Walmart Problems And Future Prospects

Topics: Wal-Mart, Retailing, Discount store Pages: 5 (1489 words) Published: November 8, 2014
Problems faced in different countries

1. Slowness to develop a strong presence online.
Walmart has become sloppy in executing big changes, which is inevitable for an organization. After so many years of such an explosive growth. Case in point is Walmart's slowness to develop a strong presence online. Despite these fears, Walmart's leaders are optimistic that they can shift the business and position the retailer for long-term success. They are already testing a radical new concept -- downsizing stores, literally, by dramatically shrinking the square footage of new stores.

2. The Consumer Trends That Are Slowly Killing Walmart in USA Shopping behavior has changed. And even though the recession forced many Americans to "trade down" to cheaper items like the ones Walmart is famous for, consumers sought out new ways to do so. In many cases they traded even further down and headed right for the Dollar Generals (DG) of the world. The change, of course, is that traffic has shifted from physical stores to online stores. In fact, a startling 50% of Walmart's customers now shop on Amazon.com (AMZN), versus just 25% five years ago. Amazon's low prices (thanks to its low overhead expenses and no sales tax in most states) and unbeatable selection (thanks to the acquisition of companies like Diapers.com and Zappos), combined with the convenience of online shopping, have attracted a growing fan base of customers -- stealing more and more customers away from Walmart. That's because Amazon's reach will only continue to expand as it builds out its Kindle platform. The ease of purchasing with just one click from virtually whatever device you choose (your computer, phone, Kindle, or even Apple's iPad) will continue to attract a growing number of consumers -- again, spelling bad news for Walmart.

3. Walmart is losing market share in Brazil :
World's biggest retailer's Mexican division bribed government officials to secure building permits in the country. Confronted with evidence of widespread corruption in Mexico, top Wal-Mart executives focused more on damage control than on rooting out wrongdoing. Under fire from labor critics, worried about press leaks and facing a sagging stock price, Wal-Mart’s leaders recognized that the allegations could have devastating consequences, documents and interviews show. Wal-Mart de Mexico was the company’s brightest success story, pitched to investors as a model for future growth. (Today, one in five Wal-Mart stores is in Mexico.).

4. Problems in China :
In China, however, the company’s problems are much deeper. Even after 18 years of operation, Wal-Mart’s Chinese business has grown to just 405 stores. The retailer has had problems in understanding discerning Chinese consumers as their buying decisions aren’t always price driven. They are more inclined towards tailor-made products and a shopping environment that reflects the local touch. While Wal-Mart’s strategies to adapt to local tastes haven’t been fruitful, local retail chain Sun-Art retail group has been extremely successful. Its imitation of Wal-Mart’s business model and better understanding of consumer behavior have helped it win Wal-Mart’s customers.

5. Economic slowdown in Mexico :-

Although Mexico’s retail sales have grown steadily for the past few years, they remained weak in 2013 due to low consumer confidence and an overall slowdown in the economy. Mexico’s economy expanded by just 1.1% in 2013, on account of lower government spending, weak demand for exports and sluggish consumption. This marked the region’s slowest economic growth rate in the last four years. Also, consumer confidence index declined to 89.7% in December 2013, reaching its lowest level in the last two-and-a-half years. The index fell further to 84.5% in January due to increased taxes that prevented consumers from spending freely.

6. Issues in India

The Indian government required retailers to source 30 percent from small suppliers which was...
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