Wal-Mart Still Dominates But Faces Slowing Revenue Growth

Walmart is the world’s largest retailer, based on revenue, and is the largest corporate employer in the U.S. (more than 2.3 million total employees worldwide). Outside of America, Walmart has a strong presence in such nations as Mexico, Canada and the UK.

Walmart, faced with daunting competition from Amazon.com and other ecommerce firms, is investing heavily in its online platform. Importantly, Walmart acquired online retailer Jet.com in August 2016 for $3.3 billion. Jet’s capabilities were consolidated with those of Walmart’s online units. Walmart has also acquired Bonobos, Modcloth.com, Moosejaw, Shoebuy.com and Hayneedle.com, adding unique online merchandising and ecommerce expertise to Walmart’s total enterprise. The retailer has its own mobile apps, the Walmart Pay mobile payment system and its own cloud services unit.

Walmart plans to allot more of its annual capital spending towards increasing ecommerce sales, upgrading technology and improving customer service. It also has been investing heavily in its workforce to reduce turnover, including higher pay for most of its 1.6 million U.S. employees.

China continues to be a major focus for growth, but at a slower pace than previously planned. The company is also expanding its online presence in China, where ecommerce is booming thanks to companies like Ali Baba and Tencent.

Walmart launched ecommerce operations in India in 2014, where it faces tremendous online competition, including the Indian unit of Amazon.com. In August 2018, Walmart acquired a 77% stake in Indian ecommerce company Flipkart for $16 billion. In 2019, India enacted regulations that limit the ability of foreign firms, such as Walmart, to utilize deep price discounts or to streamline their supply chains. The government’s intent is to better protect its millions of small store owners from competition, and to boost the potential success of locally owned chains.

Due to its sheer size and customer base, Walmart is still the one to beat in the retail industry in the U.S. and abroad. Over the long-term, Walmart achieved its astounding success through deep discounts, high volume purchasing and cutting-edge technology that raised the chain’s distribution and inventory control systems to the pinnacle of efficiency. Costs are cut to the bone while customers flock to the stores in massive numbers seeking everyday low prices.

Walmart has taken a significant departure from its giant 178,000 average square-foot Supercenter size, by developing hundreds of Neighborhood Market grocery stores in cities across the U.S. This format averages about 40,000 square feet per store. As of early 2023, Walmart had 781 Neighborhood Market locations in the U.S.

As one of the world’s largest in-store pharmacy operators, the firm has slashed health care costs for many customers by offering $4 prescriptions for hundreds of generic drugs, along with low-cost prescription eyeglasses. Walmart also has in-store medical clinics in hundreds of stores nationwide. The clinics, which are operated by outside contractors, offer quick and inexpensive visits for such needs as school physicals and treatment for minor infections. In the same way that grocery customers drive sales in other Walmart departments, these health care customers are likely to make purchases elsewhere in the store as long as they are already in a Walmart. Walmart announced that it will invest further in its health care offerings, boosting its Walmart Health with new locations and increased services. Patient visits can include primary care, chronic disease care, hearing tests, vision tests and mental health. Including pharmacy, health services account for a significant and rapidly growing portion of the firm’s revenues. Meanwhile, Walmart is investing heavily in its consumer bank-like financial services under the brand name “One.” Walmart sees this as a way to boost both store traffic and customer loyalty. One will expand to cover everything from BNPL (buy-now-pay-later) plans to debit cards, checking, savings, credit cards and probably investment services.

Walmart has significant influence on food companies, the products they produce and the way in which they package and distribute those products. The firm has doubled the amount of food purchased from local farmers in the U.S.

Walmart relies on its massive grocery departments in its Supercenters to bring in customers, and it is not impervious to the marketing efforts of competing grocery chains. Firms such as Kroger Co., HEB and SuperValu, Inc. have redesigned stores to offer shoppers more convenient, neighborhood shopping experiences in addition to stocking higher-end breads, meats and wine not carried by Walmart.

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