Wal-Mart: External Market Analysis
The objective of this study is to conduct an external market analysis for Wal-Mart and to analyze the HRM data trends and issues to identify appropriate strengths, weaknesses, opportunities, and threats from a global perspective. This information will be utilized as the basis for the strategic workforce improvement plan.
Wal-Mart is the largest retailer in the world as well as being the second-largest company in the world following Exxonmobile as well as the largest nongovernmental employer in the United States. Wal-Mart Stores, Inc. operates retail stores in all 50 U.S. states. Wal-Mart is reported to have labor relations issues and external threats due to competition. Low sales in the clothing lines due to reductions in personal consumption spending are reported in the apparel industry at a rate from somewhere between 5% and 15%. The hurt that was put on such as Ann Taylor and Talbots and that leaked over to Wal-Mart loss of sales as well.
The economy has been weak with a consumer survey reporting Nearly 130 million customers shop its 3,200 U.S. stores each week with only a little more than 45% shopping throughout the store and regular shoppers reporting sticking to low-margin basics, by passing a higher margin sections such as apparel” (Berner, p.67 cited in: Akkad, Chelune, and Coppolla, 2011, p.19) The competition derived from the global marketplace which is characterized by consumer quality increases and service receipts and competitions in the price game keep prices competitive with retailers searching for ways to increase profitability and experience growth in dismal times.
II. Strengths
The strengths of Wal-Mart include the great market share that they hold and the offering of a great deal of business to both wholesalers and manufacturers. This provides Wal-Mart with a great deal of power because the threat of Wal-Mart switching to a different supplier would result in a panic to the suppliers of Wal-Mart. Wal-Mart deals with major suppliers such as Coca-Cola, and Proctor & Gamble providing Wal-Mart with more bargaining power than the smaller retailers. The entry barriers are high in this retailing sector and Wal-Mart’s distribution center is outstanding as are its locations, and brand name as well as Wal-Mart possessing the financial capital needed to fight competitors.
III. Weaknesses
Wal-Mart’s clothing line has suffered greatly in sales due to the downturn of the economy.
IV. Opportunities
Included in the opportunities of Wal-Mart is the ability to create a new more affordable line of apparel that would fit the budgets of families in today’s economy better. With the purchasing power of Wal-Mart and its global presence, the company should seek alternative clothing producers for its apparel line. Wal-Mart should additionally concentrate on increasing its online sales.
V. Threats
External factors for Wal-Mart includes both opportunities and threats including the opportunities of the rise in healthcare spending in the U.S. And the increase in online sales in addition to an increasing network of stores. Threats are due to intense competition and the effects of the subprime banking crisis.
V. Online Sales
It is reported that Wal-Mart Stores, Inc. reported that it had a growth in its online sales “more than 39% in the first quarter of the year [2013] and that it planned to expand around the world.” (Davis, 2013, p.1) E-commerce will be a growing area of importance for Wal-Mart Stores, Inc. according to Chief Financial Officer, Charles Holly who stated specifically as follows:
“During the quarter, e-commerce sales increased by over 30%, and we continue to make strategic investments in the markets that offer us the greatest growth opportunity. We’re focusing this investment in key areas, including our global technology platform and next-generation fulfillment networks, as well as scaling additional markets around the world.” (Davis, 2013, p.1)
Also reported for Wal-Mart Stores Inc. was the following information:
(1) It is reported that Wal-Mart now ships in the U.S. alone order from 35 of its 4,000 stores in the U.S. compared to the previously reported shipping from 25. Goals have been set at 50 stores by the end of the year. It is reported that traffic to Wal-Mart’s U.S. e-commerce site “exceeds 45 monthly visitors and growth and conversion are accelerating.” (Davis, 2013, p.1) Davis also reports that Wal-Mart announced yesterday it had acquired two online technology startups and planned to hire 150 more staffers for its Walmart.com operations in Silicon Valley, which already employ 1,500.” (Davis, 2013, p.1)
(2) It is reported that in the U.K. The “Asda supermarket chain that Wal-Mart owns is the country’s second-largest online grocer, Wal-Mart says. Asda completed the rollout of Wi-Fi to its stores in the first quarter, making it easier for customers and employees to connect to the Internet via mobile devices. Asda also expanded its Click and Collect service that lets customers pick up web orders in stores to 100 stores, and opened a third e-commerce fulfillment center in Nottingham.” (Davis, 2013, p.1)
(3) It is reported that in Brazil, sales online “…grew more than 40% in the first quarter and Walmart.com.br is now the most heavily visited e-commerce site, Wal-Mart claims.” (Davis, 2013, p.1)
(4) Reports state that in China, Yihaodian, an online retailer that Wal-Mart bought a controlling interest in last year, now offers same-day delivery in Beijing, Shanghai and Guangzhou. Yihaodian is No. 42 in the Internet Retailer Asia 500. (Davis, 2013, p.1)
Summary
Wal-Mart Stores, Inc. is acknowledging that it has some serious catching up to do in online sales if it is to compete with its present competitors because these stores are already established in terms of their online presence and their sales gained in online shopping transactions. Because of Wal-Mart Stores, Inc. low prices, there is little threat for new entrants that would pose a serious level of competition for Wal-Mart Stores, Inc. And there is little threat of substitution. Wal-Mart’s sales were quite strong online for the first quarter of 2013 and growth is projected for online sales for Wal-Mart Stores, Inc. For the remaining quarters of 2013.
Recommendations
The information reviewed in this study has highlighted the need for Wal-Mart Stores, Inc. To focus on training and education of employees to accommodate the growth in online sales and the necessity to use technology applications for these transactions. Wal-Mart Stores, Inc. will need to focus its HRM strategy on ensuring that employees are trained and educated to interact via website support chat and other technological requirements in the online shopping environment. Wal-Mart will need to continue to devote its focus on increasing online sales and in competing with other online retailers in today’s global marketplace. As well, Wal-Mart Stores, Inc. will do well to examine other apparel manufacturers and consider its own low-cost line of apparel for the family budget in today’s tough economy when people have very little to spend on apparel.
Conclusion
Wal-Mart Stores, Inc. is strong and is experiencing growth and expansion on a global basis however, the company must necessarily concentrate on how it can enhance the online shopping experience for its customers and must train employees to ensure that the online shopping experience is a pleasant one and one that is not too complicated or time-consuming.
References
Akkad, S., Chelune, T., and Coppola, C. (2011) Wal-Mart’s Strategic BMGT495-7380. University of Maryland; University College. 22 Nov. 2011.
Wal-Mart (2011). Corporate Facts Sheet. Retrieved from http://walmartstores.com/pressroom/factsheets/
Wal-Mart Corporate (2011). About us. Retrieved from https://walmartstores.com/AboutUs/
Walmartstores.com (2008). 2008 Annual Report. Retrieved from http://walmartstores.com/sites/annualreport/2008/docs/wal_mart_annual_report_2008.pdf
Yang, F. (2009) Strategic Analysis of Wal-Mart. 1 May 2009. Retrieved from: http://aladinrc.wrlc.org/bitstream/handle/1961/9446/Yang,%20Fan%20%202009S.pdf?sequence=1
