Walmart Case
OUTLINE ON WALMART, INC Cetin AMATO
Despite the sparkling initial growth and emerging as a big retail power, Walmart goes into a sustainability problem with its growth. It is a strategy problem and not a financial problem, because Walmart needs to identify its core areas where it is strong and can leverage further growth on, such as product variety, customer satisfaction and affordable prices. The initial success points the company had are customer oriented services, inventory control and distribution.
The reason of the sustainability issue was saturated US market. One factor that led to this was the big players in the discount retail sector has similar and “oligopolistic” market shares, (according to the Exhibit 3) which is bound to slow growth for every player, until one or more of them collapses. This collapse may also mean a differentiation of one of the players; through a transformation after which we can no longer identify the player in the same niche. For example, if Walmart becomes active in all everyday specialty categories like toys, drugs, flowers and home appliances; if the SKU count exceeds all competitor limits; then it would mean that Walmart beat the competition, creating and becoming the “category: itself.
The second solution to fight saturation was opening up to Mexico and Canada; for additional growth. The distribution network was suitable to expand to these countries; thanks to geography and proximity; as well as the similarity in market preferences.
Today, we know that Walmart adopted both of the approaches, both by capitalizing on their variety/price mix and the geographic expansion
Despite the sparkling initial growth and emerging as a big retail power, Walmart goes into a sustainability problem with its growth. It is a strategy problem and not a financial problem, because Walmart needs to identify its core areas where it is strong and can leverage further growth on, such as product variety, customer satisfaction and affordable prices. The initial success points the company had are customer oriented services, inventory control and distribution.
The reason of the sustainability issue was saturated US market. One factor that led to this was the big players in the discount retail sector has similar and “oligopolistic” market shares, (according to the Exhibit 3) which is bound to slow growth for every player, until one or more of them collapses. This collapse may also mean a differentiation of one of the players; through a transformation after which we can no longer identify the player in the same niche. For example, if Walmart becomes active in all everyday specialty categories like toys, drugs, flowers and home appliances; if the SKU count exceeds all competitor limits; then it would mean that Walmart beat the competition, creating and becoming the “category: itself.
The second solution to fight saturation was opening up to Mexico and Canada; for additional growth. The distribution network was suitable to expand to these countries; thanks to geography and proximity; as well as the similarity in market preferences.
Today, we know that Walmart adopted both of the approaches, both by capitalizing on their variety/price mix and the geographic expansion