5C Analysis of Walmart

What is a 5C Analysis?

5C analysis is a situation analysis technique. It involves the examination of the external environmental factors and various internal capabilities that affect the business operations of a company. It is an extension of the 3C analysis that originally included only three components — company, competition, and customers (Wikipedia). Later two more components were included in this analysis — collaborators, and climate. The integrated analysis covers some of the most important areas related to business operations and marketing and the insights generated from this analysis are highly valuable to identify key challenges affecting a business.

A 5C analysis of Walmart:

COMPANY

Walmart was founded in the year 1962 in Rogers, Arkansas, United States. The founder of Walmart was Sam Walton and right since the foundation, the company’s central focus was the customers and offering products at the lowest prices of all the retailers based in the United States. The company’s focus on supply chain management and eliminating middlemen by sourcing directly from the manufacturers helped it establish itself on a strong footing and it did not take Walmart very long to become the favorite retail brand of America. Its focus on the supply chain has remained steady and with time, the company has improved its supply chain management practices through technology to grow its competitive advantage rooted in its EDLP pricing strategy. The central focus of the company is offering a large product range to its customers at the lowest price of all the retail brands. Its mission is — helping people save money so they can live better lives. It’s true that Walmart helps people save a ton of money by offering products at the lowest prices in the market. As of 2020, the company has around 11,500 stores and serves nearly 265 million customers each week through its retail stores and e-commerce websites under 56 banners in 27 countries. The company employs around 2.2 million people that are called Walmart associates. In 2019, its net revenue reached $524 billion from $514 billion in the previous year. Its revenue touched the $5 billion mark for the first time in the year 2018. During the past five years, the company has been enjoying consistent growth in sales and revenue.

Operating model of Walmart:

Walmart’s operating model is organized on the basis of geographical markets. Its operations are divided into the US and non-US operations mainly. However, the US operations of Walmart are divided into two reportable segments — Walmart US and Sam’s Club. The non-US operations of Walmart are called Walmart International. The leading international markets of Walmart include Mexico, the United Kingdom, Canada, and China. Walmart US is the largest reportable segment of the company that accounts for the largest chunk of Walmart’s revenue.

  • Supply chain innovation
  • Efficient Distribution system
  • Technological innovation
  • Customer service
  • Human resources
  • 1. Grocery and consumables
  • 2. Fuel and other categories
  • 3. Home and apparel
  • 4. Technology, office, and entertainment
  • 5. Health and wellness.

Walmart & the US Retail Industry

Walmart enjoys strong brand awareness not just in the US but also in many other markets of the world where it has kept growing its presence through local partnerships and overseas acquisitions. It acquired a majority stake in Flipkart, an Indian e-commerce brand in the year 2019. Its pricing strategy has also played a key role in marketing the brand and making it famous worldwide. Apart from that, its growing investment in technology and e-commerce has also helped it grow its brand awareness. The company’s main marketing channels are its stores and its websites and the size of its customer base has kept expanding over the past several years. Despite the intensifying competition in the US e-commerce industry, Walmart has managed to retain its leadership position through sustained focus on lower prices and consistently improving upon customer experience.

Walmart’s Record Breaking Performance:

COMPETITORS of WALMART:

The Kroger Company:

Headquartered at Cincinnati, Ohio, United States, The Kroger Company is among the largest food retailers in the US. Kroger has physical retail stores in 35 states of the US and the District of Columbia. It has maintained an extensive presence in the US market through its 2,758 supermarkets and multi-department stores supported by 45 distribution centers. Nearly half a million associates work for Kroger. The company also runs 1,560 supermarket fuel centers and 35 food production plants as well as 256 jewelry stores. The consolidated net sales of Kroger in 2019 reached $122.3 billion. The company enjoyed 2% same-store sales growth in fiscal 2019. Kroger has also kept investing in e-commerce for superior growth and during the last quarter of 2019, it experienced 19% growth in its e-commerce sales.

Costco:

Costco is also among the leading US-based retail brands that operates warehouses in the US as well as some other international retail markets. Its operating model differs from Walmart & other retailers. However, Costco is also investing in technology for achieving growth in e-commerce. As a retail brand, Costco’s reputation is very strong which is mainly because of its customer focus and an organizational culture that values diversity, inclusion, and satisfaction of customers, employees, and other stakeholders.

Home Depot:

Home Depot is the largest home improvement brand in the world. It has its headquarters at Atlanta, Georgia in the United States. The company offers a very large assortment of home improvement products as well as building material, lawn and garden products, and home decor products. It also offers home improvement services. As of fiscal 2019, the company had 2,291 stores operational. The consolidated net sales of the company reached $110.23 billion in 2019 compared to $108.2 billion in 2018; yoy growth of around 2%.

Walgreens Boots Alliance:

Walgreens Boots Alliance (NASDAQ: WBA) is a US-based retailer that sells health and wellness products apart from beauty and lifestyle products. Together with its subsidiaries, the company is present across 25 countries. It's brick and mortar stores (including the companies in which it has an equity investment) are present in 11 countries. There were a total of 18750 such stores operational as of 2019. Walgreens also operates one of the largest global pharmaceutical wholesale and distribution networks, with over 4001 distribution centers that deliver to more than 240,000 pharmacies, doctors, health centers, and hospitals each year in more than 201 countries. In fiscal 2019, the company had consolidated net sales worth $136.9 billion.

Target:

Target Corporation is also one of the leading players in the US retail industry. It has its headquarters in Minneapolis, Minnesota, United States. It was founded in 1902 as Dayton DryGoods Company. However, the first Target store opened in Minnesota in 1962. The density of Target stores which are operational across all the 50 states of the US is so high that around 75% of the US population has a Target store within its reach. Target is a general merchandise retailer that sells a vast assortment of products. Its net revenue in fiscal 2019 reached $77.1 billion. The number of Target stores operational in 2019 reached 1871 and the number of distribution centers that support the retail store network of Target is 41. Target also owns 42 brands that are unique to the company.

Amazon:

Amazon is the largest e-commerce brand in the world with a global presence founded by Jeff Bezos and has its headquarters in Seattle, Washington, United States. Amazon has established a global sales and distribution network and apart from its e-commerce websites has also established a global network of global warehouses for supply and distribution.

Lowe’s:

Lowe’s is the second-largest home improvement brand in the world and ranked at the 40th place on the fortune 500 list as of 2018. The company serves more than 18 million customers each week in the US, Canada, and Mexico. However, Lowe’s has been planning to exit the Mexico market. Its largest market is the United States that accounted for more than 90% of its revenue in 2018. Net sales of the company reached $71.3 billion in 2018. The company employs around 310,000 people. Lowe’s sells merchandise in 13 product categories ranging from appliances and tools to paint, lumber and nursery products. The company also sells more than 400,000 products online.

Best Buy:

Best Buy is also one of the leading and well known retail brands in the United States. It sells merchandise in the following key categories: computing and mobile phones, consumer electronics, appliances, entertainment, services, and others. Apart from the US, Best Buy also operates in Canada and Mexico. As of the end of fiscal 2019, the brand had 1187 large format and 51 small-format stores in its domestic and international markets. There were a total of 1,026 Best Buy stores operational in the US in 2019 and 212 in its international markets. The consolidated net revenue of the company was $42.9 billion in 2019 compared to $42.15 billion in 2018.

COLLABORATORS:

Collaborators include suppliers, distributors, agencies, and partnerships. However, since its earliest days, the focus of Walmart was on reducing operating expenses and keeping all types of variable costs low in order to pass the cost savings to the consumers. Therefore, there is no role of agencies or middlemen in the business of Walmart. It sources directly from the producers which allow it to save money. The company has also established a strong distribution network inside the US and overseas which includes both online and offline distribution channels.

CLIMATE:

In a 5C analysis, climate refers to the business environment of the company. A PEST analysis is most suited to conducting this analysis. The PEST analysis focuses on four important factors including political, economic, social, and technological factors, and how they impact the business and its growth. While the retail industry in the US and overseas is not as heavily regulated as many other industries, the political environment of the market still has a direct impact on the retail businesses. The economic environment and the social or technological factors are also affecting the retail industry more directly since globalization. You will read about these factors in detail in the following PEST analysis.

PEST Analysis of Walmart

Political:

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