Walmart, being the world’s largest company by revenue, operates a chain of hypermarkets, discount department stores, and retail stores with different divisions across the globe. It was founded by Sam Walton who was inspired by the success of a small discounted department store which was prevalent in the early 90s. Before beginning with Walmart and how this American multinational retail corporation gave many similar e-commerce businesses a run for their life, it is imperative to know what makes Walmart still the favorite of consumers. However, Walmart similar companies are no less in emerging as most cogent competitors and gaining traction in the market.
Walton always aspired to go beyond boundaries with the retail stores and today Walmart has more than 11000 stores and clubs in 27 countries operating under 56 different names in the world. Walmart serves nearly 250 million customers with its stores. Walmart’s sales keep growing every year. As per the Statista reports, the company has hit around $519.93 billion in revenues, however, the trade analyst anticipated it to cross the $524 mark which seems to be happening in anytime soon before the year ends. According to the Fortune Global 500 list published in the year 2019, Walmart generated $514.405 billion USD surpassing Sinopec Group and making it to the top of the charts.
With many e-commerce businesses in line, bringing the successful business model of Walmart to conclusion with just one line would be an injustice. However, the business strategy, on which the company keeps steering its accomplishment, is evident to everyone. Walmart, ever since it has been incorporated, is working with the EDLP motto which states ‘Everyday Low Price.’
Everyday low price is the commitment of the company for all the three main segments which are – Walmart US, Walmart International, and Sam’s Club. Now the question is how Walmart manages to pit oneself against the well-established e-commerce and retail businesses with this low price strategy. The key lies in inventory management. Not only this but the company manages to secure the positions with many innovative programs in the business itself to meet competitive pressures within the industry. Now many Walmart competitors are coming into view who are walking the same path and trying to adopt the same business model and motto as the multinational retail corporation to reel in more audience.
Walmart Business Strategy – EDLP + Competitive Advantage
Walmart started in 1962 as a retail store with the aim to offer everything to the customers at a cheaper rate than other e-commerce and retail businesses. The products of Walmart range from, appliances, beauty products, hardware to sports. Today the company has spread its wings to other services as well which includes groceries, healthcare, etc. Many enterprises, following the same approach, have adopted the same business model as Walmart. It won’t be wrong to that With the motive of making everything available at the lowest rate to the consumers, Walmart sets its sight on entering every market segment and keeps on dominating all of them with the single motto of EDLP.
This catchphrase of the company spread among people like wildfire and acquired trust that the price of Walmart’s product will not be changed anytime soon either even in promotional activities. Apart from that, Walmart’s money-back guarantee, which was a one-of-its-kind initiative rolled back in the 90s, sent a feeling of satisfaction down the customer’s spine.
Either it is about changing the face of how the business would be leveraging customers in the coming era by implementing a plan of action like money-back assurance or online placements of orders to ease the customer’s efforts, Walmart has come a long way. Walmart, who is the leader of retail and wholesale business, penetrates the market with a low pricing approach. The company who once was famous among the people as a department store retailer is now making inroads and transforming itself to become the world’s largest online retailer as well.
According to Forbes, Walmart witnessed 97% sales growth in quarter 2 of 2020. While the other e-commerce industry’s average was 6.2 for discount stores and warehouse clubs, Walmart notched up 9.5% non-store sales. The company did not only come to be one of the biggest retailers and wholesalers of the world by just growing itself constantly as per the market but got involved in the rigorous competitive analysis to secure the position it holds today.
Instead of just working with one motto throughout, Walmart focused on giving specialized treatments and customized services to the consumers. Ever since Walmart has established its store in different locales of the world, the company is pivoting its strategy to win the market everywhere. Walmart has sold all its products and services to the customers directly except for the Indian market. In India, Walmart, by discarding the traditional customs of retail shopping, has gone up to selling products to customers directly by opening cash-and-carry format stores.
Cash and carry stores are different from regular chains whose concept is based around self-service. It targets professional customers rather than end customers. And to everyone’s surprise, it has held itself strong all over the world including the Indian market itself where the self-service store concept is not that prevalent. So how did Walmart do it? Before diving deep into the unique and proposed action plan that Walmart adopted to rise up in the business, we should be fixing our eyes on its rivals. It would be interesting to see how this single company has outshined many of its competitors and what the reasons for that have been.
Walmart Similar Companies – 7 Dominant Walmart Competitors in the Market
Walmart has different operating divisions across the globe which goes by the name of Walmart U.S, Walmart International, and Sam’s Club. Being in a competitive business, the company has gained enough competitors during the short span of time. So who are Walmart’s competitors? How some of them are even following a powerful strategy to preside over Walmart? Let’s have a look.
- Amazon
Amazon is a multinational technology company that is also operating as the world’s largest retail player. It was founded by Jeff Bezos in 1994. The company is headquartered in Seattle Washington, USA. Apart from limiting its services and market to the e-commerce industry, Amazon also offers services in the field of digital streaming, artificial intelligence and has emerged as a prominent cloud services provider. Amazon is turning to be one of the biggest Walmart competitors in US. While Walmart is leading the physical space, Amazon has been the pain in the rear and dominating the company in the online world.
To go head-to-head competition with Amazon, Walmart has also gird up its loins. Walmart has recently announced its new push into streaming service with the concept of Walmart + which can give tough competition to Amazon Prime. Being the biggest retail network in the market and giving mano-a-mano to Amazon in that field, Walmart arguably has the resources and finances to be a viable rival of Amazon Prime.
However, there is no fall behind Amazon in this race of being the best online retailer. The company is looking forward to revolutionizing the concept of the self-serve convenience store in the United States through Amazon Go which is generally a chain of convenience stores. This means Amazon is aiming to make it big and take the e-commerce market by storm. Amazon has a well-established third-party marketplace and the company claims that 50% of its sales come from its third party selection.
- Alibaba
China’s leading e-commerce giant, Alibaba is gaining over the marketplace and making great strides against Walmart. The business model of the company is quite similar to eBay, a service-based e-commerce website allowing users to buy and sell goods on its platforms. While Alibaba is dominating e-commerce and cloud computing services in China, it has come to be known as one of the prominent names for Walmart competitors in recent years.
Alibaba reported $56.12 billion revenue for the financial year ended in March 2019, with a surge of 51% year-over-year. Alibaba’s sales strategy is a little different. The company essentially generates revenue from sales commissions, advertising fees, and other service-based fees, including its online payment merchant, Alipay which is not the case with Walmart.
Now Alibaba’s international expansion has ringed the alarming bell for Walmart. The China giant is emerging as a tough competition to Walmart in certain Asian specific countries and geographical regions as well. Alibaba, being a peer-to-peer platform similar to many online retail stores, is not just the biggest threat to Walmart but invariably other bigwigs in the industry who are in a similar business as Alibaba.
There is no doubt that Alibaba is very strong competition for Walmart but the cultural difference in every competition is something that could be counted as a roadblock in the success of the enterprise. Alibaba has been afflicted with more or less the corresponding concern. Alibaba is striving to overcome traditional differences between countries, somewhere the language barrier is still the risk and struggle of Alibaba to win over and defeat Walmart.
- The Home Depot
It would not be wrong to say how niche-specific The Home Depot has been with its growth strategy. The Home Depot who supplies tools and mainly provides products and services related to construction is the largest home improvement retailer in the United States. When the company was founded in 1978, it aimed to build home-improvement superstores because none of them was operating with such an idea in the market then. It has its headquarters in Atlanta, USA.
The marketing strategy of The Home Depot has always been unique and the company has always believed in a divergent strategy to build its name in the market. This is one of the major reasons why The Home Depot is regarded as a weighty competitor of Walmart. Even though the business of The Home Depot is slightly opposed to Walmart as it sells home improvement products, building materials, supplies and offers repairing and remodeling of houses services while Walmart, being the largest company in terms of revenue, is a retail giant.
Home Depot’s marketing and sales success in perceivable business activity defines how successful and competitive the company is. The Home Depot’s target groups are general contractors, tradesmen, small and medium-sized businesses, and homeowners. Home Depot has a huge number of stores and is also penetrative in price and hence is one of the topmost Walmart competitors in the market.
- Costco Wholesale
Costco Wholesale is a global retailer with warehouse club operations in multiple countries. It is still considered the second-largest retailer after Walmart. Similar to Walmart, Costco deals in selling frozen and fresh meat, bakeries, packaged products, and all the typical items that a supermarket carries including merchandise. Both Costco and Walmart are massive discount retailers.
Even after sharing so many common qualities, Costco comes with a membership warehouse club format which makes both the retailers non-identical. With hundreds of locations worldwide, this multibillion-dollar retail company provides the convenience of specialty departments and exclusive services for its members. This is the strategy Costco gained to make the shopping experience a pleasurable one for its consumers in earlier times.
According to the sources, Costco reported earnings of US$3.659 billion in the fiscal year 2019 in which annual revenue was US$152.703 billion. If we look and observe Walmart’s business model. The Sam’s Club appears to be taking inspiration from the Costco model, selling items in bulk at rock-bottom prices. Costco showed an upright growth in the last quarter and got much better sales growth while Walmart’s operating income seemed to have declined last quarter.
Costco has a strong customer following and loyal employees. Moreover, the retailer makes money without even selling a single product. How does this happen? Costco keeps customers loyal with the eccentric strategies of offering services which include in-store pick-up options and improved in-store customer experience.
- Kroger
The Kroger Company, famously known as Kroger, is an American retail firm. It was founded by Bernard Kroger in 1883 in Cincinnati, Ohio, which is surprisingly the largest supermarket in the United States. It made a revenue of more than 60 billion USD through non-perishable products by the end of the fiscal year 2019. It is not hard to discern that Kroger and Walmart have been in a state of war for years.
Though Walmart, being the giant retailer, might constantly be receiving overwhelming response from customers, when it comes to being the provider of fresh items, like meat and produce, Walmart’s quality is not as good as Kroger’s. In fact, most grocery stores have better quality meat than Walmart. Even though Walmart is cheaper, Kroger has a better variety of processed foods. Overpowering Walmart in the competitive grocery industry, Kroger keeps growing and maintaining its position in the grocery space.
The one thing that has made Kroger one of the leading grocery retailers is the way it sells products. Besides the new approach to developing an ecosystem experience in the grocery space, Kroger is also attempting to drive growth using traditional methods. Kroger, being one of the largest organic-food sellers in the country, offers steep discounts on a few of the most purchased items including fruits and processed items while most of the remaining produce such as pre-cut vegetables are more expensive at Kroger as compared to Walmart.
- eBay
eBay is an American multinational e-commerce website that is best known for its B2C and C2C sales. It’s also extremely popular for online merchants to use as a sales channel and emerging as the most popular online shopping marketplaces. eBay is a multibillion-dollar business with operations in about 32 countries. Walmart has mostly been in competition with Amazon because of its target user base but now the company is in the percussion of eBay and other similar industries. The marketing and sales strategy of eBay is something new businesses have so much to learn from.
eBay, in this span of years, has nurtured a relationship with its customers to the core and has understood what goes well with them. When eMarketer released its February 2020 report of top US companies by e-commerce sales share, it was a surprise to see that Walmart surpassed the sales growth of eBay by 0.6%. While eBay raked the third position with a sales share of 4.7%, Walmart was placed at number 2 with a 5.3% e-commerce sales share. Both the companies have an amazing distribution and supply chain network but where Walmart experienced nearly 50% sales share growth since 2018, eBay’s share has dropped almost evenly.
- Target
Target is the eighth largest retailer in the United States. The Target Corporation has been carving out market share and e-commerce industry mainly in the US with avant-garde advertisements. However, Walmart still dominates the market with its sheer size. Walmart and Target both are cost-effective retail stores with massive revenues but if we angle to a closer business model of Target, we see Walmart is about 20 times bigger than Target. Target runs large stores as well, but they are more focused on profit margins through the supply chain. If you Google – “who are Walmart’s main competitors” you’ll find the name of Target Corp, who has more than 1800 stores in the US, flashing on the screen.
Although Target has a lot of basic properties in common with Walmart, they thrive in not having that much variety. People who have been a regular customer of Target say it is superior for fashion-oriented shoppers. On the other hand, Walmart seems more efficient in business operations than Target. Well, this is reflected in the company’s asset turnover. The market cap and the balance sheet of both companies say it all. Target has tried employing the low pricing strategy similar to Walmart but its business model is what makes it slightly different which focuses on slightly smaller stores.
Conclusion
Despite the exuberance competition, Walmart remains afloat. Walmart, all these years, has stayed true to its purpose and consistently striven to offer low everyday prices to its customers. That proves how specific competitive advantage turned out to be a valuable strategy for Walmart in this game of staying ahead of competitors. Though Walmart and its competitors hold sway on a large group of audiences, the products, and kinds of services you are offering still play a major role in winning the customer. Even with so many competition increasing players in a similar industry, Walmart is embracing the e-commerce marketplace with flying colors. The major selling point of Walmart, all these years, has been offering best to customers at the lowest price possible.