Competitive Strategies for Wal-Mart

by Althea Thompson; Updated September 26, 2017
Wal-Mart Posts 21 Percent Drop In Q4 Profit

Sam Walton opened the first Wal-Mart in Rogers, Arkanses, in 1962.

The first Wal-Mart was opened in 1962 by founder Sam Walton, in Rogers, Arkansas. By 2014, Wal-Mart Stores Inc. had more than 11,000 locations in the United States and 27 other countries. The company has become a retail giant offering a wide range of products, from groceries, clothing and jewelry to consuler electronics, hardware, and auto maintenance products and services. Other retail giants like Target and Best Buy compete with Wal-Mart. However, Sam Walton’s company continues to thrive in the highly competitive retail marketplace.

Big Box Phenomenon

The emergence of Wal-Mart as a big box retailer has changed retail in the United States, according to a 2008 article on Wal-Mart and competition reprinted in Free Patents Online. Big box retailers typically have stores exceeding 50,000 square feet. This type of store is standard, with large windowless single-story buildings. Several other big box retailers like Toys "R" Us, Best Buy, Lowe's and Home Depot have created competition for Wal-Mart in specialized categories like toys or consumer electronics. However, Wal-Mart has stood out as the perennial general merchandise big box retailer. Because of its big box status, Wal-Mart has exceeded small retailers in profits. Annual revenues for 2013 were slightly over $473 billion, an increase of 1.4 percent over 2012. Wal-Mart maintains its status as a big box retailer by seeking profits through a high volume of low-price items.

Low-Cost Leadership

Wal-Mart’s slogan is “Save Money. Live Better.” The giant retailer prides itself on underselling competitors. Wal-Mart reported a 3.6 percent increase in net income from cost cutting, according to an August 2010 Associated Press article posted on MSNBC. When the economy is slow, consumers are cautious about spending, and shop at Wal-Mart because it has so many low-cost items. The Associated Press article stated that Wal-Mart benefited during the recession as affluent shoppers were forced to downgrade to cheaper options.

Differentiation Strategy

Wal-Mart uses the differentiation strategy to succeed by creating a product or service unique to customers, according to ReferenceForBusiness.com. Whether the feature is real or just in the mind of the customer, customers must believe they are being offered something special. The products must be marketed in a way that makes customers feel it is exclusive to the store. Wal-Mart has achieved this strategy by offering unique warranties and brand images. Wal-Mart customers believe they are being provided with something not offered by any of the store's competitors.

About the Author

Althea Thompson began writing professionally in 2002, and her work has appeared on CBN News and in the award-winning "Focus Magazine." She holds a Master of Arts in journalism from Regent University and a Bachelor of Arts in communication and writing from Houghton College.

Photo Credits

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