Business Articles / Strategy

What are the Competitive Advantages of Wal-Mart?

by Richard Andrew

When you see a brand or business is doing better than the others having the same goal, that company is enjoying its competitive advantage. Competitive advantage helps a business to reach more customers and earn greater profit margins than its rivals. And if you want a proper example for this concept, nothing can be better than “Wal-Mart”. Wal-Mart has changed the strategic concept of the whole retail industry and became the “Global Leader” of this sector. And all this happened because of the strong sustainable competitive advantage that WalMart possesses among its rivals.

So, what are those Competitive Advantages of Wal-Mart?

Focus on Keeping the Price Low

This is one of the main competitive advantages that helped WalMart become what it’s today. “Everyday low prices” is their philosophy and their slogan is “We save people’s money so that they can live better”. And since the beginning, the company has been keeping its promise and providing customer their daily necessities at lower price than others in the market.

Best Customer Services

Wal-Mart always prioritized superior customer services for its customers. They not only focus on low prices but also offering different services both online and offline, such as 90-day return policy without receipts, using digital tools to ease the shopping process etc. Wal-Mart has the best hiring and training program for its employees and the company constantly motivates its employees for a better customer management. It ensures the repeated coming of customers though frequent customer service improvement.

Cost Effectiveness

To provide low prices while gaining a bigger profit margin is not easy. But Wal-Mart has done it though its various resources, such as human resource, knowledge resource, and large operation scales etc and gained a powerful bargaining power among its competitiors. Wal-Mart has invested in technology a lot, which also helped to cut-back its costs. Entry mode, store locations, good management etc. has helped WalMart to achieve the economies of scale and having the cost leadership.

Market Saturation

Wal-Mart has reached out to places where population was very low. Those small towns didn’t have the capacity to maintain multiple stores. And because of the promotion, price and service offerings, other competitors on the same location couldn’t manage to operate there anymore. As a result Wal-Mart successfully achieved the market monopoly of several small locations. They’ve also successfully placed a strong foothold in pet owner communities. As per Packaged Facts, around 43 million households in the U.S who have pets shop at Walmart. Although it’s proportionately low in ratio when compared with their other consumer demographics, this example perfectly illustrates how Wal-Mart captures a market.

Efficient Supply Chain Management

Wal-Mart has invested the most on its supply chain and warehouse management. Wal-Mart is the fastest mover among its competitors for starting barcode, RFID and most importantly cross- checking supply chain strategy. Also, due to its regional warehouse and distribution center Wal-Mart stores enjoys direct shipping from the manufactures and reduces transport, labor and storage costs significantly. Wal-Mart’s insistence on investing in the R&D sector as well as integration of technological advancement into their day to day operations has transformed them into a frontrunner in the industry. Sustainable planning has enabled them to cut down on inventory costs as well as improve shopping experience for the consumer. WalMart also maintains a long-lasting and strong relationship with its vendors.

Speed of Global Expansion

Starting with only one small store in US, Wal-Mart now has its operations in 28 countries with 11700 stores all over the world. The speed with which this company has penetrated each country is noteworthy. From local adaptation to battle with local companies, Wal-Mart’s choice of market has been greatly successful. It has made itself an ideal example for globalization within the retail industry.

Related:

Reference

https://notesmatic.com/2018/03/11711/
https://medium.com/@shahmm/how-did-sam-walton-build-wal-marts-sustainable-competitive-advantage-b670af205df1
https://www.tradegecko.com/blog/supply-chain-management/incredibly-successful-supply-chain-management-walmart
https://profitworks.ca/blog/marketing-strategy/579-sam-walton-wal-mart-what-is-wal-mart-s-secret-to-success.html