Walmart, the largest US corporation by revenue for a decade, is under pressure as Amazon is on the verge of taking the top spot. With an annual revenue of 648 billion US dollars, more than 1.2 million US dollars per minute, Walmart enjoys significant advantages in negotiations and dealing with government agencies. However, this position seems increasingly at risk, as Amazon, with a revenue of 575 billion US dollars and growth of 12% last year, surpasses Walmart's growth of 6%.
To achieve its own annual target of about 4% sales growth, Walmart must generate an additional 26 billion US dollars in sales this year, a challenge given that 90% of Americans already shop at the retailer. The pandemic and rising inflation have brought a sales boost of 100 billion US dollars since 2019.
To support its growth, Walmart plans to open new stores – the first major expansion in nearly a decade. Additionally, Walmart introduced a new line of premium food products to attract new customers and encourage existing customers to spend more. Despite expanding its physical presence, the focus is also on e-commerce, where Walmart aims to attract more third-party sellers to its platform.
The Company Faces Additional Challenges. The intense competition with discounters such as Aldi and traditional supermarkets like Publix and Kroger, as well as the need to attract high-priced consumers – households with an income above $100,000 – poses problems for Walmart. This consumer group is more inclined to competitors like Amazon, Target, or Costco.
Walmart's efforts to improve its assortment while maintaining an attractive price level have not always been successful in the past. After the 2008 recession, Walmart tried to offer trendier clothing, leading to a loss of sales as customers continued to look for simple staple items. Today, Walmart uses more comprehensive data on consumer behavior and preferences, adjusting its strategy accordingly by highlighting specific products in certain stores to target different consumer groups directly.
The challenge to improve the shopping experience in stores, especially at the checkout area, remains a central issue. Walmart continues to test methods to increase efficiency without additional costs to enhance customer satisfaction.
The sustained focus on cost management and adaptation to changing consumer habits are crucial to Walmart's strategy to remain competitive in the future. The upcoming quarterly report could provide further insights into the retailer's successes and challenges in a rapidly changing market environment.
