWOT Analysis.
