Wal-mart Stores: Hybrid e-Tailing and Brick-and-Mortar Model

989 Words2 Pages

Final Recommended Strategy:
Hybrid e-Tailing and Brick-and-Mortar Model

Problem: Losing Ground as the Cost-Leadership Poster Child
Wal-Mart Stores, Inc.’s legendary competitive advantage in distribution and low cost operations has eroded beyond the point of recovery. Once considered the undisputed cost leader in retail, a recent study showed that after discounting tax and shipping, a basket of goods at Walmart cost 19% more than at Amazon.com (Jannarone, 2011). Forbes contributor Steve Denning points out that if a consumer wants something quick, he shops at a convenience store; if he wants something cheap he’ll buy at Amazon.com; and Walmart is no longer needed (Denning, 2011).
Walmart has frantically battled against Amazon’s superior cost leadership, but it has become clear that they cannot draw blood from a stone. Their former competitive advantage in low cost operations—sustained for decades—is no longer as difficult to imitate as it once was. Although Walmart’s financial reports still show fairly admirable ratios, their customer traffic in U.S. stores declined during the five consecutive quarters ending in February 2011 (Denning, 2011). Their five-year stock performance (WMT in blue) vis-à-vis Amazon (AMZN in red) also paints a bleak picture, as seen in the chart below. Another growing cause for concern over Walmart’s battle for cost leadership is its impact on their negative public image as an employee-abusing, union-busting bully.

Proposed Solution: Interactive In-Store Shopping Experience
Although their cost leadership has been conquered by focused e-tailers, Walmart possesses a resource that is at once valuable, rare, not easily imitable and supported by an organizational structure that is prepared to leverage it. Wa...

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...ping Day of the Season. Retrieved January 19, 2014, from Walmart.com: http://news.walmart.com/news-archive/2013/11/29/black-friday-shoppers-have-spoken-walmart-delivers-biggest-shopping-day-of-the-season

Wal-Mart Stores Inc. (2013). Our Story. Retrieved January 19, 2014, from Walmart: http://corporate.walmart.com/our-story/ Wal-Mart Stores Inc. (2013, October 1). Walmart Announces New Large-Scale Centers
Dedicated to Filling Online Orders. Retrieved January 19, 2014, from Walmart.com: http://news.walmart.com/2013/10/01/walmart-announces-new-large-scale-centers- dedicated-to-filling-online-orders

Yglesias, M. (2013, October 21). Why Walmart's e-Commerce Will Almost Certainly Fail.
Retrieved January 19, 2014, from Slate.com: http://www.slate.com/articles/ business/moneybox/2013/10/_walmartlabs_why_walmart_won_t_succeed_ in_e_commerce_even_if_it_does_everything.html

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