Target’s performance was affected by the global financial crisis that hit the world during that time. The crisis caused a fall in GDP and massive unemployment. This affected the buying habits of customers who then preferred to buy from Wal-Mart due to their legacy as a low-cost discounting store. Wal-Mart, Target’s main competitor, was attracting more customers because of its low-cost selling strategy. Consumption patterns were all of a sudden frugal; this made Target lose many customers since it was perceived as a luxury store.
Wal-Mart’s Opportunities Issues The biggest problem for Wal-Mart is connected to the threat of rivalry. Competitors created an environment where a well-established company like Wal-Mart have a hard time to continue growing in the market. Since its first years, Walmart has had a massive impact on the market, growing quickly and sometimes overwhelmingly to reach the reputation of “richest company in the U.S.”. Later, however, towards the end of the 2000s, Walmart experienced a decrease in growth. The decrease in revenues was due to more specialized competition from retail competitors to Wal-Mart.
The company continues to employ new IT systems to track sales and allow managers to compare their store’s success to others. But, its enormous size makes it impossible to track and monitor everything that goes on in all stores. Walmart continues to engage in new countries, and sometimes doesn’t meet customer preferences in those markets. One of its biggest weaknesses is their exploitation of workers. Technological developments give Walmart the opportunity to dominate ecommerce.
It makes since, instead of always wasting the sales person time. If everyone is going to be going into stores just to check barcodes and see where they find the product cheaper or even shop online all the time it doesn’t make sense for a company to be paying employees for unnecessary work. Or work their not able to do at all. It will save the company money instead of paying for such big space that not a lot of consumers are going to. The only downfall I see or disadvantage I see is depending on where those lower rent locations are because some uppity people don’t feel secure in lower rent locations.
Once the competition has been eliminated then the company increases its prices and customers are often forced to buy products at such high prices because competition has been knocked off the scene (Horngren 2011) (Garg, 2011). In this instance companies may be challenged to prove their intent when this occurs. In the article, “Is predatory pricing rational?” in The Economic Times, the author explained that it may be difficult to prove if a company is using predatory pricing to get rid of competition. The author explained using three reasons. First, it must be determined if a company is pricing their products at below variable cost.
Wal-Mart has also caused the property value of buildings in these small towns they invade to plummet. When one of their Superstores sets up shop in town they can begin to count down the days until the small businesses are ran out; their properties become vacant, and depreciate in value because so many become unoccupied. They receive millions of dollars in subsidies to build in cities because the political leaders believe it will stimulate the economy. When in realty the money they invest in bringing in Wal-Mart is never returned into the community. They are often left with no choice but to give them the money to build within the city limits because nothing keeps this corporation from buying a plot of land just outside the city limits and acquiring the same profits with 0% of the sales tax going back into the town itself.
The decline is significant because it is a measure of operational productivity. In the case of Leon’s Furniture, some of the decrease may be attributable to the economic decline and the accompanying reduction of construction and home improvement expenditures. The current economic client and comparable store sales figures will force Leon’s Furniture to increase its focus on finding a merchandise mix that attracts more customers. All of Leon’s stores are scattered distribution, if people want to buy any Leon’s products they need cross half town or even more to get there, and it is not convenient for people who want to go to Leon’s. It is too far and inconvenient for them to get to the store and buy.
Advantages of traditional grocery stores over web grocery stores: ● The logistics of fast delivery are hard to optimize. It’s hard enough to deliver goods to the home in one day or less but it’s much harder when those goods are perishable. ● Many people would not be comfortable with someone else picking out their produce to make for a big business. Traditional grocery stores allow the customer to choose their own produce. ● Some people enjoy picking out groceries for themselves.
Porter's Five Forces Model Bargaining Power of Customers: LOW Wal-mart faces the weak intensity of the bargaining power of buyers in the retail industry environment. The large population of buyers makes it difficult for them to impose significant pressure on retail firms. • Customers usually make small purchases • A large number of customers • Wal-Mart;s main customers are individuals • Consumer could shop at a competitor who offers comparable products at comparable prices, but the convenience is lost. Bargaining Power of Suppliers: LOW The bargaining power of suppliers has weak intensity in the retail industry environment. There are many suppliers in the retail industry.
However, if there are not enough suppliers to support these stores, sales will be cannibalized. While an individual customer may not have much power, the overall customer base of the office supply industry has collective power. A large company purchasing a large amount of supplies may have room to negotiate a discount, but the average consumer cannot walk into a store and demand 20% off a product. Also, there are