In today's dynamic market, businesses, both big and small, must uncover their competitive advantage to thrive. Walmart, an exemplar of success, has established itself as more than just a retail store. It serves as a hub where supply and demand meet and information is harnessed to predict customer needs accurately. In this blog, I will point out key elements of Walmart's competitive advantage and how small and medium-sized businesses (SMBs) can adopt similar strategies for their success.
Competitive Advantage for Target Market: Year-Round Low Market Prices
Walmart's main competitive advantage lies in its commitment to year-round low market prices. Despite facing growing inflation, Walmart deftly keeps its prices steady, averaging a mere 3% increase compared to the 7.5% inflation rate. By collaborating with suppliers to lower prices, Walmart fulfills its mission of "saving people money so they can live better." This advantage effectively caters to its target audience—low and medium-income families. By offering affordable consumable food categories, Walmart frees up cash for customers to spend on discretionary goods. The result is a substantial competitive edge over rivals and increased consumer satisfaction.
Understanding Customer Behavior and Preferences
A pivotal aspect of Walmart's success lies in its profound understanding of its customers. Walmart knows who their customers are, where they are located, what they desire, and what they are willing to pay. The ability to accurately predict customer needs allows Walmart to maintain a stable supply and demand equilibrium. Moreover, Walmart's strategic positioning of its market fulfillment centers ensures that 90% of Americans live within a 10-mile proximity to a store. This proximity guarantees constant supply and demand, making it easier to deliver products efficiently and fulfill customer orders. Investing in technology, e-commerce, and supply chain further strengthens this advantage, as Walmart remains committed to staying at the forefront of innovation.
Product Visibility Matters
Walmart's appeal to vendors as they are given the freedom to position their products on shelves for maximum visibility, leading to free advertisement and exposure to a vast target market. Consequently, vendors view Walmart as a marketing booster, where customers can try their goods and develop brand loyalty, which often translates to increased sales in other retail outlets. SMBs can strategically position products on shelves depending on price, brand, and demand. For instance, some complimentary products can go together. There is a way to monitor which products are purchased based on the brand name or which are based on the location.
Optimizing Labor and Meeting Demand
For any business, labor is a crucial capital that requires careful monitoring to manage costs effectively. Walmart diligently forecasts labor needs to align staffing levels with delivery and shipment requirements. This data-driven approach ensures transparency and efficiency in staffing procedures. While Walmart emphasizes investing in its workers, it also leverages technology and automation to optimize labor allocation and streamline operations.
The Omni-Channel Experience: Customer Satisfaction at Its Core
Walmart's leading edge in the market is amplified by its commitment to the omni-channel experience. By investing significantly in its e-commerce program, Walmart ensures that customers enjoy a seamless and personalized shopping experience, both online and in-store. This data-driven approach, fueled by a shared customer profile of order history, enables Walmart to predict customer behavior effectively. With a growing demand for personalized and memorable shopping experiences, Walmart's adoption of omni-channel strategies proves vital in meeting customer expectations. SMBs can also expand into e-commerce strategies not as big as Omni-Channel. Simply keeping track of customers and their information and feedback enable them to understand their customers' preferences and behaviors better. This knowledge, in turn, allows SMBs to optimize their operations, tailor their offerings to meet customer demands, and ultimately deliver a more personalized and satisfying experience to their clients.
Webinar: Transformative Strategies for Small Business Owners
Missed our special webinar on July 31st? Watch the recorded session now to discover expert insights from Charles Liu, a renowned business expert with a stellar background in supply chain management and business transformation strategies. Charles Liu served as the Vice President of Supply Chain at Walmart; he led several multibillion-dollar transformations and played a pivotal role in eCommerce initiatives, enabling remarkable revenue growth from $40B to a staggering $80B.
In this webinar, you'll achieve the following learning objectives:
Transform your labor and maximize inputs.
Increase customer traffic.
Enhance operational efficiency.
Apply efficient management techniques.
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Kateryna Meshcheriakova
July 31, 2023