Walmart Competitor Analysis and Competitive Strategy in Vietnam

Globally, the retail industry has experienced intensifying growth. The retail industry is characterized with the highest growth rate when equated to other industries such as the service industry. Walmart Company is particularly involved in wholesaling and retailing business in the international market. The company is ranked among the leading retailing companies around the globe based on its financial stability, market share, revenue, and resources. Its success has particularly been acquired via the utilization of strategic operations and marketing. Walmart has not operated without challenges as it is subjected to intensifying competition mainly from well-established companies such as Carrefour, Tesco and Traders Joe which creates the need for expansion to capture the untapped markets. Walmart’s generic approach is based on cost leadership. The company is focused on offering quality and affordable products while decreasing its operating costs to create revenue generation balance. The strategy has supported the company in acquiring an extensive market and consumer loyalty because its mission demonstrates that the firm is consumer-centric. In cost leadership approach the company’s concentration is on sustaining lower-priced services and products a move that its competitors have not been able to maintain.

Walmart is popular for its low pricing strategy, which is its main selling central point of all its commercial operations. The low prices are maintained via the utilization of cost reduction approaches. In that, the company, for instance, utilizes information technology to fully create utmost operation efficiency. in addition, based on its large size and high bargaining power the company acquires products from the suppliers at least prices given that most suppliers cannot risk losing the firm as it contributes more as compared to other firms. The company additionally, reduces workers’ salaries for the same objective. In order for the company to sustain its competitive advantage, it is supposed to expand to emerging markets such as Vietnam. Vietnam was selected as the most potential expansion market based on its economic, legal, social and political opportunities it possesses. Unlike India, Vietnam government is country supporting domestic and foreign investors as it is focused on developing its economy. The existing legal policies are particularly favorable for foreign investors given that both domestic and foreign investors enjoy close privileges.

Retailing operations in Vietnam for the last few years has recorded a stable increase that is associated with a desirable value for the involved companies and the economy. Currently, Vietnam retail sector is reported to be the most potential and eye-catching in Asia and globally. The operators and particularly the domestic ones are facing rather stiff competition from the rising number of foreign investors because the country is currently creating economic opportunities by complying with global incorporation obligations. Competition is currently intensifying in the market among the major players such as Big-C (France), Fivi-mart (Vietnam), Citi-mart (Vietnam) and Metro (Germany) which owns 34, 24, 31 and 19 supermarket stores respectively. Foreign investors are eyeing the market that is characterized by over 93 million persons. In this market, Walmart can gain a wider market through the utilization of Cost leadership strategy. In that, unlike the competitors in the market, Walmart is more focused on creating value in regard to affordability, convenience, quality, and variety. Offering goods and services at the least prices taking advantage of its supply chain efficiency would offer the firm a competitive positioning. Based on the firm’s advantages and the existing growth and investment opportunities in Vietnam Walmart should consider this as its expansion priority.

Introduction

Walmart Corporation is a global retailer leader, engaged in wholesaling and retailing business. The company has acquired the leading position based on its long success in its global commerce, resources, financial stability, revenue generation and market share which has not only provided it with a competitive advantage but categorized it as the economic giant (Chekwa, Martin & Wells, 2015). As the retailing giant Walmart is guided by the philosophy of saving consumer’s money while improving their lives standards (Chekwa, Martin & Wells, 2015). This philosophy, therefore, shows that the firm is a consumer-centric one that is not focused on revenue maximization rather on quality and affordable items and services provision. The success of the company has mainly been driven by its cost leadership approach and strategic positioning. In that, the company acknowledges that consumers are becoming highly sensitive to products quality as well as cost and therefore attempts to create a balance (Chekwa, Martin & Wells, 2015). In order to maintain these values, the firm is mainly focused on operating under minimal expenses which words to ensure that its revenue is not affected. The retailing industry is characterized by intense competition particularly from well-established firms along with its progressive growth which creates the need for expansion to increase the company’s stability.

The company’s market expansion in Vietnam will particularly focus on electronic and food specialties. This is because in today’s contemporary society people have the tendency of making a higher investment on electronics based on the growing technology demands (Grieves, 2010). The electronic specialty will, therefore, be useful for the organization in expanding while targeting the low and medium earning individuals in the market who make the highest populace in both countries. The products were mainly selected given that they are characterized by lesser competition given that the online and the discounting stores have intensified the retailing competition even further (Grieves, 2010). In order for the company to sustain its competitiveness within the industry then it is better to focus on this specialty with little competition and lesser risks in order to establish its self well prior to making additional ventures. Walmart Stores targets the low and medium earners and not particularly the wealthy individuals. This is individuals who are willing to purchase products of quality but are sensitive to the prices. The high-income earners are not excluded given that the company focuses of superiority of goods as well as services (Blackwell & Eppler, 2014). Given that the products sold are not those that would be accounted as high-end this implies that the company does not target the rich (Williams, 2011). The target for the company is for the larger populace from the individuals in need of finding low-priced products at convenience as well as quality. This paper will provide a thorough analysis of Walmart competitive analysis and competitive strategy in Vietnam in its expansion quest in order to gain a competitive advantage over the competitors.

Competition

In Vietnams retailing market competition mainly constitute of both local and foreign firms offering retail services and products at convenience. There are many firms that are involved in the provision of wholesale and retailing services such as distribution, convenience stores, and supermarkets. Since Walmart operates retail supermarkets stores where it provides variety to the consumers the competitors under this analysis are retail supermarkets operators. The list was reduced to accommodate three major competitors which include local and foreign firms to demonstrate their differences. Big-C (France), Fivimart (Vietnam) and Citimart (Vietnam) are the major competitors where all offers electronic, food, cosmetic and convenience items along with grocery. The three firms are considered as a threat to Walmart based on their store's number, global presence, and influence in the market. The retail sector in Vietnam is separated into six differentiated groups in regard to contemporary distribution with customized features which constitute of Hypermarkets, convenience stores, specialty supermarkets, shopping stores, supermarkets and salable stores (Nguyen, 2017).

Retail Competitors in Vietnam

Big-C

Big-C is currently the solitary variety hypermarket in Vietnam (Nguyen, 2017). Other stores such as Metro (German) are presented as hypermarkets but fail to offer varieties for the category. In that Metro mainly deals with wholesalers and industrial consumers (Nguyen, 2017). Hypermarket can best be described as an extensive trade facility which incorporates an extensive range of goods like grocery, food, electronics and other items. Big-C stores are located out of the major cities based on its large sizes (Nguyen, 2017). In addition despite the fact that they offer extensive goods variety which is devoted to quality and low prices, most of the firm’s stores are usually grounded particularly during Rush hours. Big-C is the largest hypermarket today in Vietnam that directly aims end consumers (Nguyen, 2017). The company understands the potential of the market and it utilizes its financial and resources strengths in maximizing its earning in the developing economy. The company is well-established as popular for its variety and low priced items which has created a positive reputation with the capability to reach more consumers in the market. Currently, the firm has 34 stores which are mainly located in the cities rather than the rural or inner areas (Nguyen, 2017).

Based on Walmart’s size and resources, the firm has adequate capability to invest more on food and electronics specialty. Thus, the company could become a leading competitor for the retail consumers in Vietnam. Walmart’s efficiency, strong supply chain, and cost leading strategy would work against Big-C Company once the firm is established in the market (Nguyen, 2017). However, with its global presence and establishment in Vietnam Big-C can pursue an equal approach given that it has the resources to do so but the challenge is how to maintain the strategy (Syamananda, 2013). Big-C’s is highly recognized in the global context and its items are available in most retailing stores internationally especially in France and Thailand (Syamananda, 2013). The firm is a fresh competitor into the electronic specialty. It has a dedicated website that offers support and assistance to its digital consumers and is rapidly creating its image in the electronic market. While does acquire its electronic products from the domestic and foreign suppliers it has a weak supply chain as compared to that of Walmart. However, the company has an authoritative Research Development division that would play part in establishing the most suitable products that suit Vietnamese preferences (Syamananda, 2013). Based on the company’s size it has the capability to enjoy expenses reduction that would, in turn, result in the provision of low priced products to the end consumers. The company has a reputation and resources such as supply chain, workers, and technology which can be utilized in gaining an adequate market share and its well establishment in the domestic market would be useful in displacing other competitors within the market (Syamananda, 2013). The company, therefore, present the potential threat to Walmart in regard to food and electronic specialty.

Big-C Strengths

· Brand recognition – Particularly in France and Thailand

· Variety

· Low-prices

· Availability of resources, financial stability, market share, revenue, sales, consumer relation and R&D.

· Consumer centric

· Brand leader

· Global presence in regard to hypermarket retailing

Big-C Weaknesses

· Presence only in a few countries such as France and Thailand.

· Weak Supply chain

Risk to Walmart

· Customized products, efficient supply chain, information technology and low

· Wide distribution channels

Citi-mart

Citi-mart is the retail leader in the local supermarkets in Vietnam in offering retail based products particularly, grocery food and other convenient items (Nguyen, 2017). The company only has domestic-based stores and enjoys its technology and customization strength in creating fresh products based on the preferences of the wider consumers. Citi-mart is among the major supermarkets in Vietnam and being a local firm it has undeniable influence. For this supermarket, its prices are particularly high when being compared to those offered in the hypermarkets but are more suitable for regular shoppers. However, Citi-mart offers similar products to other retailers but lacks variety (ANT, 2016). The Retail market is particularly dominated by conventional, small modern stores that provide convenience and purchasing frequency options. Citi-mart, cannot be categorized as a direct competitor to Walmart. In that, the firm is small because it is locally based and despite the fact that it has 31 stores its resources and financial stability is below that of Walmart (Nguyen, 2017). However, its domestic foundation and acceptance in the market present threats to Walmart as a foreign firm. Walmart can thus utilize its supply chain efficiency, resources and cost leading approaches in gaining relevance within the market. Citi-mart has the potential of becoming Walmart’s competitor in Walmart based on its domestic presence, varied product options, positive image, well-situated distribution channels and knowledge in regard to the local’s preferences and the market.

Citi-mart Strengths

· Locally owned and accepted

· Sales and consumer focused

· Consumer Loyalty

Citi-mart Weaknesses

· Limited variety

· Higher prices

· Weal supply chain

· Lack of international presence

Risk to Walmart

· Extensive products line, supply chain efficiency and low prices

Fivi-mart

Fivi-mart is a Vietnam based supermarket retailer. The firm is a small supermarket retailer that provides products variety and convenience located in Vietnam (Nguyen, 2017). Similarly to Citi-mart, Fivi-mart offers items convenience but the pricing within the supermarket sector in the country is particularly higher. The firm has 24 stores in Vietnam which are small but digital and offers flexibility and shopping convenience to the consumers (Nguyen, 2017). The firm is a threat to Walmart because it is locally situated and has acquired large acceptance in the country along with consumer loyalty. The firm is a consumer-centric one that is focused on providing convenience, flexibility, and affordability (ANT, 2016). However, based on its limited global presence the firm has fewer resources and a limited market share (ANT, 2016). However, it has more influence in regard to domestic supply which might work against Walmart in addition to the fact that the firm is mainly focused on lowering its operative expenses to maximize its earnings. Walmart can thus, gain competitive relevance by offering low priced products to gain trust from the consumers.

Fivi- mart Strengths

· Local foundation

· Acceptance and consumer loyalty

· More stores which creates high grounds for sales and marketing of its products.

Fivi-mart Weaknesses

Limited capital and resources

Low presence in the global market

Risk to Walmart

· Comparable product offering

· Larger variety of products

Summary of Retail Competition in Vietnam

There is no actual competition in Vietnam in regard to food and electronic products because the firms do not own special suppliers (Vietnam Bridge, 2017). In addition, they are characterized by distribution limitation contrary to Walmart which has extensive supply sources which are both relevant and reliable. The primary weaknesses of the retailing firms are international presence and pricing. In that, the Big-C is the least priced but its pricing cannot be equated with that of Walmart because it is particularly higher (Vietnam Bridge, 2017). The firm is the only one offering more variety, unlike Citimart and Fivimart which offers packaging flexibility and convenience at higher prices (Vietnam Bridge, 2017). Most of these firm’s stores are located in the country’s cities which demonstrates that their distribution is unequal which is particularly limited by capital given that they are trying to lower their operative expenses (ANT, 2016). It is -however, apparent that based on the well-establishment of the firms these hurdles can be overcome with the utilization of an equal operative strategy to the one suggested in this report for Walmart. Their competitive advantage can mainly be derived from high market share and products variety but with an attachment of quality as well as affordability. However, based on the risks and costs associated with this approach the major competitor in the case is Big-C because it has the necessary resources, substantial market share, and establishment (ANT, 2016). The company, unlike the others, has the necessary resources for venturing into global expansion and competitive positioning.

Walmart’s Competitive Advantage

Factually, Walmart’s main competitive advantage has always been its low pricing on brand products and services. Walmart is the global leader in regard to cost leadership. The Company mainly centers on maintaining low services and products prices (Grieves, 2010). Most of the company’s competitors are unable to adopt the strategy based on the involved risks. The corporation, however, sustains its cost leading approach by ensuring that it operates under minimal expenses (Blackwell & Eppler, 2014). In that for instance, the company mainly utilizes information technology to increase efficiency in all its operations such as reducing workers’ wages and supply costs. The company is a huge retailer which implies that it necessitates products distribution in large quantities to feed all its consumers. As the leading retailer its market share locally and globally is extensive and this implies that the suppliers are never willing to lose the company (Lamb, Hair & McDaniel, 2012). Its switching costs are low and most of the company’s suppliers are well-established companies which create efficiency, products continuity and reliability. An additional strategic aim of the company is to acquire scales economies so that it can adequately support its cost leadership approach. In that, for the firm to minimize the associated products prices, the corporation is required to sustain the high capacity of sales and huge measure operations (Lamb, Hair & McDaniel, 2012).

Despite the fact that cost leadership is Walmart’s most essential competitive advantage strategy, it is not the sole one (Timilsina, 2015). In that its competitive advantage is mainly grounded on a number of strategic options that are related to low pricing (Timilsina, 2015). This includes stores location, strategic operation, market penetration, inventory control, and market and product development. The company’s market penetration approach involves focusing on utmost sales of products and services to its target consumers. This is achieved through the incorporation of discounts, flexible packaging, and convenience. Market development is an additional strategic choice that the company utilizes. This involves getting into emerging markets in order to make more sales other than those that are already targeted (Timilsina, 2015). This strategy helps in the tapping of more potential consumers which in turn increases its industrial sales and increases sales. The company, however rarely depends on products development which involves the introduction of fresh goods in the market (Lamb, Hair & McDaniel, 2012). Generally, the company invests minimally in the development of fresh goods because it is more focused on marketing and sale efforts which shows that product development, in this case, is not among the significant alternatives that contribute to its growth in general. By strategically situating the company’s outlets within close proximity of its distribution sites, Walmart is fully able to maintain minimal inventory which is associated with fewer expenses (Timilsina, 2015).

Internal Threats

Brand Recognition

The success of any business is determined by its general capability to create a positive brand image. This cannot be achieved merely given that the company will be required to invest heavily to support marketing and advertising operations. Getting into a fresh market is not only complex but much effort is required to understand the operation of the specific market and the preferences of the consumers. Unlike Big-C, Fivimart and Citimart Walmart have the responsibility of creating awareness and knowledge of its presence, operations, values, and products to the consumers (ANT, 2016). Fivimart and Citimart are well-founded brands in Vietnam while Big-C has a positive recognition in the global market (ANT, 2016). Despite the fact, Walmart will be focused on offering variety, affordable and customized products in Vietnam that considers price and quality value the competitors are well recognized and established. Based on the establishment of Big-C, Fivimart and Citimart it is apparent that they all have enough finances to provide competing goods within the local market and Big-C is more likely to react competitively to the expansion of Walmart because of its stability (Express, 2017). Walmart, however, has an advantage because of its resources and extensive distribution channels. In order to fight this threat, Walmart is required to utilize its cost leading positioning to influence the main competencies in regard to the provision of these products which would, in turn, attract more consumers.

Vietnam Retail Market Access

Big-C, Fivimart, and Citimart are already well-situated and recognized within the retail market in Vietnam market (Express, 2017). Their consumer’s networks are high because their stores provide, flexibility, variety, convenience and affordability (Grieves, 2010). However, since most of their stores are situated within the country’s major cities Walmart can venture both in Cities and rural parts to access most of the unreached consumers. By offering variety, convenience, and affordability the firm will surely gain the trust of the consumers given that its operations will, in general, be based on the needs and preferences of the target market (Grieves, 2010). It is worth noting that the rural areas offer more benefits because the operative expenses related to labor and stores are lower (Nguyen, 2017).

Acceptance

Walmart’s retail competitors in Vietnam are not only well-situated and recognized but they are highly accepted based on their local foundation and consumer-centric operations (Timilsina, 2015). In this context, it is recommended that the company goes ahead and apply its cost leadership and three competitive values which are affordability, quality, and convenience to attract more consumers. Through this, the company will adequately be able to eliminate the foreign negative perception by focusing on the needs of its target consumers rather than on revenue maximization (Timilsina, 2015).

Consumer Support

Unlike Big-C, Fivimart, and Citimart, Walmart lacks consumer support division online and physically to support its market development strategy (Express, 2017). The company should, therefore, invest in an online base development particularly for consumers within the specific market. This will help in building strong relationships with the consumers in general. In addition, inquiries and needs of the consumers can be noted and addressed at ease (Timilsina, 2015).

Walmart Competitive Advantage Relative to Competitors

The intensifying competition in the retail sector has forced the existing firms to adopt different strategies in the quest of obtaining a competitive advantage. Despite the fact that cost leading is the main approach that Walmart uses it has other competitive advantages that are comparable to its competitors (Hazzawi, Palladini & Martinelli-Lee, 2014). The major areas where Walmart holds competitive advantage relative to that of its competitors are products variety, consistent assortment improvement, and access. These competitive advantage areas represent differentiation and cost leadership. In that, the Company similarly to its competitors is focused on providing products variety in order to provide its consumers with more options and convenience (Grieves, 2010). Consistent assortment implies that the products are refilled consistently to suit the needs of the consumers while reducing storage expenses and inventory levels which might result in losses (Hazzawi, Palladini & Martinelli-Lee, 2014). The competitor’s stores similarly to those of Walmart are located accessibly and they all work to ensure that products are updated on a consistent basis to ensure that the consumers can access the needed goods at any given period.

These strategies create loyalty, satisfaction, and convenience on the ground that the consumers are exposed to a variety of choices based on their needs. Walmart provides goods variety to cater for the diverse needs of the consumers ranging from price, quality, flexibility, and convenience (Grieves, 2010). These values are the center of the company’s business which ultimately attempts to lower the operating expenses and in turn save costs for its consumers. In other words, Walmart similarly to its competitors struggles to deliver extensive products choices for the least prices in addition to giving its consumers the chance to select the most opportune means of facilitating their buying (Timilsina, 2015). In regard to differentiation, assortment, improving consumer services and increasing flexibility to upgrade the experiences of the shoppers are the major competitive advantage areas that companies in the retail industry focus on (Timilsina, 2015). In that based on the increasing sensitivity among consumers in regard to quality, the firms are focused on improving consumer services to address their concerns and gain knowledge in regard to their needs (Grieves, 2010). In addition, Walmart and Big-C are consistently working to incorporate their physical and online outlets in order to provide more enhanced shopping experiences. This implies that the consumers will be particularly informed in regard to their operations and services.

Recommendation of a Competitive Strategy

Walmart Company’s competitive strategies adhere to its philosophy and vision of providing quality at the least prices. The company is mainly oriented on creating convenience through quality and affordability. The company’s competitive position is sustained via the general application of low expenses and prices. This approach is more of cost leadership which has been particularly effective in increasing its market share and sales globally. However, based on the existing competition in Vietnam that is subjected by local and foreign firms the firm is required to adopt a mixed strategy that incorporates differentiation and cost leadership. This is because the competitors such as Big-C have adequate resources to mitigate the political instability threats in the country. This, therefore, shows that given that the competitors are focused on operations that are associated with low cost in order to offer goods at low prices the low-cost approach might not be effective without attaching it to variety and differentiation. This approach will mainly work against all its competitors in the market because they are only concentrating on cost reduction. This strategy will enable the company to maximize sales in order to support operations that are associated with fewer costs while affirming Walmart’s long run competitive positioning in Vietnam.

Conclusion

Based on the above analysis, it is apparent that Walmart will experience intense competition from local and foreign retail companies. These firms are well-situated and have recognized brands and based on their stability they are able to mitigate the existing political instability in the country. Walmart’s competitive advantage revolves around low-cost pricing and operations. The company pursues this strategy which is supported adequately by the scales economies acquired from its large market share and sales. In addition, consistent assortment, convenience, and quality are also at the center of this strategy. The company focuses on the provision of variety for the least prices in addition to providing the consumers with the opportunity to select their most suitable purchasing mode. With the expansion to Vietnam using cost and differentiation strategies, the firm will fight the existing competition because despite the fact that the competitors offer low cost and variety based products they are not differentiated. Walmart is particular potential for this market expansion into Vietnam based on its resources, market share, experience, brand and financial stability.

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