Walmart Competitors Analysis

Walmart Inc. is a multinational retail corporation that operates a chain of big-box department stores, grocery stores, hypermarkets, neighborhood markets, and discount stores. Founded in 1962 by Sam Walton, it has its headquarters in Bentonville, Arkansas. The company has about 10,500 stores and clubs in 24 countries under 46 banners.

According to the Fortune 500 list for 2022, Walmart is the world’s largest company by revenue with US$572.754 billion. It’s also the largest private employer in the world, with 2.3 million employees. Walmart went public in 1970 and became a publicly traded company on the New York Stock Exchange (NYSE: WMT) in 1972. Its initial public offering was $16.50 per share. 

As of August 2022, the company had a market cap of $361.969 billion, with shares trading at a 52-week range of $117.27 – $160.77 per share. Although it’s the world’s largest company, Walmart is not without competition. This Walmart competitors analysis looks deeper into some of its main competitors’ strategies, financials, and competitive advantages.

walmart

Bottom Line Up Front

Walmart competes in varied retail sectors, including grocery, general merchandise, and e-commerce. It stands out as an industry leader primarily due to its scale, which gives it cost advantages and the ability to offer low prices. While it doesn’t have the same focus on customer experience as some of its competitors, Walmart’s low prices and one-stop-shop convenience keep customers coming back. 

List of Top Walmart Competitors

  1. Amazon.com, Inc. (AMZN) 
  2. Costco Wholesale Corporation (COST) 
  3. Target Corporation (TGT
  4. The Kroger Co. (KR) 
  5. The Home Depot, Inc. (HD)

Walmart Business Strategy and Revenue Model

Walmart’s business strategy reflects its motto, “Save people money so they can live better.” The company’s strategy is to offer low prices daily, provide a broad assortment of merchandise, give customers the best shopping experience, and be a partner and resource in its communities. 

To achieve these goals, Walmart invests heavily in technology and innovation. For example, it’s using robots to help fulfill orders in its warehouses and is testing autonomous vehicles for grocery delivery. The company is also expanding its online presence and partnering with other companies to offer more products and services to customers. 

Walmart generates revenue from three reportable segments. The first source is Walmart’s U.S. stores, which accounted for 69% of the company’s total revenue in 2022. The second source is Walmart’s international stores, which generated 18% of its revenue in 2022. The third source is Sam’s Club, a membership-only warehouse club that accounted for 13% of Walmart’s total revenue in 2022.

Each of the above segments has an omnichannel and merchandise focus. The U.S. segment includes revenue from Walmart’s e-commerce business and brick-and-mortar stores in the United States. The international segment consists of Walmart’s operations in 27 countries outside the United States, including Argentina, Brazil, Canada, China, and Mexico. Sam’s Club offers memberships that allow customers to purchase merchandise at discounted prices. 

In 2022, Walmart’s revenue increased by $14 billion from the previous year to $572.8 billion. The company’s net income increased from $13.706 billion in 2021 to $13.940 billion in 2022. Walmart attributed its revenue growth partly to increased e-commerce sales, consumer behavior changes during the COVID-19 pandemic, and expansion in its international markets.

walmart online

Walmart Competitor Analysis

Given Walmart’s highly diversified business, it competes with companies from different industries, including retail, e-commerce, logistics, and technology. While Walmart’s main competitors vary by segment, some notable competitors include Amazon, Costco, Target, Kroger, The Home Depot, and Alibaba.

Below is a detailed analysis of Walmart’s main competitors.

1. Amazon

amazon

Amazon is a multinational technology company that offers e-commerce, cloud computing, and artificial intelligence (A.I.) services. Jeff Bezos founded the company in 1994 while working as an investment analyst on Wall Street. He started Amazon as an online bookstore but soon expanded to sell varied items, including electronics, apparel, furniture, food, toys, and more. Today, Amazon is the world’s largest online marketplace and cloud computing platform.

According to the 2022 Fortune 500 list, Amazon is the second-largest company in the United States, with a revenue of $469.822 billion. As of August 1, 2022, it had a market capitalization of $1.371 trillion, with shares trading at $134.95. Its strong financials is evidence of a company with a sound business model. The company has several subsidiaries contributing to its revenue, including but not limited to Amazon Web Services (AWS), Whole Foods Market, Ring, Zoox, Kuiper systems, and IMDb.

Walmart and Amazon are fierce competitors in the retail space. They compete for market share, customer mindshare, and profits. Amazon leads the race in the e-commerce space, with a market share of 37.8%, while Walmart is a distant second with a market share of 6.3%.

Most of Amazon’s brick-and-mortar sales came from Whole Foods Market, which it acquired in 2017 for $13.7 billion. Although Amazon has no significant presence in the physical retail space, it reported $4.68 billion for its fourth quarter of 2021, up from $4.02 billion in the fourth quarter of 2020. 

Given that both companies are leaders in respective industries, they compete in multiple areas, including but not limited to pricing, product assortment, customer experience, delivery, and logistics. Continued innovation is characteristic of both companies, as they seek to maintain their dominant positions. Competitively, we believe Amazon has a more diversified business model, which cushions it against macroeconomic headwinds that might impact Walmart’s business, such as a recession.

2. Costco

costco

The Costco Wholesale Corporation is an American multinational corporation that operates a chain of membership-only warehouses. Founded in 1976 by James Sinegal and Jeffrey Brotman, the company has its headquarters in Issaquah, Washington.

The company operates 833 warehouses worldwide, including 574 in the United States and Puerto Rico, 107 in Canada, 40 in Mexico, 29 in the United Kingdom, 31 in Japan, 16 in Korea, 14 in Taiwan, 13 in Australia, four in Spain, one in Iceland and china, and two in France. 

Costco started as a small operator of warehouses in the Seattle area and has since grown to become one of the largest retailers in the world. As of August 1, 2022, it had a market capitalization of $241.902 billion, and shares traded at $541.30. The company’s financial performance has been impressive, with shareholders earning a 29% CAGR over the last five years. In 2021, it reported a revenue of $195.029 billion, an increase from $166.761 billion in 2020.

Costco is a formidable competitor to Walmart, especially in the grocery space. The company has a strong reputation for offering quality products at low prices. In addition, Costco’s membership model gives it a loyal customer base. While Walmart has a broader reach, with 11,500 stores globally compared to Costco’s 775 stores, Costco’s focus on quality and customer loyalty gives it a competitive advantage.

While Walmart operates a physical retail business and an e-commerce platform, Costco is primarily a brick-and-mortar retailer. However, it also offers an e-commerce platform, which contributed about $7.547 million to its revenue in 2021. The company’s competitive advantages include its broad product assortment, competitive prices, and superior customer service. 

Unfortunately, it requires a membership fee, which limits its customer base. Moreover, it doesn’t sell its wholesale products online, further reducing its reach. However, as the company slowly grows its brick-and-mortar footprint, its e-commerce sales are expected to grow, giving it a competitive edge against Walmart.

3. Target

target

Target Corporation is an American retail corporation. According to the National Retail Federation, it’s the seventh largest retailer in the United States as of 2021, with $104.62 billion in revenue. Founded in 1902 by George Dayton, the company has its headquarters in Minneapolis, Minnesota.

Target started as a small-scale department store chain before expanding into a discount retailer in the 1960s. Today, it trades on the NYSE under the ticker TGT and has a market capitalization of $77.108 billion as of August 1, 2022.

The company is a component of the S&P 500 Index and operates 1,934 stores in the United States as of 2022. While we may categorize Target as a discount retailer, its focus is on offering its customers a “one-stop shopping” experience. Both its brick-and-mortar locations and e-commerce platform provide a broad assortment of products, including apparel, home goods, electronics, and groceries. 

Walmart and Target focus on different segments of the retail market. Walmart is a mass-market retailer, while Target is a more upscale discount retailer. We can see the difference in their pricing strategies, with Walmart offering lower prices and Target offering a mix of low and high prices. Target’s higher prices reflect its focus on providing a more premium shopping experience.

Although Walmart has better financials, Target is a more formidable competitor. Target has a strong brand, loyal customer base, and competitive prices. In addition, its brick-and-mortar locations are usually located in affluent neighborhoods, which gives it an advantage over Walmart. If Target can continue to innovate and grow its e-commerce platform, it will be a tough competitor for Walmart to beat.

4. Kroger

Kroger 

Kroger is one of the world’s largest grocery retailers, with $137.888 billion in revenue in 2021. It’s the third largest retailer in the United States as of 2021 and trades on the NYSE under the ticker K.R. The company was founded in 1883 by Bernard Kroger and currently has its headquarters in Cincinnati, Ohio. Kroger operates 2,800 stores in 35 states under various banner names, including Kroger, Ralphs, King Soopers, Harris Teeter, and Food 4 Less.

Kroger is a mass-market grocery retailer with a focus on offering low prices. In addition to groceries, the company also sells general merchandise, including health and beauty products, home goods, and electronics. Kroger has a strong competitive position in the grocery market, with a loyal customer base and efficient operations. 

The company has been investing heavily in its online platform, which includes grocery delivery and pickup services. It’s also investing in fulfillment centers to improve its e-commerce capabilities. These investments have been paying off, with Kroger’s online sales growing 105% in two years by the end of 2021. 

Kroger’s financials are solid, with a strong balance sheet and healthy cash flow. The company has been able to weather the pandemic well, thanks to its efficient operations and online sales growth. Kroger is a strong competitor for Walmart, and its focus on e-commerce will help it compete effectively in the future. In FY2021, it had $137.88 billion representing a 4.07% increase from $132.498 billion in FY2020. The company had a net income of $2.585 billion, up from $1.659 billion in the previous fiscal year. 

5. The Home Depot

The Home Depot 

The Home Depot is an American home improvement retailer with $132.38 billion in revenue in 2021. According to the National Retail Federation, it’s the fourth largest retailer in the United States and trades on the NYSE under the ticker H.D. The company was founded in 1978 by Bernie Marcus and Arthur Blank and has its headquarters in Atlanta, Georgia. As of February 2021, Home Depot operated 2,293 stores in all 50 states, Puerto Rico, the U.S. Virgin Islands, and Canada. 

The Home Depot is a one-stop shop for home improvement products, including building materials, tools, appliances, and home décor. The company also offers installation services for some of its products. While most of its sales come from in-store purchases, Home Depot has invested heavily in its online platform. In 2021, the company’s online sales grew 9% to represent 14% of its total sales. 

The company’s main competitive advantage is its large store footprint. This gives Home Depot a significant advantage over smaller home improvement retailers. In addition, the company has a robust online presence and is continuing to invest in its e-commerce capabilities. Given the post-pandemic surge in home improvement spending, Home Depot will likely continue to perform well.

Financially, Home Depot is in good shape, with a strong balance sheet and healthy cash flow. The company performed relatively well during the pandemic, thanks to its essential status and growing online sales. Its 2021 revenues increased by 19.85% from $110.225 billion in 2020. Although it’s much lower than Walmart’s $572.754 billion, we shouldn’t ignore that the two companies compete for market share in different retail categories. 

Walmart SWOT Analysis

Below is a detailed Walmart SWOT analysis:

Strengths

  • Walmart has strong financials that allow it to invest in growth initiatives, weather economic downturns, and fund share repurchases
  • It’s the largest company in the world by revenue and has a massive global footprint, with 10,500 stores in 24 countries 
  • The company’s adequate supply and logistics chain allows it to source products at lower costs and sells them at competitive prices
  • Walmart has a strong customer loyalty program and a vast customer base 
  • Its brand is one of the most valuable in the world, with a brand value of about $111.9 billion

Weaknesses

  • Walmart has thin profit margins relative to its competitors, which limits its ability to better invest in growth initiatives 
  • The company is highly dependent on the U.S. market, which makes it vulnerable to economic downturns in the country 
  • Walmart has been criticized for its labor practices and has been involved in several lawsuits related to its treatment of employees 
  • Controlling the large workforce is challenging for Walmart as it looks to improve employee productivity and satisfaction 

Opportunities

  • The global retail market presents a significant opportunity for Walmart to grow its revenue 
  • The company can increase its revenue by expanding its e-commerce capabilities and entering new markets 
  • Walmart can improve its brand image by focusing on sustainability initiatives and being more socially responsible 
  • By improving quality standards, Walmart can attract a higher-end customer 

Threats

  • Intense competition from Amazon and other retailers is a significant threat to Walmart’s growth 
  • The company faces the risk of losing customers to rivals who offer more convenient shopping experiences 
  • Walmart’s dependence on physical stores leaves it vulnerable to disruptions in the supply chain 
  • The company is also exposed to reputational risks associated with its brand image 
  • Economic uncertainties can lead to lower consumer spending and negatively impact Walmart’s results
  • International trade tensions could increase tariffs and affect Walmart’s sourcing costs

walmart phone

Walmart Competitor Analysis (FAQs)

Question: What type of competitor is Walmart?

Answer: Walmart is a cost-centric competitor. Essentially, it focuses on offering products at the lowest possible prices. This strategy makes it difficult for other retailers to compete on price. While I can’t say Walmart is the best retailer regarding customer service or product quality, its prices are hard to beat. As such, customers are willing to overlook some shortcomings.

Question: How did Walmart create its competitive advantage?

Answer: Walmart created its competitive advantage by leveraging its economies of scale. Through the company’s supply chain management strategy, it uses its massive buying power to source lower-cost products. It can then sell these products at competitive prices, undercutting the competition. Additionally, Walmart has a vast global footprint, which gives it an advantage over smaller retailers.

Question: What competitive advantages does Walmart have over Amazon?

Answer: Walmart’s competitive advantages over Amazon include its brick-and-mortar locations, low prices, and vast product selection. While Amazon is a threat to many retailers, Walmart’s physical locations give it an advantage. Customers can go to Walmart to purchase items immediately rather than waiting for them to be delivered. Additionally, Walmart’s prices are typically lower than Amazon’s, making it a go-to destination for budget-conscious shoppers. 

walmart facility

Conclusion

Walmart competes in varied industries with a massive degree of success. The company has a unique competitive advantage in its focus on offering low prices. This strategy, alongside its economies of scale, allows Walmart to undercut the competition and win market share. While Walmart faces some threats, such as intense competition from Amazon, its brick-and-mortar locations and strong brand give it a solid foundation to compete in the future.

Other formidable competitors in the space include Costco, Target, and Kroger. While each company has a different focus, they all present a competitive threat to Walmart. To stand out from the crowd, Walmart must continually focus on its key strengths of low prices and convenience. Additionally, the company should look for ways to improve its customer service and product quality.

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