What Keeps Walmart One of the Top Retail Company in the US and Globally - Case Study Example

Walmart

Walmart is the largest business that operates in a retail business model both in the US and globally. It is headquartered in Arkansas and operates a chain of different businesses such as grocery stores, hypermarkets, and discount stores. The company has been improving since its inception in 1962. Currently, it has at least 11,000 stores globally that it operates and has been continuously emerging the top company according to the Fortune 500 businesses for several years indicating a string of success in its business model. Walmart’s operating income as of the financial year 2015 was $482.13 billion while the operating income was an equivalent of $24.1 billion. Groceries alone account for up to 56% of its overall sales (Peterson, 2015). It has at least 1.4 million employees in the US alone (Isidore, 2016a). It also has several subsidiary companies that include but not limited to Lider, Vudu, Asda, Amigo Supermarkets, and Massmart. Walmart operates on a price orientation model where it strives to achieve the lowest prices for its products to ensure that they can have a significant impact on the lives of the customers. To make its marketing strategies easier, the organization has adopted various technological advancements to help in making the shopping experience easier and more efficient for the customers. This is especially to try to reduce the time taken to shop and reduce the number of people available at the stores.

As is the case in any industry, Walmart has some aggressive competitors most of whom are ready to overtake it by taking its market share. The only reason most of the competition has not been able to outdo Walmart is the low price culture that serves as the organization’s bloodline. Some of the competitors include Target, which comes in as the closest competition followed by BestBuy and Macys. Walmart has continuously insisted on the importance of affordable prices for the customers because this is one of the most important economic determinants with regard to the profitability of an organization. Judging from the performance of Walmart, it is clear that this strategy has worked. To further improve the success, the organization has integrated different technologies.

One of the technologies that Walmart has integrated is a virtual store assistant system that functions through text messages. In contrast to other organizations, Walmart has opted to use this old technology because it has various advantages, especially when considering the customers. The system is easy to use and is familiar to the customers making it considerably easy to get answers to common questions regarding products and services such as locations for a particular product, and if the system cannot assist, a nearby assistant is assigned to handle the query. This eliminated inconvenience and improved the number of customers to the company stores. Moreover, it has also integrated technologies that help in keeping the online platform updated with the products that are in store to ensure the customer is not turned down by unavailable products. Such technologies have pushed Walmart to the top as the organization has managed to do the simple things very well. In 2015, the organization started receiving complaints from customers especially concerning a lack of fresh produce as well as empty shelves, which was caused by the large number of customers who were attracted by the lower prices that were approximately 15% lower as compared to other stores such as Kroger (Peterson, 2015). As a response, the organization ramped up its restocking efforts and made adjustments in the number of grocery staff to ensure customers would always find what they were looking for. To further improve convenience, the organization undertakes observations concerning consumer behaviors to make sure that it responds in a favorable way. For instance, in 2015, Walmart noted that the customers were snacking more and as such, it upgraded the assortment of the snacks and brought better labels.

In the past, the company had a good and highly motivated employees working as customer service representatives, but this may have changed since the start of this decade. There have been complaints especially concerning the customer service the organization exhibits, and this is affecting the organization’s profitability as well as its market share. This is acting as an opportunity for the competitors who are now gaining on Walmart and may be in a position to outdo it if measures are not taken to improve the customer service that has a lot to do with the economic performance of an organization regardless of the service that the organization has to offer. In fact, due to deteriorating customer service the organization is losing its customers leading to the closure of many stores mostly in 2016. The organization has scheduled to close at least 269 stores with 154 of them being in the US (Goldan, 2016). Due to poor customer experience, the organization has seen its revenues drop by $3.52 billion throughout the course of 2015. This implies that the revenues fell to $ 482.13 billion in 2016 (Jennings, 2016). Such developments have taken place for the first time in recent times mainly because the organization intends to close more stores than it is planning to open in the US alone. The organization has made many managerial mistakes such as maintaining a weak brand although the name itself is strong. It is made weak by the consistent lousy shopping experience, disorganization in the stores, and a poor customer service (Lutz, 2015).

From the customer’s perspective, Walmart is substandard and boring, a perspective that has developed recently. As compared to the competitors that include Amazon and Kroger, the competitors are being preferred by the customers who, in spite of slightly higher prices, view them as facilitating a fun shopping experience. In fact, some of the competitors are even selling some of their products at lower prices as compared to Walmart, which implies that Walmart has even lost its reputation as the store with the lowest prices. It has also been noted that the organization does not have consistency. The customer experience in addition to layout is significantly different in various stores. Moreover, in spite of having improvised by improving the online experience and experimenting on neighborhood markets, it has neglected its core business, which is all about the off-line business. This has led to outdated designs, poor layout, and poor stocking but the experimentations have been going rather good. This type of neglect has also played a role towards its current losing streak as compared to its competitors. Lack of focus may have also played a critical role in the poor performance exhibited by Walmart in recent years. Walmart has concentrated on a wide range of businesses that include operating supermarkets, discounting, and online retailing among others. This has left the organization dealing with many initiatives at once and not being able to allocate adequate attention to them. Moreover, most of its overseas expansion initiates have failed in spite of having invested a lot in them. For instance, Brazil represents one of the countries in which Walmart has failed because it has closed at least 40 stores there (Goldan, 2016). Its outside US expansion strategies are lacking, and the organization is shifting its attention from the best market that it has ever had, the US market. Walmart realizes a profit margin of approximately 4% in overseas stores and more than 7% in the US. Its current predicament has reduced this profitability and led to its intention to close more than 150 stores in the US alone. It is also known for firing employees that try to take part in strikes directed towards better working environments for employees (BBC, 2016).

As an attempt to improve its image that ranks almost at the bottom of the retail sector, Walmart has resulted to increasing the wages of the employees to make it higher than the federal minimum (Hill, 2015). The wages were increased by 3% for the full timers and 6% for the part-time employees (Isidore, 2016). This move was reached in January 2016 as an attempt to reduce employee turnover. The organization has also reinstated 16 employees that had been fired for taking part in strikes although this was after a directing by a court (BBC, 2016).Walmart has also brought back its greeters to the front doors of its stores in a desperate move of improving customer experience (Isidore, 2016b). Another strategy that has been adopted to improve customer experience is training academies that are intended to train its employees on how to offer the best experience to the customers (Howland, 2016). There are also investments made to ensure better career paths for the workers for a period of the coming five years. Although Walmart is attempting to improve the experience of the customers, it may be approaching the issue from the wrong perspective.

One of the ways to improve is to pull back in to the US dominant markets as well as Canada are re-establish a better expansion strategy for the overseas markets which can be made possible by partnering with local organizations in foreign countries and undertaking research on what those markets want. Increasing employee salaries may not have been the best move especially in a time that the organization is incurring reduced profits. Instead of wage increase, it should ask the employees on how they would like the organization to improve and provide suggestions on the same. This would improve the perception of the employees concerning the values that the organization has placed on them as well as motivate them. Employee turnover would be addressed by a more open workplace where the management is willing to incorporate the ideas of the employees into the organization decision making. In addition, Walmart should concentrate on the organization of the stores, which brings convenience. Although it has brought a system that is directing the customers to the products, it would not be required if adequate attention was directed towards organization. Moreover, Walmart should resume its main agenda, which is a lower price than the competition. The company needs to take care of one of the most important factor, which is the customers through a better customer experience. A better customer experience can only be realized if the organization would listen to the customers through the feedback that they provide through emails. Market research on the experiences of the customers would help in revealing the aspects to be addressed. It should also concentrate on manageable projects.

In conclusion, Walmart has been performing well for many years to the point that it is the top retail company in the US and globally. However, its competitors may take over the top spot if the organization’s poor business practices including poor customer service and layout are not addressed. The organization has preoccupied itself with many initiatives leading to neglecting of the most important market, which is the American market. Although it has more than 1.4 million employees, it is not treating them with dignity. Walmart, in spite of being known as the organization with the lowest price, has changed this agenda because there are competitors offering better prices, which is affecting its customer base. Although it has attempted to resolve these issues by increasing employee salary and training them on customer service, a lot still needs to be done. To address these issues, Walmart needs to concentrate on the American market and re-strategize on better expansion strategies. It also needs to listen to the employees and the customers to improve customer service and employee turnover.