This article covers the topic of BCG matrix of Walmart.
Before we start discussing about the BCG matrix of Walmart, let’s have a quick glance at what is BCG Matrix and its different components.
BCG Matrix stands for the ‘Boston Consulting group’s product portfolio matrix (BCG matrix)’ – BCG Matrix was designed to help companies with long-term strategic planning.
In simple terms, this matrix helps companies/organisations identify which of their business are doing well, which are not doing well, which businesses need to be shut down and which need to be expanded.
BCG Matrix basically has 4 quadrants.
Below is how these 4 quadrants are classified.
- Low Growth, High Share. Companies should milk these “cash cows” for cash to reinvest.
- High Growth, High Share. Companies should significantly invest in these “stars” as they have high future potential.
- High Growth, Low Share. Companies should invest in or discard these “question marks,” depending on their chances of becoming stars.
- Low Share, Low Growth. Companies should liquidate, divest, or reposition these “pets.”
BCG Matrix is also sometimes referred to as The Growth Matrix.
To read more in detail about the BCG Matrix, click on the link.
Let’s check out the BCG Matrix of Walmart:
Company Background: Founded in 1962, Walmart is an American Multinational retail corporation that operates different kinds of retail outlets across different countries.
As of April 30, 2022, Walmart has 10,585 stores and clubs in 24 countries, operating under 46 different names.
With a revenue of $570 Billion, Walmart is the largest company by revenue.
The company operates through three distinct business segments: Walmart U.S., Walmart International, and Sam’s Club.
Walmart US: Under Walmart US, the company operates different types of stores such as Walmart SuperCentre, Walmart Discount Store & Walmart NeighbourHood Market. These stores are operated across different locations in the US.
Walmart International: Walmart International has more than 5,100 retail units and approximately 550,000 associates around the world. In addition to this, Walmart also works with other manufacturers, to sell their products, including Apparel, Homeware, Jewellery etc.
Sam’s Club: In 1983, Sam Walton founded the first Sam’s Club to assist small company owners in saving money on bulk purchases of goods. Sam club is an American chain of membership-only retail warehouse clubs.
Apart from these 3 business segments, Walmart is also growing it E-Commerce business as well.
Now since we have the information about the 3 business segments of Walmart, let’s check out the BCG Matrix of Walmart.
BCG Matrix of Walmart
Walmart US, is surely the ‘Cash Cow’ for the company. Walmart stores in US command a strong presence and market share in the region. Walmart stores surely face huge competition from Costco, Krogers etc. but the unique positioning of Walmart is what makes its customer’s favourite.
Walmart US is posting strong numbers QoQ and YoY and that’s what makes Walmart US the perfect Cash Cow for the company.
Sam’s Club is potentially a ‘Star’ of the company. This business segment has shown strong growth in terms of revenue as well as Club’s memberships over the years.
The company can invest more in this business segment and look at ways where they can grow it more in terms of revenue and market share.
Some people might consider including Sam’s Club in Cash Cow segment, but the reason we have added it in Star quadrant is because of the level of growth this business segment has shown over the years and its potential to grow in future.
Walmart’s E-commerce business falls under the ‘Question Mark quadrant’ of the BCG Matrix of Walmart. The E-comm business of Walmart is at a nascent stage and has a huge scope of growth. In this digital age, Walmart should and need to invest heavily in making its E-commerce business big.
In the past two years (from 2020-22), Walmart’s E-comm. business has grown by 38%.
With proper vision, strategy & investment, the e-comm business of Walmart has huge potential to become the ‘Star’ of the company.
Walmart International falls in the ‘Pet’s quadrant of the BCG Matrix of Walmart. Walmart continues to shrink its global footprint to focus on India, China, Mexico and Canada. In 2022, Walmart International’s net sales declined by $3.5bn to $23.8bn, representing a 13.0% decrease.
Increased competition from the homegrown local players is one of the major reasons why Walmart International sales are seeing a drop.
Due to intense competition and low growth, Walmart should not be looking in investing in this business segment and should in fact look at optimising it by disinvesting or repositioning the business segment.
This concludes the article on the BCG Matrix of Walmart.
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