WAL-MART STORES, INC.SWOT ANALYSIS 2017

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ABOUT WALMARTName Wal-Mart Stores, Inc.

Logo

Industries served Retail (discount department stores and warehouse stores)

Geographic areas served Worldwide (11,528 stores in 28 countries)

Headquarters Bentonville, Arkansas, U.S.

Current CEO C. Douglas McMillon

Revenue US$482.130 billion (2016) decreased 0.7% over US$485.651 billion (2015)

Profit US$14.694 billion (2016) decreased 10.1% over US$16.182 billion (2015)

Employees 2.3 million (2016)

Main CompetitorsCostco Wholesale Corporation, Dollar General Corporation, Dollar Tree, Inc., Kohl's Corporation, Macy's, Inc., Sears Holdings Corporation, Target Corporation and many other retailers/wholesale companies

Wal-Mart business overview from the company’s financial report:

“Wal-Mart Stores, Inc. helps people around the world save money and live better – anytime and anywhere – in retail stores, online, and through their mobile devices. We earn the trust of our customers every day by providing a broad assortment of quality merchandise and services at everyday low prices ("EDLP"), while fostering a culture that rewards and embraces mutual respect, integrity and diversity. EDLP is our pricing philosophy under which we price items at a low price every day so our customers trust that our prices will not change under frequent promotional activity.”[1]

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BUSINESS DESCRIPTION (1/2)“ ”

“Our operations comprise three reportable business segments: Walmart U.S., Walmart International and Sam's Club. During fiscal 2016, we generated total revenues of $482 billion, which was primarily comprised of net sales of $479 billion. Walmart U.S. is our largest segment and operates retail stores in various formats in all 50 states in the U.S., Washington D.C. and Puerto Rico, as well as its online retail operations, walmart.com.Walmart International consists of the Company's operations in 27 countries outside of the U.S. and its operations include numerous formats of retail stores, wholesale clubs, including Sam's Clubs, restaurants, banks and various retail websites.Sam's Club consists of warehouse membership clubs and operates in 48 states in the U.S. and in Puerto Rico, as well as its online operations, samsclub.com.”[1]

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BUSINESS DESCRIPTION (2/2)“ ”

1. Being the largest retailer in the world, with unmatched scale of operations and strong market power over suppliers and competitors

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STRENGTHSS WO T

Wal-Mart is the world’s largest company by

revenue and the largest retailer in

the world.[2]

  Wal-Mart Carrefour Costco Tesco

Revenue (US$ billions)

482.130 ~113.280 113.666 ~102.684

Locations 11,528 12,296 686 6,902

Countries served 28 35 9 13

Employees 2.3 million 380,000 205,000 476,000

Retail space (square feet) 1.149 billion - 98.7million -

Figure 1. Comparison of the top 4 retailers in the world in 2016

Source: The respective companies’ financial reports[1][3][4][5] (Carrefour and Tesco revenues are rounded up due to revenue translation.)

What does ‘being the largest retailer in the world’ mean to Wal-Mart?

• economies of scale;

• efficient and effective use of resources;

• huge gains from implementing best practices;

• experimenting with less risk;

• market power over suppliers and competitors.

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STRENGTHSS WO T

Wal-Mart’s revenue reached US$482

billion in 2016, more than the Carrefour, Costco, Tesco and

Amazon.com revenues combined.

1. Overdependence on sales from the U.S. market

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WEAKNESSESS WO T

In 2016, 74.5% of all company revenue and

more than 85% of its operating income came from the U.S.

 Walmart U.S.

2016

Net sales 298.378

% share of total revenue 62.3

% revenue growth 3.6

2015

Net sales 288.049

% share of total revenue 59.8

% revenue growth 3.1

2014

Net sales 279.406

% share of total revenue 59.0

% revenue growth 1.8

Figure 5. Wal-Mart’s revenue growth in 2014-2016 (in US$ billions)

Source: Wal-Mart’s financial report 2016[1]

1. The e-commerce market is forecast to reach US$2.5 trillion by 2018, a projected growth of 89.1% in 4 years

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OPPORTUNITIESS WO T

Figure 10. Total e-commerce sales worldwide (actual and forecast), 2013-2018

2013 2014 2015 2016 2017 2018

1.0771.316

1.5921.888

2.1892.489

25.9% 22.2% 20.9% 18.6% 16.4% 13.3%

Total E-Commerce Sales (in trillions, US$) Change (%)Source: eMarketer[22]

• Wal-Mart currently operates in 6 of the 10 largest e-commerce markets in the world, including China, the U.S., the U.K., Japan, Canada and Brazil.

• The company could expand its e-commerce operations in other countries as well.

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OPPORTUNITIES

Countries 2014 2015 2016 2017 2018

1. China 315.75 426.26 562.66 871.79 1,011.282. U.S. 264.28 305.65 349.06 442.55 493.893. UK 70.39 82.00 93.89 114.64 124.964. Japan 62.13 70.83 79.33 96.87 106.075. Germany 51.91 63.38 73.46 91.97 99.336. France 34.21 38.36 42.62 49.71 53.267. South Korea 29.30 33.11 36.76 44.07 47.828. Canada 20.98 24.63 28.77 37.61 42.679. Russia 15.06 17.47 20.30 26.88 30.9110. Brazil 13.34 16.28 18.80 23.79 26.17

Figure 11. Top 10 countries ranked by total e-commerce sales worldwide (actual and forecast, 2014-2018 (in US$ billions)

Source: eMarketer[30]

S WO T

1. Slowing growth of the China, Canada, Brazil, Japan and Chile retail markets

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THREATSS WO T

  2012 Jan 2013 Jan 2014 Jan 2015 Jan 2016 Jan

China 14.7 12.2 11.8 10.7 10.2

Canada 0.2 0.9 0.9 - 2

Brazil 7.3 5.9 6.2 0.6 (10.6)

Japan 1.5 (1.1) 4.4 (1.1) (0.1)

Chile 6.8 9.5 6 1.8 3.4

Figure 17. Retail sales growth in China, Canada, Brazil, Japan and Chile in 2010-2015 (in percentages)

Source: Trading Economics [31][32][33][34][35]

Wal-Mart’s foreign retail markets are

becoming increasingly

saturated each year and their growth is

slowing.

1. Wal-Mart Stores, Inc. (2016). 2016 Annual Report. Available at: http://s2.q4cdn.com/056532643/files/doc_financials/2016/annual/2016-Annual-Report-PDF.pdf Accessed January 8, 2017

2. Fortune (2016). Global 500. Available at: http://fortune.com/global500/ Accessed January 8, 20173. Carrefour (2016). Annual Reports. Available at:

http://www.carrefour.com/sites/default/files/2015_consolidated_financial_statements_0.pdf Accessed January 8, 20174. Costco Wholesale (2016). Financial Reports. Available at: http://phx.corporate-ir.net/phoenix.zhtml?c=83830&p=irol-

reportsannual Accessed January 8, 20175. Tesco PLC (2016). 2015 Annual Report. Available at: https://www.tescoplc.com/media/1426/tescoar15.pdf Accessed January

8, 20176. Forbes (2016). The World’s Most Valuable Brands. Available at: http://www.forbes.com/powerful-brands/list/ Accessed

January 8, 20177. Whole Foods Market (2016). 2016 Annual Report. Available at:

http://s21.q4cdn.com/118642233/files/doc_financials/2015/Annual/2015-WFM-10K.pdf Accessed January 8, 20178. Yahoo! Finance (2016). Form 10-K for FRESH MARKET, INC. Available at: https://biz.yahoo.com/e/160323/tfm10-k.html

Accessed January 8, 20179. Amazon.com, Inc. (2016). Form 10-K for the Fiscal Year Ended December 31, 2015. Available at:

http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual Accessed January 8, 2017 10. Lundberg, A. (2002). Wal-Mart: IT Inside the World's Biggest Company. Available at: http://www.cio.com/article/2440726/it-

organization/wal-mart--it-inside-the-world-s-biggest-company.html Accessed January 8, 201711. Walmart (2016). History Timeline. Available at: http://corporate.walmart.com/our-story/history/history-timeline Accessed

January 8, 201712. Walmart (2015). Annual Report 2015. Available at: http://s2.q4cdn.com/056532643/files/doc_financials/2015/annual/2015-

annual-report.pdf Accessed January 8, 201713. Perez, S. (2016). Walmart expands its curbside grocery pickup service in the US. Available at:

http://techcrunch.com/2016/04/13/walmart-expands-its-curbside-grocery-pickup-service-in-the-u-s/ Accessed January 8, 2017

14. Boomerang Commerce (2015). Introduction to Price Perception Index (PPI). Available at: http://www.boomerangcommerce.com/ppi-whitepaper-rboomerang/ Accessed January 8, 2017

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SOURCES (1/3)

15. Osterndorf, C. (2015). 10 reasons Walmart is the worst company in America. Available at: http://www.dailydot.com/opinion/walmart-labor-unions-bad-company/ Accessed January 8, 2017

16. PBS (N.A.). STORE WARS: When Wal-Mart Comes To Town. Available at: http://www.pbs.org/itvs/storewars/stores3.html Accessed January 8, 2017

17. Weber, L. (2015). One Reason Wal-Mart Is Raising Pay: Turnover. Available at: http://blogs.wsj.com/atwork/2015/02/19/one-reason-wal-mart-is-raising-pay-turnover/ Accessed January 8, 2017

18. O'Donnell, J. and McElhaney, A. (2014). Costco pays more ... because it can. Available at: http://www.usatoday.com/story/money/business/2014/01/29/costco-wages-walmart-federal-minimum-wage-obama/5029211/ Accessed January 8, 2017

19. Ziobro, P. and Morath, E. (2015). Wal-Mart Raising Wages as Market Gets Tighter. Available at: http://www.wsj.com/articles/wal-mart-plans-to-boost-pay-of-u-s-workers-1424353742?mod=WSJ_hp_LEFTTopStories Accessed January 8, 2017

20. American Customer Satisfaction Index (2015). Available at: http://www.theacsi.org/the-american-customer-satisfaction-index Accessed January 8, 2017

21. Interbrand (2015). Best Retail Brands 2014. Available at: http://www.interbrand.com/assets/uploads/Interbrand-Best-Retail-Brands-2014-3.pdf Accessed January 8, 2017

22. eMarketer (2014). Retail Sales Worldwide Will Top $22 Trillion This Year. Available at: http://www.emarketer.com/Article/Retail-Sales-Worldwide-Will-Top-22-Trillion-This-Year/1011765 Accessed January 8, 2017

23. Bahn, C. (2015). Wal-Mart focus on grocery sales. Available at: http://www.arkansasonline.com/news/2015/mar/05/wal-mart-focus-on-grocery-sales-2015030/ Accessed January 8, 2017

24. Goodfellow, P. (2015). Walmart's $7 Billion 'Gift' To Kohl's. Available at: http://www.forbes.com/sites/forbesinsights/2015/02/24/walmarts-7-billion-gift-to-kohls/ Accessed January 8, 2017

25. IBIS World (2016). Supermarkets & Grocery Stores in the US: Market Research Report. Available at: http://www.ibisworld.com/industry/default.aspx?indid=1040 Accessed January 8, 2017

26. Packaged Facts (2012). Private Label Foods & Beverages in the U.S., 7th Edition. Available at: http://www.packagedfacts.com/Private-Label-Food-7165114/ Accessed January 8, 2017

27. Packaged Facts (2014). Private Label Foods & Beverages in the U.S., 8th Edition. Available at: http://www.packagedfacts.com/Private-Label-Foods-8358109/ Accessed January 8, 2017 SLIDE | 12

SOURCES (2/3)

28. IRi (2013). Private Label & National Brands: Paving the Path to Growth Together. Available at: http://www.iriworldwide.com/Portals/0/T_T%20December%202013%20Private%20Label.pdf Accessed January 8, 2017

29. Progressive Grocer (2013). 1 in 3 Grocery Shoppers Use Mobile Devices in Store: Study. Available at: http://www.progressivegrocer.com/1-3-grocery-shoppers-use-mobile-devices-store-study Accessed January 8, 2017

30. eMarketer (2014). Mobile Draws in Deal-Seeking Grocery Shoppers. Available at: http://www.emarketer.com/Article/Mobile-Draws-Deal-Seeking-Grocery-Shoppers/1010778 Accessed January 8, 2017

31. Trading Economics (2015). China Retail Sales YoY. Available at: http://www.tradingeconomics.com/china/retail-sales-annual Accessed January 8, 2017

32. Trading Economics (2015). Canada Retail Sales YoY. Available at: http://www.tradingeconomics.com/canada/retail-sales/forecast Accessed January 8, 2017

33. Trading Economics (2015). Brazil Retail Sales YoY. Available at: http://www.tradingeconomics.com/brazil/retail-sales-annual Accessed January 8, 2017

34. Trading Economics (2015). Japan Retail Sales YoY. Available at: http://www.tradingeconomics.com/japan/retail-sales-annual Accessed January 8, 2017

35. Trading Economics (2015). Chile Retail Sales YoY. Available at: http://www.tradingeconomics.com/chile/retail-sales-annual Accessed January 8, 2017

36. Identity Theft Resource Center (2016). Identity Theft Resource Center Breach Report Hits Near Record High in 2015. Available at: http://www.idtheftcenter.org/ITRC-Surveys-Studies/2015databreaches.html Accessed January 8, 2017

37. Ibis World (2015). Online Grocery Sales in the US: Market Research Report. Available at: http://www.ibisworld.com/industry/online-grocery-sales.html Accessed January 8, 2017

38. Bishop, B. (2014). Ready or not, here comes online grocery. Available at: http://supermarketnews.com/online-retail/ready-or-not-here-comes-online-grocery Accessed January 8, 2017

39. Nielsen (2015). The Future of Grocery. Available at: http://www.nielsen.com/us/en/insights/reports/2015/the-future-of-grocery.html Accessed January 8, 2017

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SOURCES (3/3)

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2017