Answer: Walmart is better than its compitators because of the
following reasons:
- Big Box stores: Walmart has huge superstore
which attract customers with its single-serving options unlike its
copitators.
- Advertising: Walmart spends an incredible
amount each year on advertising. which results in mass reach of
audiences and brand showcase. and due to this Walmart achieved the
things 20 years ago though everyday low prices advertisemnet than
what his compiators has achieved now.
- Customer Loyalty: Walmart is trying to woo
back its customers with new products like an Amazon-style free
shipping pass, in-store pick-up options, curbside delivery, and
improved in-store customer experience, Walmart plans to instill
loyalty in their customers. With shopping at Walmart becoming more
convenient and pleasant.
- Low Prices than its compitators: The economies
of scale that Walmart has achieved allow it to provide lower prices
than its competitors
The challenges of copitators walmart facing are as follows:
- Staffing cost: Walmart has faced issues with
its employees involving low wages, poor working conditions and
inadequate health care. The cost of increasing the average wage to
match Compitators and providing full-time hours to whoever wants
them and providing benefits is way too economically risky for the
company.
- Low Prices: Walmart, though, has a huge
network of stores that must constantly receive deliveries. but it
can’t possibly drop its prices to Costco’s level because of its
subscription business model. The reason Costco can cap its margins
to a mere 10% is that it makes money every day by selling its
memberships.
- High advertising cost: As walmart spends an
incredible amount each year on advertising compare to its
compitators. For example ,Costco relies on mailer promotions for
its members and word-of-mouth advertising. However, Walmart is
trying to cut back on its advertising. Once it improves its
reputation as a safe, welcome, and inexpensive place to shop,
Walmart too will be able to rely on word-of-mouth advertising.
- lawsuits from employees: Wal-Mart implements a
strategic predatory pricing tactic in that they drop prices too low
and drive away competition, thus gaining a monopoly. This
is an unethical and aggressive way to conduct one of the
world's largest corporations.
- Thin Profit Margins: Thin profit margins are a
typical effect of using the cost leadership strategy. Because
Walmart minimizes selling prices, it also needs to minimize profit
margins and rely more on sales volume.
- Easily copied business model : The cost
leadership strategy also makes Walmart’s business model easy to
copy.
- Competitive disadvantage against high-end specialty
sellers : The firm does not have significant competitive
differentiators, except for its business size and prices.
Furthermore, high-end specialty retailers have the upper hand in
attracting quality-seeking buyers who have low sensitivity to
price.