Walmart, created by Sam Walton in 1962, was built on the idea of low prices and great service. After becoming a public company in 1970, they went on to build a corporate empire and is currently ranked first on Fortune 500.
Unfortunately, not all fairy tales can last forever.
Walmart is floundering after undergoing it’s worst stock decline in over 25 years. (Bloomberg) Analysts predict that the company’s profits will drop 6-12% in the next year. (Business Insider) Walmart has been riding high for years by attracting customers with their variety of goods at cheap prices. However, with wholesalers becoming increasingly popular, such as Costco and Trader Joe’s, Walmart is no longer consumers “go-to” store.
So how will Walmart respond?
A good starting place would be reconsidering their business model. To lower their cost structure, Walmart employees are paid minimum wage. However, this provides low incentive to work hard and satisfy customers’ needs. This may be the reason that Walmart, a company founded on great service, is receiving complaints on the treatment of their customers. In addition, their “everyday low prices” may be so low that it’s unsustainable. In response to all the speculation, Walmart CEO Doug McMillon’s taking this all in stride and claims that the company will “continue to get stronger.” (Business Insider) Despite McMillon’s optimism, only time will tell the future of Walmart.
Sources:
Business Insider: Walmart’s Entire Business Model is Crumbling
Business Insider: Walmart is Finally Paying the Price
The Street: Walmart’s Entire Business Model is Being Smashed to Pieces