SWOT Analysis of Walmart (5 Key Strengths

in 2022)
Last updated:  August 16, 2022  by  Ovidijus Jurevicius

This Walmart SWOT analysis reveals how the largest company in the
world uses its competitive advantages to dominate and successfully
grow in the retail industry.

It identifies all the key strengths, weaknesses, opportunities and threats

that affect the company the most. If you want to find out more about the
SWOT of Walmart, you’re in the right place.

Learn how to do a SWOT analysis.

Company Background

Name Walmart Inc.

Founded July 2, 1962

Logo

Industries Retail
served

Geographic Worldwide (10,585 stores in 26

areas served countries)

Headquarters Bentonville, Arkansas, U.S.

Current CEO Doug McMillon

Revenue 559.151 billion (2021) 6.7% increase

(US$) over 523.964 billion (2020)

13.706 billion (2021) 9.8% decrease over

Profit (US$)
15.201 billion (2020)

Employees 2.3 million (2021)

Main Alibaba Group Holding Limited,

Competitors Amazon.com, Inc., Best Buy Co., Inc,
Costco Wholesale Corporation, Kmart
Corporation, Schwarz Group, The Kroger
 Company, Target Corporation,
Walgreens Boots Alliance, Inc. and many
other retailers/wholesale companies.

Business description

Walmart business description taken from the company’s financial report:

“Walmart Inc. (“Walmart,” the “Company” or “we”) helps people around

the world save money and live better – anytime and anywhere – by
providing the opportunity to shop in retail stores and through e-
commerce.

Through innovation, we strive to continuously improve a customer-centric

experience that seamlessly integrates our e-commerce and retail stores in
an omni-channel offering that saves time for our customers.

Each week, we serve over 240 million customers who visit approximately
11,400 stores and numerous e-commerce websites under 54 banners in 26
countries.

Our strategy is to make every day easier for busy families, operate with
discipline, sharpen our culture and become digital, and make trust
a  competitive advantage. Making life easier for busy families includes our
commitment to price leadership, which has been and will remain a
cornerstone of our business, as well as increasing convenience to save our
customers’ time. By leading on price, we earn the trust of our customers
every day by providing a broad assortment of quality merchandise and
services at everyday low prices (“EDLP”).
EDLP is our pricing philosophy under which we price items at a low price
every day so our customers trust that our prices will not change under
frequent promotional activity. Everyday low cost (“EDLC”) is our
commitment to control expenses so our cost savings can be passed along
to our customers.

In fiscal 2021, we launched Walmart+ in the U.S., a new membership

offering with omni channel shopping benefits that currently include
unlimited free shipping on eligible items with no order minimum,
unlimited delivery from store, fuel discounts, and mobile scan & go for a
streamlined in-store shopping experience.

We are enhancing our ecosystem with our omni-channel capabilities,

stores, services, e-commerce sites and supply chain combined with our
more than 2.3 million associates as of January 31, 2021 to better serve our
customers. Together, we believe these elements produce a flywheel effect
which creates customer relationships where customers view Walmart as
their primary destination.

We are engaged in global operations of retail, wholesale and other units,

as well as e-commerce, located throughout the U.S., Africa, Canada,
Central America, Chile, China, India and Mexico. Our operations are
conducted in three reportable segments: Walmart U.S., Walmart
International and Sam’s Club.”[1]

You can find more information about the business in Walmart’s official
website or Wikipedia’s article.
SWOT analysis

Strengths Weaknesses

1. Being the largest retailer 1. Overdependence on

in the world, with sales from the U.S. market
unmatched scale of 2. Highly criticized
operations and strong employment policies, which
market power over result in high employee
suppliers and competitors turnover and poor
2. Cost leadership strategy customer service
3. The combination of a 3. Negative publicity and
developed distribution poor brand reputation
system and a well-
managed information
system
4. International presence
5. Large merchandise
selection in its many
physical stores helps it to
develop e-commerce
channel sales faster and
with lower costs

Opportunities Threats

1. Strengthen and expand 1. New laws and

Walmart Marketplace and regulations concerning
Walmart Fulfillment Services food, safety, wage, work
(WFS) to accommodate the benefits and
growing number of smaller pharmaceutical business
retailers 2. New lawsuits, which
2. Growing variety of would further damage
sophisticated robots and brand reputation
automation tools opens up 3. Growing risk of data
many opportunities for breaches
automated distribution
 Opportunities Threats

centers and staff-free stores

3. Increased adaptation of
augmented reality (AR) and
virtual reality (VR) tools for
better shopping experiences
4. The e-commerce market is
forecast to reach US$6.3
trillion by 2024

Strengths
1. Being the largest retailer in the world, with unmatched scale of
operations and strong market power over suppliers and competitors

Walmart is the world’s largest company by revenue. [2] It is also the world’s
largest private employer, with more than 2.3 million employees. The
company is a retail market leader in the U.S. and is a major competitor in
all geographic markets in which it operates.

Figure 1. Comparison of the top 5 retailers in the world in 2021

Walmart Amazon.com Costco Kroger Carrefour

Revenue (US$ billions) 559.151 294.034 163.220 132.498 87.55

Locations 11,443 576 795 2,742 7,193

Countries served 26 17 12 1 32
 Walmart Amazon.com Costco Kroger Carrefour

Employees 2.3 million 1,298,000 273,000 465,000 322,164

Source: The respective companies’ financial reports [1][3][4][5][6] (Walmart

reports its revenue for 2021, but most of its financial year is in 2020, so
we compare the company’s 2021 data with other businesses’ 2020 data.
Amazon.com’s revenue is for sales made from online stores, physical
stores and from third-party seller services only.)

Walmart’s revenue reached US$559.151 billion in 2021, more than

Amazon.com and Costco, the two next rivals, revenues combined. The
company employed twice as many people than Amazon and owned
about 3 times more retail locations than its top 3 rivals.

Forbes listed Walmart as the 19th most valuable brand in the world in

2020[7], worth US$29.5 billion. No other direct competitor, except
Amazon, has made it to the Forbes list of the top 50 most valuable
brands.

What does ‘being the largest retailer in the world’ mean to Walmart?

 Economies of scale. The company can share its fixed costs

over many products, which makes Walmart one of the
cheapest places to shop.
 Efficient and effective use of resources. Walmart can use its
resources, such as distribution facilities, information systems,
knowledge and other capabilities and skills, more efficiently
and effectively over a large number of locations.
  Huge gains from implementing best practices. The
company can identify better ways of performing tasks,
managing stores and hiring new employees and can achieve
huge gains by implementing these best practices in its vast
network of stores.
 Experimenting with less risk. The company can engage in
many experiments within its stores or in new store formats
without the risk of losing a substantial amount of profits or
revenue.
 Market power over suppliers and competitors. Due to its
size, Walmart can exercise its market power over suppliers by
requiring lower prices from them. The company can also
affect the competition by selling selected items at a loss, thus
driving competition out of the market.

Walmart’s size and scale allows grants the company a competitive

advantage that no other company’s rival can match.

2. Cost leadership strategy

Since its incorporation, Walmart has used a cost leadership strategy. A

cost leadership strategy is based on manufacturing and selling products
or services at the lowest possible cost. The advantage of this strategy is
that a company can benefit from economies of scale by growing to be
very large in size.

Cost leadership strategy have enabled Walmart to successfully grow to

become the largest retailer in the world. The same strategy that has
helped the company to grow in the past continues to drive its growth in
the current e-commerce era.
Figure 2. Walmart’s total revenue 2017-2021 (in US$ billions)

Source: Walmart’s financial report[1]

According to a study done by LendEDU[8], prices at Walmart.com are on

average 1.73% lower than the prices on Amazon.com. The following
table compares Walmart.com and Amazon.com general prices in
selected categories.

Figure 3. Walmart price difference vs. Amazon price

Source: LendEDU[8]

The two sites offer the same prices on many of their products.
Amazon.com prices are lower on Kitchen/Appliances and Miscellaneous
Items categories, while Walmart is able to offer lower prices on Food &
Beverage, Home Goods and Technology & Entertainment categories.

E-commerce market, where most of the retail growth is happening now,

is favoring companies that can offer low prices, huge product selection
and fast shipping. This is where Walmart’s cost leadership strategy is
paying off. The company has stepped up its e-commerce efforts and is
now the second largest e-commerce company in the U.S. behind
Amazon.com.

Therefore, Walmart’s cost leadership strategy is the right choice for the
company. It allows for extraordinary economies of scale, some market
power over competitors and suppliers, easier expansion into foreign
markets and successful competition in the e-commerce sector with lower
costs.

3. The combination of a developed distribution system and a well-

managed information system

In order to maintain its huge scale of retail operations, Walmart has to

operate an equally large and efficient distribution system. In 2021, the
company owned 404 distribution facilities, of which 183 were located in
the U.S. and 221 in international markets. To fully stock every store, each
distribution facility serves nearly 28 stores and helps to generate over
US$1.2 billion per distribution facility, which is a very efficient distribution
network.

Walmart also operates 32 dedicated e-commerce fulfillment centers in

the U.S. and 83 fulfillment centers internationally with an additional 11 e-
commerce fulfillment centers run by Sam’s club. The total of 126
Walmart’s fulfillment centers brought in US$64.9 billion in total e-
commerce revenue in 2021 or US$0.51 billion per dedicated e-commerce
fulfillment center.[1]

In comparison, Amazon.com owned 295[9] fulfillment centers globally and

generated around US$294.034 billion[6] from its e-commerce retail
operations in 2020 or around US$0.94 billion per fulfillment center. While
Amazon.com’s fulfillment centers are almost twice as efficient in helping
to generate online sales, Walmart is not far behind. The company’s
fulfillment centers allowed the company to become the 2 nd largest online
retailer in the U.S., just behind Amazon.com[1]

Every large retailer can build a large network of distribution centers, but
to manage them efficiently requires extra effort, and this is where a well-
managed information system is the key. Walmart achieves this for two
major reasons. First, the company runs a centralized information system
based in Arkansas, which allows developers to manage the system and
collaborate with each other more easily than if they had a decentralized
system. Second, the company uses common platforms and systems
across all of its U.S. and international stores. By using their single system
in every store, the company lowers its costs significantly. In addition, the
best practices from one store or distribution center can be easily
replicated in another without additional costs.

Their well-managed information system allows the company to efficiently

manage its stores and distribution facilities, which results in huge cost
savings and a competitive advantage that no other retailer can match.

4. International presence

Walmart went international in 1992 through a joint venture with Cifra, a

Mexican retail company, opening a Sam’s Club in Mexico City. [10] Since
then, the company has expanded globally to become the largest
international retailer (by revenue), operating 6,101 retail units in 25
countries outside the U.S. The company operates under different brand
names, such as ASDA in the U.K., Walmex in Mexico and Seiyu in Japan.
Walmart’s non-U.S. revenues reached US$121.360 billion or 21.7% of its
total sales in 2021, a significant source of revenue. [1]

Figure 4 Walmart’s revenue breakdown by segment 2021

Source: Walmart’s financial report[1]

Walmart’s international expansion strategy not only helps the company

to grow, but also strengthens the company’s retail leadership position.
By growing internationally, the company diversifies its income sources,
gains valuable new experience and further benefits from economies of
scale.

5. Large merchandise selection in its many physical stores helps it to

develop e-commerce channel sales faster and with lower costs

Retail sales in physical stores compared to e-commerce channels are

slowing. Many retail companies, including Walmart, are focusing on
establishing themselves as electronic commerce retailers. Walmart’s total
(includes domestic and international sales) e-commerce sales grew by
US$25.2 billion in a single year from US$39.7 billion in 2020 to over
US$64.9 billion in 2021. Online sales comprised only 8.6% of the total
company’s revenue in 2021, but while Walmart’s physical store revenue
grew by 2.1% in 2021 its e-commerce sales grew by 63.5% in the same
year.
Figure 4. Walmart’s e-commerce revenue by segment 2019-2021 (in US$
billions)

Source: Walmart’s financial reports  [1][11]

Walmart as an electronic commerce retailer cannot compare to

Amazon.com yet, but the company is significantly expanding its e-
commerce operations. Walmart has 6,750+ pickup and 5,300+ delivery
locations across the world and can offer next day delivery to over 75% of
U.S. population.[1][12] The company constantly invests in new fulfillment
centers and has developed new mobile apps for its e-commerce sites
across the world.
The driving force behind Walmart’s strong e-commerce growth is its low
prices, achieved by huge economies of scale and the use of their existing
assets for selling items and fulfilling orders.

In addition to its low prices, Walmart’s existing assets such as its physical
stores and wide merchandise selection help the company to expand its
Internet sales with little additional cost. There was no need for Walmart
to build many costly fulfillment centers, the company converted many of
its superstores to fulfillment centers instead. If the company’s e-
commerce operations continue to grow, Walmart can easily convert
more of its stores to fulfillment centers. By shipping from the store, the
company also reduces product delivery time to the customer. Lastly, if
some of the items are out of stock in Walmart’s online store, their single
information system can easily check if the same items are available at
any of its physical stores and if so, ship the product straight from the
shelf.

Walmart is still less experienced in e-commerce than Amazon, but it

already has some of the strengths that even Amazon.com cannot match.

Weaknesses

1. Overdependence on sales from the domestic U.S. market

Walmart operates retail stores in all 50 states, Washington D.C. and

Puerto Rico, with supercenters in 49 states, Washington D.C. and Puerto
Rico. Walmart’s sales from its domestic operations (includes Walmart
U.S., Sam’s Club and other revenues) were US$436.649 billion,
US$402.532 billion and US$392.265 billion respectively for fiscal 2021,
2020 and 2019. In 2021, 78.1% of all company revenue and more than
85% of its operating income came from the U.S.[1]
Figure 6. Walmart’s net sales growth in 2019-2021 (in US$ billions)

Walmart Walmart Sam’s

U.S. International Club

2021 Net sales 369.963 121.360 63.910

2021 Share of the 66.6% 21.9% 11.5%

total net sales

2021 Net sales 8.5% 1% 8.7%

growth

2020 Net sales 341.004 120.130 58.792

2020 Share of the 65.6% 23.1% 11.3%

total net sales

2020 Net sales 2.8% (0.1)% 1.6%

growth

2019 Net sales 331.666 120.824 57.839

2019 Share of the 65% 23.7% 11.3%

total net sales

2019 Net sales – – –

growth
Source: Walmart’s financial report  [1]  (Walmart’s net sales and revenue
figures differ, because Walmart does not add revenue from the
memberships to any of the segments directly. Walmart’s revenue for 2021
was US$559.151 billion, while the net sales were US$555.233 billion)

Walmart’s reliance on sales from one market weakens the company, as

decreasing demand in the U.S. may seriously affect the company’s
growth. This trend of low or even negative U.S. retail market growth is
likely to continue; therefore, the company has to find other growth
markets outside the U.S.[13]

2. Highly criticized employment policies, which result in high

employee turnover and poor customer service

The most noticeable Walmart weakness is the company’s policies

regarding employee hiring and management. There are numerous
complaints from Walmart’s employees and managers about poor
working conditions, including no break times, very low wages, no
overtime pay, no guarantee of sufficient work hours or a regular
schedule, no benefits, wrongful termination etc.[14][15][16] All of these
complaints lead to high employee turnover, understaffed stores and
poor customer service.

Low-paid employees who work in understaffed stores aren’t capable of

providing quality service, and this subsequently drives customers out of
Walmart stores. According to the American Customer Satisfaction Index
(ACSI),[17] Walmart is one of the most disliked department and discount
stores in the U.S. market.
Figure 6. Customer satisfaction score of discount and department stores
in the U.S.

Store name 2020 score (out of 100)

Costco 81

Nordstrom 80

Sam’s Club (Walmart) 79

Dillard’s 79

TJX (Marshalls, TJ Maxx) 78

Kohl’s 78

BJ’s Wholesale Club 77

Macy’s 77

Target 76

JCPenney 76

Category average 75

Walmart 71
Source: ACSI[17]

Figure 7. Walmart’s customer satisfaction score

Source: ACSI[17]

Walmart’s customer service while currently improving, is still below the

industry’s average, and people are less inclined to visit its stores. This
weakness requires a better, stronger response or Walmart will find it
hard to grow in the U.S. market in the future.

3. Negative publicity and poor brand reputation

Due to its size, Walmart is one of the most criticized companies in the
U.S. The company receives criticism for many of its policies and business
practices, but the most significant are:
  foreign product sourcing
 monopolistic practices
 supplier treatment
 low wages
 working conditions
 wrongful termination
 bribery
 taxes

Negative publicity damages brand’s reputation and decreases company’s

sales. In 2016, negative publicity already affected the company when
Walmart’s revenue decreased for the first time in ten years, even when
the overall retail market was growing. The company’s brand also suffers
from many lawsuits, in which the company is engaged mainly because of
its poor business policies and practices.

Opportunities
1. Strengthen and expand Walmart Marketplace and Walmart
Fulfillment Services (WFS) to accommodate the growing number of
smaller retailers

2020 was one of the most disrupting years for the retail industry in the
past century. Retailers suffered worldwide due to the many restrictions
placed on them, lockdowns and the constant supply shortages. The
pandemic also changed how consumers were shopping. To avoid contact
with the others, many more people opted to shop online. To avoid heavy
losses due to the decreased traffic to their stores, retailers had to start
selling their merchandise through their own e-commerce platforms or
through the huge marketplaces like Amazon Marketplace, Walmart
Marketplace or eBay. An increased number of smaller retailers moving
online opened up many new opportunities for such a huge e-commerce
retailer as Walmart.
Figure 8. U.S. retail landscape in 2020

Source: Digital Commerce 360[18]

The changing customer habits have led to the increased traffic to

walmart.com as well. The stellar growth of Walmart’s e-commerce
operations in the U.S. in 2020 (fiscal year of 2021) has led to walmart.com
becoming the second highest earning e-commerce website in the
country.[18]

Figure 9. Top 10 U.S. companies ranked by retail e-commerce sales in

2021
Source: eMarketer[19]

Increased traffic to the walmart.com makes the platform more attractive

to the sellers who have not yet decided to offer their merchandise
through Walmart Marketplace. Therefore, Walmart should focus its
efforts in attracting more sellers to Walmart Marketplace by offering
more and better benefits for the new and existing members. The more
members will join the marketplace the more products will be offered for
the walmart.com customers and this will increase the traffic to the e-
commerce platform even more.

In addition to the opportunity of attracting new sellers to Walmart’s

Marketplace, the company has an equally good opportunity to attract
new sellers to Walmart Fulfillment Services (WFS). Introduced in 2021,
WFS, similarly to Amazon.com’s Fulfilled by Amazon service, offers a
world-class supply chain capabilities – from storing, picking, packing and
shipping items to handling of returns and customer service.

In order for small retailers to be able to compete with the large store
chains, they have to offer similar or even better fulfillment of their orders
than top retailers can offer. While small retailers can offer faster delivery
in local areas, they lack in delivery options and the ability to ship fast to
other regions. This is where WFS can offer huge benefits to smaller
retailers. According to Digital Commerce 360 report, [18] in 2020, over 50%
of top 500 retailers were offering curbside pickup. WFS with its huge
network of stores and fulfillment services could enable smaller retailers
to offer the same services to their customers.

Figure 10. Curbside pickup growth

Source: Digital Commerce 360[18]

If Walmart will be able to offer better benefits for the new sellers to join
its Marketplace and an appealing WFS services, it will benefit greatly
from the new smaller retailers coming to e-commerce. Amazon, which
earned around 5-6 times more than Walmart from it’s e-commerce
operations, generated US$80.461 billion from third-party sellers services.
[6]
 In comparison, Walmart, could potentially earn US$10 billion to US$20
billion from third-party sellers in the near future.

2. Growing variety of sophisticated robots and automation tools

opens up many opportunities for automated distribution centers and
staff-free stores

Retail chains are looking for how to improve their operations constantly
and technological side is one of the most important operational areas for
improvement right now. Profit margins in retail are low and any
technological advancement that could improve those margins is
welcomed and quickly implemented. In recent years, Walmart has been
investing large sums of money into expanding its e-commerce
operations as well as automating stores and distribution centers,
improving order fulfillment, delivery times and reducing operational
costs. All these areas were significantly improved by introducing new
technologies into them. Nonetheless, there are still many areas where
Walmart could improve its operations even further. The most promising
of these are:

 Automated distribution centers. An increasing number of

people are ordering online and all of those orders have to be
fulfilled and delivered to the customer or made ready for
pickup at designated locations. Small automated distribution
facilities are a key this. Distribution facilities are designed in a
smart way with many facilities using robots and artificial
 intelligence for moving the parcels around and doing the
heavy lifting.[20][21] In addition, orders can be fulfilled
autonomously by sending them to the parcel lockers, which,
according to some researchers, reduces total delivery time by
78%.[22] Another option is to use autonomous vehicles to
deliver the orders to customer’s location. Walmart is already
testing all of these options and the company should scale
them to get the full benefits of autonomous distribution
facilities.
 Staff-free and cashier-less stores. Robots are also making
their way into the stores. New types of robots are able to
understand what is out of stock, check if the prices are right
and whether the products are in the right places and if there
are enough of them. They can also identify hazardous
conditions and report back to the store employees where and
what has to be fixed. Some of the companies have already
deployed such robots.[23][24] Self-checkout is another option for
stores to improve checkout times and become staff-free and
with fewer cashiers. In 2020, Walmart introduced a new
checkout experience with open type self-checkouts in an
attempt to eliminate the wait and add options at the register.
[25]
 However, these checkouts were only available in a very few
stores and the company could expand it across all the
possible company’s locations.

The growth of many new types of sophisticated robots and automation

tools creates and opportunity for Walmart to reduce costs, improve
customers’ experience and satisfaction.
3. Increased adaptation of augmented reality (AR) and virtual reality
(VR) tools for better shopping experiences

AR and VR have been a part of retail for many years. Nonetheless, even
as AR market is expected to be worth over US$50 billion by 2024 and at
least 5% of AR use will be in retail industry, few of the retailers offer
AR/VR experiences in their online/offline shops.[26][27] At the end of 2019,
only 1% of the retailers were using AR or VR in the customer buying
experience.[26][27] In contrast, 71% of consumers say they would shop more
often if the stores would offer AR experience and 61% say they prefer
retailers with AR experiences.

Figure 11. AR/VR in retail sector

Source: Threekit[26]  and Marketing Dive[27]

The benefits of introducing AR/VR to the customers’ buying experience

are huge, including higher engagement and conversion, more money
spent per purchase and increased satisfaction with the whole buying
process. Walmart has identified these benefits and has been slowly
rolling out AR/VR for their shoppers over the last few years. However,
these mostly focused on enhancing in-store shopping experience
through interactive signage or augmented reality super hero apps. [28]
[29]
 These AR rollouts were limited and engage only a small number of
customers who visit Walmart stores. Instead of using augmented reality
for customer shopping experience, Walmart uses it mainly to increase
inventory picking speed, picking out items from the store for online
orders or making sure all the products that are available in-store are also
available online and vice versa.[30]

The potential of AR and VR in retail is huge and Walmart should find new
ways to better engage customers and improve their shopping experience
using AR or VR.

4. The e-commerce market is forecast to reach US$6.3 trillion by

2024

According to eMarketer[31], the global e-commerce market is expected to

expand significantly faster than the traditional retail sector, from
US$4.280 trillion in 2020 to US$6.388 trillion by 2024, a growth rate of
49.3%. Based on these forecasts, e-commerce will account for 21.8% of
total retail sales by 2024.

Figure 12. Total e-commerce sales worldwide (actual and forecast), 2019-
2024
Source: eMarketer[31]

The main e-commerce growth markets will be China, the U.S, South
Korea and India markets.[32][33] China is also forecast to account for 52.1%
of global e-commerce market with sales of US$2.779 trillion. The U.S. and
the U.K. will trail in 2nd and 3rd place with sales of US$843.15 billion and
US$169.02 billion, respectively. Currently, these 3 markets are Walmart’s
largest in terms of sales, and the company has a strong e-commerce
presence in all of them. The company currently operates in 6 of the 10
largest e-commerce markets in the world, including China, the U.S., the
U.K., Japan, India and Canada.

Figure 13. Top 10 countries ranked by total e-commerce sales worldwide

in 2020-2021 (in US$ billions)

Country 2020 2021 Growth

1. China 2,296.95 2,779.31 21%

 Country 2020 2021 Growth

2. US 794.5 843.15 6.1%

3. UK 180.39 169.02 -6.3%

4. Japan 141.26 144.08 2%

5. South Korea 110.60 120.56 9%

6. Germany 96.86 101.51 4.8%

7. France 73.8 80.0 8.4%

8. India 55.35 67.53 22%

9. Canada 39.22 44.12 12.5%

10. Spain 36.4 37.12 2%

Source: eMarketer[33]

Walmart sells online both through its own branded websites and those
of its subsidiaries. Most of its e-commerce businesses are experiencing
strong growth in e-commerce, especially in China and the U.S. Therefore,
the company should focus on improving its e-commerce capabilities to
take advantage of these growing markets.

Threats
1. New laws and regulations concerning food, safety, wage, work
benefits and pharmaceutical business

Walmart is the world’s largest company in terms of revenue and the

world’s largest employer operating in 28 countries. Walmart operates
both physical and online stores that sell groceries, apparel and other
various merchandise. The company owns pharmacies and, in some
countries, even sells fuel. Due to Walmart’s size, geographic expansion
and business complexity it is subject to numerous laws and regulations
in domestic and foreign markets.

The company highlights these risks in its report:

“The regulations to which we are subject include, but are not limited to:
federal and state registration and regulation of pharmacies; applicable
governmental payer regulations including Medicare and Medicaid; data
privacy and security laws; laws and regulations relating to the protection
of the environment and health and safety matters; regulations regarding
food and drug safety trade regulations, and consumer protection and
safety regulations, as well as state regulatory authorities, governing the
availability, sale, advertisement and promotion of products we sell and
the financial services we offer.

Changes in laws, regulations and policies and the related interpretations

and enforcement practices may alter the landscape in which we do
business and may significantly affect our cost of doing business.” [1]
Walmart also emphasizes that its international businesses face many
risks:

“Walmart International’s operations in various countries also sources

goods and services from other countries. Our future operating results in
these countries could be negatively affected by a variety of factors, most
of which are beyond our control. These factors include political
conditions, including political instability, local and global economic
conditions, legal and regulatory constraints, local product safety and
environmental laws, tax regulations, local labor laws, anti-money
laundering laws and regulations, trade policies, currency regulations, and
other matters in any of the countries or regions in which we operate,
now or in the future.”[1]

Walmart has to constantly manage these threats in order to grow and do

that successfully.

2. New lawsuits, which would further damage brand reputation

Walmart is well-known for its poor brand reputation, as well as

involvement in litigation related to its employment practices, impact on
local communities, bribery, and monopolistic practices. The company
states that involvement in more lawsuits is one of its key threats, and
addresses this issue in its financial statement:

“We operate in a highly regulated and litigious environment. We are

involved in legal proceedings, including litigation, arbitration and other
claims, and investigations, inspections, audits, claims, inquiries and
similar actions by pharmacy, healthcare, tax, environmental and other
governmental authorities. We may also have indemnification obligations
for legal commitments of certain businesses we have divested. Legal
proceedings, in general, and securities, derivative action and class action
and multi-district litigation, in particular, can be expensive and disruptive.
Some of these suits may purport or may be determined to be class
actions and/or involve parties seeking large and/or indeterminate
amounts, including punitive or exemplary damages, and may remain
unresolved for several years.

For example, we are currently a defendant in a number of cases

containing class or collective-action allegations, or both, in which the
plaintiffs have brought claims under federal and state wage and hour
laws, as well as a number of cases containing class-action allegations in
which the plaintiffs have brought claims under federal and state
consumer laws.”[1]

Walmart will likely be subject to this threat in 2021 as well, which will
further damage the company’s brand.

3. Growing risk of data breaches

Walmart is the world’s largest retailer, serving tens of millions of

customers each day in 26 countries. For almost every transaction, the
company collects customers’ credit or debit card information, either
through in-store payments or online. It stores that credit/debit card data
and protects it from theft. Nonetheless, data breaches can occur and
customer data does get stolen and exposed from time to time.

According to the Identity Theft Resource Center, in 2020, there were

1,108 identity thefts reported.[34] Since 2015, billions of records of
personal information have been stolen, with significant associated
damages incurred by both affected businesses and their customers.

Some of the biggest credit/debit card information thefts have affected e-

commerce giants such as eBay, Amazon, Target, and even Walmart. All of
these companies have lost customers and sales because of it. With the
growing number of data breaches, there is always a potential risk of
Walmart being breached again. The company identifies this threat as one
of the key risk factors to their business:

“Like most retailers, we receive and store in our information systems

personal information about our customers and members, and we receive
and store personal information concerning our associates and vendors.
Some of that information is stored digitally in connection with our digital
platforms.

In addition, our eCommerce operations depend upon the secure

transmission of confidential information over public networks, including
information permitting cashless payments. Cyber threats are rapidly
evolving and those threats and the means for obtaining access to
information in digital and other storage media are becoming increasingly
sophisticated.

We and the businesses with which we interact have experienced and

continue to experience threats to data and systems, including by
perpetrators of random or targeted malicious cyberattacks, computer
viruses, worms, bot attacks, ransomware or other destructive or
disruptive software and attempts to misappropriate customer
information, including credit card and payment information, and cause
system failures and disruptions.”[1]
Summary

Walmart has become the world’s largest company by revenue for a few
reasons. First, it used cost leadership strategy and executed it brilliantly.
Second, it operated in the world’s richest economy, which enabled
Walmart to grow fast and successfully.

At the moment, most of Walmart’s strengths come from the huge

company’s size. These strengths, such as market power over suppliers
and competitors, well developed distribution system and large
merchandise selection, will help the company to stay the largest retailer,
at least the largest brick-and-mortar retailer, for quite some time.
Nonetheless, the company has to find other strengths if it wants to grow
faster and be able to compete with Amazon.com in e-commerce.

As for the weaknesses, Walmart should improve its brand image,

employment and business practices. That would most likely result in
more productive employees, happier customers and eventually in higher
sales.

Opportunities are very clear: strengthen e-commerce capabilities and

implement technological advancements faster for better user shopping
experience and cost savings. Both opportunities should help the
company become more competitive online retailer and, if pursued
successfully, would increase company’s revenue significantly in the near
future.

The main threat for Walmart is its competition against Amazon. The store
chain tries to become a real omnichannel retailer and its bet on e-
commerce and online grocery delivery must continue successfully or the
company will be outmatched by Amazon.com. In addition, the
company’s reputation could really suffer further if any data breaches
would occur or the company would be involved in any infamous lawsuits.

Walmart will continue to dwarf the U.S. retail industry and will grow
internationally, at least for the next 5-10 years.