Wall-Mart in the digital era?
Walmart was and is still able to create an effective physical channel to the classic shopping experience with low prices, convenience, consumer rights with easy return policies, and positive & empowering stuff.
They have created their competitive advantage, especially in the early years of their journey with creating a low-cost activity system (sharing rooms at hotels, etc.) that is in line with their Value proposition of “everyday low prices”. Also, in their initial years, they have invested their employees and promoted their employees with profit sharing and empowerment to high ranks of the organization, which provided customer sales support and leverage ideas for cost-saving. Their sub-urban locations, price comparisons with other retailers, created convenience for the customers. They have been able to develop sustainable partnerships with the suppliers by sharing data and focusing on negotiations from a shared interest point of view rather than a seller/buyer position, which enabled them to sustain their low-cost value proposition. As part of their low-cost activity system, they have leveraged technological solutions and distribution optimization to provide operational efficiency.
These advantages haven’t been able to be converted to digital channels with the same success.
Walmart’s classic era competitive advantages
Brand — by providing value for customers with low prices, easy return processes, welcoming them at the entrance, providing sales help, not even spending a penny on an extra cost at the management level. They have been able to build a good reputation and a trusted brand
Employee Engagement — By providing their employees profit shares, career opportunities, stock options for retirement and empowering them by making them part of decision-making processes they have been able to create a high employee engagement
Stock Management — by leveraging technological solutions timely and effectively they have been able to manage their stores with low stocks
Distribution Channel — In-line with their low stock leveled store concept they have created a flexible and daily delivery of their stores which provide an advantage against competition
Partnerships — By sharing almost Real-time sales and shelf data with their suppliers, they have been able to build sustainable partnerships
Owned locations — They have placed their stores in suburban areas, and even small towns provided convenience for the consumers
A low-cost strategy or value proposition
A low-cost strategy or value proposition can only be sustainable if a company can create a low-cost activity system that sustains the low-cost offerings in the changing market conditions. Wal-Mart was able to establish a low-cost activity system in the classic/physical retail landscape before the .com boom. With the changing dynamics of the digital retail business, their activity and physical-centric approach haven’t helped Wal-Mart. Low cost can be sustainable while thought together with the user and supplier needs and expectations.
In the digital era, the variety of products and their alternatives, substitute products are changing the decision-making process of the buyers low-cost is not only in the same product category or with a limited number of suppliers. A user who is looking to brew coffee in the mornings can go from manual to automated devices based on budget and preferences. Instead of trusting staff at a store, they can now search the recommendations, view descriptive videos, can look into reviews, and decide on price while having more insights about the benefits. Moreover, the user can also shop at the convenience at their home with fast delivery without dedicating time to drive to a specific location. This convenience also provides flexibility to change stores or providers easily.