Current Market Conditions and Walmart
Walmart operates discount departmental stores in the US. In 1970, Walmart had 38 stores operating and registered a sales value of 44.2 million. In the same year, the company was converted into a public company and started trading in the New York Stock Exchange. The company continued expanding its market stores and by 1987, it had opened 1,198 stores with sales value of 15.9 billion. In 2005, the company registered 312.4 billion sales and had opened more than 6,200 stores in the global market. The company has 67.2 percent retail market share in the US. In 2006, Walmart expanded its market to the sale of generic drugs (Schwab, 2009). Walmart has three operational divisions Walmart Stores US, Sams Club and Walmart International. There are nine different retail formats used by the company to conduct its business (Cocheo, 2003).
b. Impact of new companies entering the market
Walmart faces stiff competition in the local and international market. Some of the competing firms in the North America market are Kmart, Target, ShopKo and Meijer. In Canada, the competitors are Zellers, The Real Canadian Superstore and the Giant Tiger. In Mexico, companies such as Commercial Mexicana and Soriana have placed stiff competition to the company. Other smaller retail firms have competed strongly in the market, for example, Family Dollar and Dollar General. In the international market, companies have competed strongly with Walmart. The company has withdrawn from the German market due to stiff competition. Walmart sold 16 of its stores in South Korea in 1998. New companies have placed a lot of impact on the domestic and international market for the Walmart stores (Cocheo, 2003). The increase in competition has forced Walmart reduce the prices of its products leading to reduced profit margins (Schwab, 2009).
c. Prices
Walmart has maintained the lowest price levels in the market. The price index of the products from the company indicates that the company has low prices compared to other retail stores in the market. The low prices have enabled the company capture a large number of customers. Walmart offers prices which are competitive in the market. The company offers low prices which maintain the profits of the company as well as attracting its customers. The stock prices have been favorable to the shareholders.
The first price offers for the stocks of the company were 47 per share in 1973. Walmart has made advertisement slogans which encourage customers to shop at the company to save their money. Other slogans bare Always Low Prices, Always. The pricing strategies were affected by the global recession of the 2009. Most of the products of the company were inflated by the recession which affected most of the international economies. The increasing fuel prices have also caused the company to raise its prices to obtain profit margins which are reasonable (Schwab, 2009).
d. Technology
Walmart has adopted online retailing services where the customers can make orders, pay bills, and also view the product varieties offered by the company (Harris Dennis, 2002). In 2005, Walmart established strategies to increase energy and reduce the environmental impact of the fuels used by the company. Its aim was to use fuels which are renewable and which produce zero waste (Schwab, 2009). Some of the sources of energy used were turbines, photovoltaic solar panels, biofuel-capable boilers, water-cooled refrigerators and xeriscape gardens (Harris Dennis, 2002).