What is Walmart‘s Winning Business Model in 2024? An In-Depth Guide
The Story Behind This Retail Juggernaut‘s 60 Years of Market Domination
Founded in 1962 in Rogers, Arkansas by the pioneering Sam Walton, Walmart has become a retail giant without parallel. Powered by a business model bordering on scientific in its precision, Walmart has grown over 16,000% from its humble beginnings to become a $573 billion revenue behemoth.
The Walmart Empire – By the Numbers
- 11,718 stores worldwide as of January 2023
- Operations across 24 countries
- 2.2 million associates globally
- #1 on 2022 Fortune 500 ranking
Sam Walton built an empire around discount shopping by sticking to principles of excellence in operations and fanatical focus on saving customers money. But what are the keys to Walmart‘s business model that have fueled ascension into the highest echelon of world business?
An Operational Masterpiece – Walmart‘s Core Segments
Walmart runs a diversified retail empire that includes physical stores, ecommerce platforms, warehouses, and more across nearly 30 brands. But three core segments form the foundation:
| Segment | % Total Sales | # Stores | Key Facts |
|---|---|---|---|
| Walmart US | 61% | 4,650 | Supercenters average 180K sq ft with wide assortment of merchandise + groceries |
| Sam‘s Club | 12% | 600+ | Membership warehouse model focused on small businesses + value-driven shoppers |
| Walmart International | 27% | 6,300+ | Operates supermarket formats like Asda (UK) + hypermarkets like Walmex (Mexico) |
Supplemented by a fast-growing ecommerce division, Walmart leverages shared capabilities across business units including distribution infrastructure and artificial intelligence. "We continue to execute our strategy to expand omni-channel access," said CEO Doug McMillon. This strategy integration pilots Walmart‘s global retail dominance.
EDLP – The Genesis of Walmart‘s Cost Leadership
"Buy low. Sell lower." Sam Walton‘s famous words succinctly capture his obsession with savings passed to the customer through everyday low prices (EDLP). By leveraging its gargantuan scale and state-of-the-art supply chain to pressure vendors, Walmart squeezes outefficiencies across its operating model to price items far lower than competitors can match.
For example, analysts estimate Walmart‘s bargaining power earns up to a 30% price discount from suppliers – significantly higher than peer discount retailers. These savings compound into substantial advantages. According to Kantar Retail, Walmart‘s EDLP model saved shoppers a staggering $90 billion collectively in 2021 vs. traditional promotional pricing formats.
The Interconnected Drivers of Walmart‘s Global Success
Walmart amplifies its core EDLP strategy through four business pillars that combine to cement dominance:
1. Best-in-Class Supply Chain Operations
- 188 distribution facilities worldwide
- $11 billion invested in supply chain 2005-2020
- 750 million miles driven by fleet of 9,000+ Walmart trucks in 2021
By perfecting logistics and warehousing to minimize costs, Walmart keeps prices low.
2. Scale-Enabled Purchasing Power
- 20,000+ vendors supply Walmart
- Works with 80% of its vendors for over 10 years
- 55-60% Walmart sales from exclusive store brands
Leveraging mutual commitment with suppliers, Walmart makes big deals that competitors can‘t match.
3. Process Innovation Through Technology
- Best-in-class retail analytics and automation
- $15 billion+ in technology infrastructure
- Patented delivery management systems
Cutting-edge tools boost everything from inventory optimization to associate task prioritization to keep operations efficient.
4. Strategic Global Expansion
- 395 new US store openings in 2022
- Accelerating growth in India ecommerce and China stores
- Acquired over $10B in overseas retailers since 2018
International markets represent major runway for growth by exporting its model worldwide.
An Ever-Evolving Model Primed for Tomorrow
Rather than resting on its achievements, Walmart continues to invest in improving its capabilities. With ecommerce sales growing 30%+ annually and targeting gaining grocery share, Walmart is ready to disrupt itself to stay ahead.
"We‘re becoming more of a tech company," explained McMillon. Coupled with moves towards being a sustainability leader long-term, Walmart won‘t relinquish its spot atop the retail world anytime soon by innovating every aspect of its business.
The Bottom Line
Fueled by the vision of Mr. Sam, Walmart has built a formidable formula combining EDLP cost leadership, supply chain excellence, scale, and strategic technology investments – a model many emulate but none can replicate. And with continuous improvements underway, expect Walmart‘s success to continue for decades to come.
