Walmart Company’s Problem Areas Identification
Walmart is one of the largest retailers operating grocery stores, supermarkets, hypermarkets, department and discount stores, and neighborhood markets. The company’s stores provide grocery and consumables, wellness and health products, office and entertainment, technology, apparel, and home categories, as well as hardlines. Additionally, Walmart manufactures its own products under several licensed labels, including Bonobos, Equate, George, Onn and others. The company also offers clients a range of financial services such as check cashing, money transfers, bill payments, and others. Walmart also operates e-commerce platforms in North and Central America, Chile, Mexico, Africa, India, and China. The main areas in which Walmart is currently struggling are brand image, sustainability as well as e-commerce. These aspects lead to the fact that within the framework of the modern market, the company has reduced competitiveness both in relation to large brands such as Amazon and local grocery retailers. The problem of competition in the grocery market is a common consequence of the existing Walmart issues, which do not allow the company to develop in the national and international market actively.
Ineffective communication and insufficient focus on researching the needs and characteristics of the company’s customers are the main reasons for the company’s existing problems. In this regard, Walmart should especially pay attention to improving its reputation both nationally and internationally. In terms of sustainability, it is important for Walmart to set more realistic goals for the transformation of operations, as well as participate in the social climate agenda. Finally, within e-commerce, building your own platform with a focus on customer needs is key.
Key Sources of Problem Areas
The main source for the deterioration of the Walmart brand image is the inadequate social policy of the brand, as well as the attitude towards customers. The main complaints of employees and customers are low wages, inconvenient location of goods, low-quality customer service, and not always low prices. Moreover, the brand experiences pressure from “lawsuits surrounding the treatment of pregnant workers, a long-running bribery investigation in its overseas operations and efforts to prevent labor unions from organizing its U.S. stores” (Boyle, 2018). Additionally, the company has met with complaints about the quality of the products offered in China, which undermines the international reputation of the brand (Shoulberg, 2022). Thus, the company further reduces its competitive advantage due to a bad reputation.
This issue is also related to another problem area for the company, which is an inadequate sustainability policy. Although in recent years, the company has declared its desire to implement sustainable practices in all parts of the supply chain, it has not succeeded (Mandel, 2021). The company aims to provide 100% of operations through renewable energy by 2035, but in some regions, this goal is unattainable due to underdeveloped infrastructure (Mandel, 2021). This aspect also negatively affects the reputation of Walmart as a large corporation that is not actively involved in the current climate agenda.
Finally, another significant source of the company’s problems is its failed e-commerce model. During the pandemic, the company’s online store sales grew by more than 70% in 2021 (Levy, 2021). The company even introduced the Walmart+ loyalty program to attract new customers and retain existing ones. However, e-commerce still accounts for only about 5% of the company’s total U.S. business, with global figures even lower (Del Rey, 2019). Thus, the company further reduces its competitiveness due to an underdeveloped digital presence.
All of the problems presented that Walmart is currently experiencing difficulties are interrelated and stem from a lack of effective brand management. First of all, although the company is actively striving to improve its reputation. In recent years and to participate in her own story, it has encountered more and more scandals. This problem may be the result of a company’s lack of focus on researching its customers (Tzuo, 2018). Amazon, which is Walmart’s main competitor, currently compares favorably with the company in terms of customer service quality. Amazon’s e-commerce marketplace offers a unique experience for customers with convenience and comfort. At the same time, Walmart has a weak e-commerce platform, which forces the company to focus on physical stores.
However, at present, many customers are dissatisfied with Walmart stores layout, pricing, and staffing policies. These aspects make visiting the company’s stores an uncomfortable experience for customers, which forces them to rely more on competitors. The main recommendation in this case for the company is to review the organization of its stores, as well as increase the staff. This measure, of course, is associated with additional costs, but in this way, the company will be able to retain existing customers and attract new ones. In today’s world, where e-commerce is the main method of retail, Walmart offering a better offline customer experience can increase its competitiveness.
It is also important that the company needs to participate in more extensive communication with customers. This approach can be implemented through a greater social media presence in Walmart’s core markets. At the moment, the company is quite closed in terms of its communication with customers and participation in the life of the community. However, for such a large corporation, the social mission is no less significant than the social one, which requires Walmart to pay more attention to the brand image.
Within the framework of sustainability issues, the main problem of the company is not the rejection of transformations but the articulation of inadequate goals. In recent years, Walmart has set various objectives that the company intends to achieve in a fairly short time frame. However, many of these statements seem unrealistic, which further undermines the credibility of the company (Mandel, 2021). The main recommendation in this regard for the company will be active participants in the public climate agenda. Walmart needs to increase the transparency of its operations through active communication with members of the community and a contribution to the global climate crisis. It is important not to set unrealistic goals but to demonstrate small but real achievements. Therefore, it is important for Walmart to review its sustainability policy in favor of describing the current situation and establishing more active participation in the transformation of the company’s least developed regions of operations.
The most significant in the modern context is the problem of e-commerce for the company. As already noted, Walmart’s main competitor Amazon has a more developed e-commerce platform, while the company focuses on physical stores. This strategy should be the foundation of Walmart’s development, as it differentiates the business from its competitors. Walmart’s drive to catch up with Amazon in e-commerce is again based on the company’s lack of focus on customer research (Tzuo, 2018). Walmart treats e-commerce channels as a separate line of business rather than its extension (Tzuo, 2018). The company sought to enter the digital retail market through the acquisition of companies that do not represent the goals of the company itself.
Thus, the main recommendation in the development of e-commerce for Walmart is the need to develop its own e-commerce platform. First of all, it is important for businesses to conduct a comprehensive study of their customers and their needs. This approach can help a company identify key aspects that should be included in a retail e-commerce strategy. It is also important to develop an adequate loyalty system, which would be based on priority areas for customers. Walmart needs to transform its operations based on the customers’ needs with a focus on the best experience.
Walmart is experiencing problems with the brand image, sustainability policy, as well as the development of the e-commerce site. However, the main source of real difficulties for the company is a lack of focus on customer research and their needs, inefficient communication, and strong competitors. In order to overcome the identified problems, the company first needs to make physical stores more convenient for customers, including layout transformation and an increase in the number of employees. Additionally, it is necessary to improve communication, including through social media. As part of sustainability problems, Walmart needs to set more realistic goals, revise its policies in accordance with the current situation, depending on the region of operations, and also participate more in social climate initiatives. For an e-commerce company, it is critically important to develop your own platform rather than ready-made purchase solutions. It is also important to research the needs of customers in order to form key digital directions.
Boyle, M. (2018). Walmart’s image takes a dive despite its best efforts to win over customers. Financial Post. Web.
Del Rey, J. (2019). Inside the conflict at Walmart that’s threatening its high-stakes race with Amazon. Vox. Web.
Levy, A. (2021). This trend could be a problem for Walmart. The Motley Fool. Web.
Mandel, K. (2021). Walmart has a plan to tackle the climate crisis. Can it pull it off? The Guardian. Web.
Shoulberg, W. (2022). How big is Walmart’s China problem? Web.
Tzuo, T. (2018). Walmart’s problem isn’t Amazon — It’s a lack of interest in who its customers are. Venture Beat. Web.