Case 6Walmart, Inc. in 2018: The World's Biggest Retailer Faces New Challenges*

In 2018, Walmart was not only the world's biggest retailer, it was also the world's biggest company in terms of revenue—a position it had first attained in 2000 and had held for most of the intervening years.

Since going public in 1972, Walmart's record of growth and profitability was remarkable. Between 1972 and 2009, its average annual sales growth was 22% and its return on equity had not fallen below 20%.

Yet, sustaining Walmart's phenomenal record of growth and profitability was proving to be an ever more daunting challenge. As Walmart continued to expand its range of goods and services—into groceries, fashion clothing, music downloads, online prescription drugs, financial services, and health clinics—it was forced to compete on a broader front. While Walmart could seldom be beaten on price, it faced competitors that were more stylish (T.J.Maxx), more quality‐focused (Whole Foods), more service‐oriented (Lowe's, Best Buy), and more focused in terms of product range. In its traditional area of discount retailing, Target was an increasingly formidable competitor, while in warehouse clubs, its Sam's Clubs ran a poor second to Costco.

However, all these competitive threats were trivial compared to that posed by online retailing—and, specifically that posed by the world's emerging retail colossus: Amazon. During 2017, the turf battle between the two became increasingly acute: while Walmart expanded ...

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