Wal-Mart Faces Intense Competition From Rivals And Loses Grocery Market Share

Wal-mart requires a transformational change in its culture so that it can regain its market share from its rivals.

Wal-Mart is facing huge competition from its rivals such as Kroger and Publix and is being ‘crushed by them’ according to Business Insider. BMO Capital Markets analyst Wayne Hood stated that the reason why the retailer is not doing well as compared to its competitors is because it has a ‘below average customer service, plus a below average quality, freshness and breadth of produce’. Since its rivals have better customer service rating, the retail giant is losing its grocery market share.

Analyst Hood further stated that this is an alarming situation for Wal-Mart Stores as grocery is the sole category through which it earns half of its revenue and as compared to its rivals, who are doing better than the retail company, the store has been constantly offering lower prices. As compared to the prices at Kroger, an American retailer, Wal-Mart’s prices are at least 10% to 15% lower. Despite of devising a low pricing strategy, the retail company has not been able to grow as much as it should have.

The rivals are doing better in the grocery market because of their loyalty programs that according to Hood have made it problematic for the retail giant’s customers to compare the prices. With the help of these loyalty cards, the rivals have been more informed on the preferences of the customers as well as their shopping behavior. He explained how Kroger uses its loyalty card to stay up to date with it customer’s needs; it stays on the top of the chain of food trends so that helps the store keep the goods that are preferred by its customers and remove the stores that the customers no longer prefer.

The company announced that it would improve its customer service and shopping experience. It plans to do so by including more associates to its produce section. Along with improving customer experience Wal-mart is also working on expanding its grocery stores, which are same as the company’s warehouse stores but comparatively small which are situated at the corner of streets. These are Wal-Mart’s Neighborhood Markets Stores, which offer same low prices that are being offered at the company’s warehouses. These have given the company a competitive advantage over its rivals.

Hood suggested that the company needs a transformational change in its culture as customer service is what would lead the company towards growth. He further explained that the problem with a transformational change is that changing a company’s culture takes a lot of time and ‘replacement of employees’. In this time, it is expected that company will continue to lose its market share to its competitors. The good news for Wal-mart is that its seniors have taken into consideration this downfall and are currently working on making changes in the company to cover the damages.