Wal-Mart’s New Premium Brick And Mortar Store: PESTLE And SWOT Analysis

Current Market Analysis

Question:

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Discuss about the Marketing Opportunity of a Premium Segment of Wal-Mart’s.

Wal-Mart is a hypermarket giant in the retail industry of American origin. Since 1945, they have expanded their market since and have captured the international market too. But the international digitalisation and globalisation is making people used to the online purchase option rather than making them visit a physical store. Therefore, the company is planning to open an exclusive store in the country to counter their image of a reasonable store. They are also focusing on creating a different image of themselves through this plan. The report contains the current market analysis and the strategic advantage that the company may have and which can be used by them in their new premium shop. Therefore, the present situation analysis will give an insight for the company personnel on which competencies and strong points to focus on. The PESTLE and SWOT analysis of the company gives the insights that they are relevant to make the Brick and Mortar store (Rezaei 2015). This premium store would incorporate the consumer behaviour outcome aspect of the company that would help to increase the visibility and revenue of the company. The legal issues that the company had faced will be ensured to avoid in the new store. The environmental and legal aspect will also be made sure to overcome in this new process. Their incorporation of new marketing strategy would be needed to achieve a successful plan for Wal-Mart. The evaluation here suggests that the company uses traditional print media advertisements as well as the social media for advertisements and recent ecommerce website is organised and optimised. Therefore, the segmentation, targeting and positioning of the Wal-Mart customers are also outline in the second part of the assignment. The recommendations based on the objective of the of SMART goals are also highlighted in the assignment.

PESTLE

The PESTLE analysis of shows the external environment features that directly or indirectly affects the company or the industry.

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Political – The political environment of US is very volatile. But the market is stable for the retails. The import and export policies regarding logistics and supply chain are favourable for the retails to source better materials. However, the company had faced legal issues regarding gender discrimination in their staff. Also US is has more growth in the services which would only provide as an advantage for the retail.

PESTLE Analysis of Wal-Mart

Economical – the GDP (gross domestic product) of USA as of 2017 is 2.3 % (estimated).  Which is slightly less at the moment but a rebound is expected in 2018. The capital asset leverage is also expected to rise pushing the sector to more invest in industry, increasing the sales. The supercentres are gaining advantage in the country. He employment sector is also facing different challenges in US

Social – As with the rise of supercentres where people can get anything and everything. It provides Wal-Mart a strategic advantage as it has been seen that many local stores are towns are either getting acquired by Wal-Mart or shutting down. In addition, Wal-Mart does employs a large section of labour in the country.

Technological – USA is technological hub for the world’s business centres. The services industry has only gained the momentum because of the technological innovation in the country. Wal-Mart is well equipped with technological advances. They use the machine language and big data analysis in drawing different conclusion in consumer behaviour. The warehousing systems are fully automated and makes the sourcing of materials efficient in their outcome. The online website of their consumer durables and non-durables have become very important, though they have more visibility or presence through their brick and mortar stores. 

Legal – the legal framework of the country is very strict with their regulation. Therefore, the company should consider the regulations regarding the product liability and distribution chain as well as food industry regulations before opening the brick and mortar store. The property insurance for emergencies should be incorporated for liability insurance.  The legal and tax implications for food and consumer durables should also be considered. The FDA (Food and Drug Administration), CPSC (Consumer product safety commission) and EPA (Environmental Protection) regulations should be incorporated in the regulations of the store. This is of utmost importance as the company has faced legal issues and had to pay 80 million dollar for using hazardous materials and for wastage of resources.

Environmental – the environmental aspect of America is also regulated to maintain the balance of usage of resources. The series of environmental measures are to be considered before increasing the efficiency in the company. The energy expenses and efficiency should also be considered in maintaining the environmental laws of the country. The focus should be in increasing organic sales, which can also be used for corporate social responsibility. The packaging and energy expenses should also be reduced in this new plan of events.

SWOT Analysis of Wal-Mart

Strength

  • It is one of the biggest wholesalers in the international market.
  • There are no rival of equal measure of the company
  • Wal-Mart is one of the most important players in introducing the flagship product.
  • It also has cost leadership in the market as well as the reputation is also good in the market in proving the necessary products
  • The company has been in the business for the last fifty years, therefore, the company has more significant experience in marketing products

Weakness

  • The major weakness of the company lies in the competitiveness in the industry. The players are more equipped with the competencies that the market needs. Tesco and Costco have become the brands of the local market. They pose threats for Wal-Mart.
  • Wal-Mart has shown reduction in store sales as well as 8 stores have shut down
  • The urban spaces are showing lesser and lesser sales through their physical store and getting more visits in the online store. Therefore, the set up of the outlets are not catching attention of the company.

Opportunities

  • The company has more chance of being successful in the international market. They can also expand as they have the greatest network of logistics among the suppliers and outsourcing capability that can serve as an advantage in the company
  • In the future years, the company can use societal marketing to contribute to the economic development in USA or in other neighbouring countries.
  • As the company has recently expanded in the ecommerce industry, they can explore more in the ecommerce sector.

Threats

  • The employment sector has shown growth in the recent years. People are becoming conscious about their health, rejecting the fast food from their health routine.
  • The major competitor of Wal-Mart Tesco and Costco has exclusive clothing sections and alcohol department advantage in the company and therefore challenges the Wal-Mart.
  • The consumer durables department of Wal-Mart also has less profitability in the company

Being in the industry for more than 50 years they have gathered more experience, maturity in dealing with their suppliers, building a good workforce relationship. This provides Wal-Mart a great competitive advantage. This also provides the company with efficiency and confidence as well as reduced labour cost for them. This also provides them a proper advantage in their organisational skills (Chandra 2015). The basic and good old-fashioned retailing is also their Unique-selling proposition in the company.

They are also customer-oriented company. They also invested more than 1 billion investment in the customisation as well as in hiking the wages as well as in training. The important part of their organisation is the employing a large part of their population.

The company is also improving the grocery section and including more organic fresh produce as the people are becoming more aware of their health, which is being reflected in their buying behaviour.

Enhancing the shopping experience of their customers and flexibility of the company has been the focus of their company. They provide latest customer experience for their retail outlet’s customers.

Sustainability in their competitive advantage is also incorporated in their business strategy. Their everyday low pricing strategy has served them well in the years. The drive out costs and economies of scales is also part of their strategic locations wide through the company. Their internal assets and good reputation has provided them a proper guarantee among their customers.

The hub and spoke network of the company’s distribution system is also known to provide them an efficient process and good market position as market leaders. Electronic data exchange system has improved their communication process in their company’s different location and helped in developing a proper communication system with their suppliers and distribution centre as well as inventory control  

Wal-Mart uses different marketing medium for their product range. As their range of products are huge in number, its compels them to use different medium of marketing tools. They mostly use the digital medium and television advertising for consumer durables. For consumer non-durables, they uses the advertising medium digital medium like website of the company. The company is also known to attract customers from their through TV, Radio and newspaper advertisements. They invested more than 3 billion for marketing of the company. Monthly circulars and newspaper advertisements of the company attract customers (Chandra 2015). Different monthly newspaper circulars attract customers through different discounts and offers in their clothing sections. The newspaper advertisements of their durables are also part of their marketing strategy. The marketing budget is controlled through the advertisements agency and marketing consultants. Interactive marketing strategies and sales of the company have shown better performance comparing with their competitors. To reduce the wastage in the company they have adopted green logistics strategies for transportation. This ensures that the efficient use of resources and contributes to the green marketing systems. The have also incorporated green packaging in their company. Wal-Mart is very much into the social marketing concept and corporate social responsibility is the main source of their marketing and communication system. They also house the different major brand of products, that are Sam’s Choice, Great Value, Equate and Play Day. The additional home line brands that are marketed through the popular magazine. The home trends and decor accessories plays a vital role in the company. The Canopy, Dura brand, Premark and Puritan are former brands of the company that supplies the automotive structure of the company to source materials. They are also regarding the relationship marketing in some of the products that are of high range. The company also uses the social media and constantly engages the customers through their Face Book and Twitter channel of the organisation

Marketing Strategy for Wal-Mart’s Premium Store

The company has a larger range of product that cannot be targeted to a specific profile. The product portfolio contains home appliance and fixtures and furniture’s of that must be targeted at a different part of customers. Other clothing segment of the company must be targeted at much younger generation rather than that of fixtures buyers. The geographic segmentation according the most trafficked area of domestic and consumer durables buyers is also in the profile of their customers. Segmentation of the company according the urban and suburban area should also be kept in mind. The company is facing problems regarding the company’s visibility in the urban area supermarkets, some of which having been closing down eight of their outlets due to rise in the cost of company. The demography of the customer’s of Wal-Mart are Bachelors, Newly married couple or mid –aged wives and a full nest of 1, 2, 3 children of married couple. The solitary survivors of in labour force.

For the income group is a wide range for Wal-Mart as it contains lower and middle-income groups. However, for World-Lux it should be of higher income groups. As a behavioural segment, the degree of loyalty is also divided in “hard core loyals” and switchers among the users. The brick and mortar that the company is looking to open in the USA should also consider this behavioural profile of customers. Therefore, they should also focus on the rich segment of USA. As this would decrease their customer, acquisition cost (Gupta 2014). The benefits sought segment is the cost advantage segment of the customers. The lifestyle of the Wal-Mart’s customers is also cross cultural and young and Rubicon. These features should also be incorporated in their target profile of the customer.

The target customer of Wal-Mart has an annual income of $20,000 to $25,000 currently. This is an average income of the population in America. Wal-Mart’s customers contain all income groups of USA. This profile of customers should be indirectly targeted. The premium part of their brick and Mortar should involve the rich and well off segment (Lesse and Schwartz 2015)t. The rich millennial that have more than an income of 50,000 thousand dollars should also be targeted. As social media has become the main tool of marketing that would include youth as a target customers as well. Therefore, the company should also focus on the millennial with more than 50,000-dollar income.

Segmentation, Targeting and Positioning

As belonging to the better and richer target market, the positioning should be parallel to that. These would include superior design, differentiated product in the market. For example, the luxury brand like Gucci, Armani have premium segment customers only, and their marketing strategy is focused into that with channels too through personal relations and interactive marketing through marketing personnel. The design superiority of the company’s product should be highlighted to those customers who are willing to buy the products. The point of parity of their products should be focused in the garment as they hold the most chances of redefining the parity. The point of difference of this marketing strategy should be unique selling propositional element of World Lux’s strategy. The marketed product should be sourced from the premium boutiques designers as well as the ambience experience of the company (Verhoef 2015

SMART objectives and goals of the company and what should be the objective of the according the specific, measurable, Achievable, Relevant and Time-Bound values are given in the following discussion.

Specific – the main objective of defining the process and specifying the goal and why the specific goals have been chosen is defined in this process. For marketing goals of World Lux, the premium retail of sector has been chosen. The target market would be rich millennial for the company, as well as the person should have a more than 50,000 dollar earnings. The retail outlet would have a premium range of product portfolio, carefully chosen from the best suppliers that would help the organisation in meeting the premium choices of the customers. The sourcing from the suppliers, with Wal-Mart’s efficiency in logistics and supply chain would help them in focusing on this demography of the customers. Gauging their behaviour with their already efficient customer relationship management department can be used in this process. The more focused goal of this premium store is to attract the customers of USA to buy from the brick and mortar site. They gets unique and effective customer experience in buying from the retail outlet rather than shopping online from the website. This is the specific marketing objective of the company. To promote the product to their customers they should also use their social media channel.

Measurable – to determine the success factor off the World Lux, the company must ensure the key performance indicators for some of the initial years. This would give an insight for the company to gain the long term benefits opportunities from tis business. The primary key performance indicators are total sales revenue, Profitability against the last month, Earnings measured from volume of sales (Reyhle and Prescott 2014). The increment in the revenue with the exact percentage should also be considered in the measuring variables. The marketing approaches of the company through different channel. For online media marketing the click through rate and click per second would apply to be the measurement of World Lux’s visibility in the target audience. The organic marketing would be useful for this purpose. The market share of the company is to be calculated as to gauge the increment in the share too. An efficient or effective customer measurements to gauge the new and repeat customer visits in the store would also help in the process.

Recommendations Based on SMART Goals

Achievable – This would provide to get knowledge of their competitors as well setting a reasonable target for their company. Some of the achievable target are increasing their market share by 10 %. As Walmart has more integrated network comparing their global competitors they can use it for this premium subsidiary to increase their visibility in international market. Customer acquisition to be increased by 12 % which is also achievable.

Relevant – setting a realistic target for this premium retail would be necessary. The boom of ecommerce is surely to affect the retail industry’s outcome and therefore, it would be necessary for the company to use the historical data of another premium retail and analyse their performance in order to get more insights in their performance.

Time bound – the above objectives are to be achieved by initial two years after opening of the retail store. The timeline for increasing the market share would be first five years after existence.

Recommended marketing strategy based on the application of marketing mix

Based on the analysis of the company’s marketing mix

Product – the company has a supermarket’s portfolio of products. Therefore, the World Lux should focus on their most selling part of their product range. The premium retail should focus on the clothing market and baby’s product market, where the company can have the greater opportunity to increase their revenue. The main competitor of the company is Target which can challenge their position in the premium sector as Target itself is a premium retail.

Place – As per the geographic segmentation the premium retail must be in the most trafficked area. The Capital, Washington D.C and its neighbouring urban area is also suitable for the place. This will also be near headquarter of the company. The convenience of the customers should also be kept in mind (Goworek and McGoldrick 2015).

Price – As the company will belong in the premium retail, the pricing strategy should consist of market skimming strategy. This would help the company to recover the initially rising variable cost. A strategic balance between thee prices like, where they can charge more and in which product in retail they can charge less should be formulated. For example, for an exclusive shopping experience in the consumer durables the company can charge more but in the grocery shops they can mitigate the expense of their customers by offering reasonable pricing (Swoboda et al.  2015).

Promotion – both of the traditional as well as modern medium of pricing should be used in the company. The high end magazines, physical demos, relationship marketing, paper circulars, television, hoardings should be used in promoting about their retail products. In addition, the modern marketing medium like through Face Book, Twitter, You Tube channels should be used as well as a different website for specifically for the premium retail should be used in this process.

Conclusion

Therefore, it can be concluded that the Walmart has different competitive advantage available. Though the company s facing some challenges as being in the maturity stage, they are also looking to increase their customer’s satisfaction through different strategies discussed above. Part 1 of the assignment suggests that the situational analysis of the company and the marketing environment and their influencing factors (Goworek and McGoldrick 2015). The factors are utilised in the analysis. Though gender discrimination issues and illegally wasting resources have challenged the company they bounced back from that state and regained their position. The next part of the assignment consists of the recommendation part of of their different marketing objectives and goals. The SMART goal are clearly defined and suggested as per the analysis. . The main goal of this premium store is to attract the customers of USA to buy from the brick and mortar site. They gets unique customer experience in their purchase from the retail outlet rather than shopping online from the website. Based on this specific outcomes the key performance indicators are given in the company.

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