PESTLE Analysis of Walmart. Walmart is an American departmental retail store and e-commerce multinational brand. The company has chains of departmental stores, discount stores, shopping malls, grocery stores, and hypermarkets across the world. Sam Walton is the founder of the company and he established the brand in 1962. Since then the Walmart has built 11496 stores worldwide by the end of 2020.
Some of the main products of Walmart are; grocery items, electronics, party supplies, music and movies, craft supplies, home, and office furniture, photo finishing, home improvement, auto, footwear and clothing, fitness and sporting equipment, jewelry, pet supplies, toys, cosmetics, and garden supplies.
When we talk about sales, profit, market share, and growth, then Walmart is at the top of the list. The annual revenue of the brand is 523.964 billion US dollars by the end of 2020, out of which the net profit of the company is 14.881 billion dollars. The brand is also a major contributor to the job market. Walmart is employing approximately 2.2 million people worldwide.
According to the ranking of Fortune Global 500 in 2011 and 2019, Walmart is at the world’s number 1 position among the 500 largest companies. The extraordinary size and growth of the company give Walmart a unique competitive edge in the hyper and supermarket industry.
Pestle analysis of Walmart would give us deep insight and information about the macro-environmental factors that could influence the productivity and growth of the company.
Stable Political Environment
As we know that Walmart is worldwide famously recognized brand. According to an estimate, approximately 250 million people visit the stores of the company across the globe. Since the brand has chains of stores in different countries. Therefore, a stable political environment is very significant to perform various business operations smoothly.
Like supplies of goods at the manufacturing plants, distribution of finished products at different stores, and open and secure transportation routes for the customers to visit the stores. If there’s a protest, road blockage, and political events are happening. It becomes difficult for the company to stay open and continue business as usual.
The most important issue global and multinational brands face is the government regulations and policies of different governments.
For instance, Walmart was selling some of the prohibited products in one of its stores in Chongqing, China. When the government officials found out, they immediately ban the sale of all the products of Walmart. Instead of banning one product; although it was temporary. But it provides a glimpse of government and political influence over the business operations.
When a company is at a top position like Walmart, then it has to keep an eye on political matters and government policies. The lobbying cost of Walmart is consistently increasing for the past 2 decades. According to an estimate, the lobbying cost of the company has increased from 2 to 15 million dollars from 2000 to 2014.
There are also some reports that Walmart has spent approximately 25 million dollars in lobbying and influencing the politician to help the brand to get into the Indian market. The company has also requested its employees to support Republicans. But Walmart changed its stance in 2018 when the company took a firm stand for gun license and gay rights.
Stable Economic Conditions
Stable economic conditions play a very important role in big corporations like Walmart. As we know that the company has a reputation for selling products/services at a low price. When the economic conditions of any country change, then Walmart has no choice but to increase the prices as well. The price-conscious customer market of Walmart doesn’t rise, and they blame the company for it.
If the company doesn’t increase the prices, then Walmart won’t be able to manage expenses and compete with other brands in terms of profit and market share. The interesting thing is when the economy hits, then people buy only necessary items. The products on the racks and shelves of Walmart don’t stay there for a long time.
Since the economic conditions of different countries are different, and Walmart has stores across the world. Therefore, the company should also keep checking the economic conditions of different countries.
Growth in the Developing Countries
Some of the developing markets in the Asian countries and Latin America have great growth potential. It also presents an opportunity for Walmart to open up new chains of stores in the new areas. Although the company has more than 11000 stores, there’s always room for growth.
Higher Wage Bill
Government and politicians can directly impact the revenue of the company. For instance, Congress and politicians agree to pass the bill of increasing the minimum wage. It’s a great step for the employees and working-class people. But it would shut down many businesses because they won’t be able to afford many employees to run their operations.
Check out this article: Pestel analysis of Walmart
Lack of Customers’ Interest in Germany
Walmart is a well-established global brand. But people in some markets don’t prefer shopping there. For instance, the German people lost interest in the brand and it cost the company approximately 1 billion US dollars. It was a great loss to the company. The company couldn’t market up to the requirement of the German people, and they stopped visiting the American brand.
Change Offers based on Demographics
It has risen a very good that a multinational brand like Walmart has to change its marketing strategies of the same product for different markets. It’s because people perceive the same thing differently in different countries.
For instance, you can’t use the meat selling strategy in the organic and vegetarian demographic. The brand should offer organic and vegan food to the health and diet conscious market.
Tend of Online Shopping
The recent pandemic of the Coronavirus, busy life, and other socio-cultural trends for the past few years have shifted the interest of people. Nowadays, people don’t feel like going out shopping after a long day of work or at the weekends. They want products at their doorstep.
Walmart has chains of stores in 27 different countries. But the company is offering e-commerce retail shopping only in 11 countries. The brand earns approximately 64% of its total profit from the US market. Most importantly, the current shoppers of the company are aging and the new generation loves online shopping. Therefore, the management of Walmart should change its focus and marketing strategy.
Automation & Robotics
Walmart has recently adopted an automation system and robots for cleaning, filling the orders, and at the production facilities. Such digital transformation would help the company to be more efficient in various business operations and compete better in the tech environment.
Automation and robots could be the only option to manage a big corporation like Walmart so that the management and employees could focus on the sales. According to an estimate, the company has automated approximately 650 stores with robots and other tech types of equipment.
Ecommerce and online retail stores would help Walmart to reach a much wider audience in a very short time. The new young generation do shopping either from their laptop, mobile phones, or tablets. They prefer to do everything online whether it’s a payment, shopping, or surfing.
Walmart also has a mobile application for online shoppers. It offers plenty of features to create a better experience for customers. It also allows customers to keep track of their orders, checkout different location points of Walmart in a particular region, and what products they’re offering. It means that the customers would be able to visit the store virtually without physically going there.
Gender Discrimination Lawsuit
In 2011, some of the women filed a lawsuit against the management of the company that they’re discriminating against women in terms of salaries, promotions, and job opportunities. Although the court ruled the decision in the favor of Walmart, it has open the doors of litigation.
Loss of $65 Million Lawsuit
Some of the former employees of Walmart filed a lawsuit against the company that the management doesn’t give them proper seating for long hours of shifts. The company filed the lawsuit in California, and the brand agreed to pay approximately 65 million US dollars to 1000 employees.
Walmart has taken many eco-friendly steps over the years to win the heart of customers and also towards saving nature. The company claims that it has been using a 28% renewable energy source. Walmart is also planning to reach 50% of using clean energy by the end of 2025.
Walmart also claims that the brand has decreased the toxic land waste by approximately 78%.
Walmart has also launched projects like “Gigaton” and the company plans to reduce 1 gigaton of harmful emission into the environment by the end of 2030.
Some critics report that the company is only claiming such figures, but the ground reality is far from the truth.
In the pestle analysis of Walmart, we have concluded that the company is undoubtedly the world’s top retail brand and it has a strong market position. But macro-environmental factors play a very important role in impacting various operations of the business. If the management doesn’t keep in mind these macro factors, the company would have to face a huge loss, bans, and restriction in the future again.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.