Some threats and challenges Wal-Mart faces include increased competition, slow market growth, entry of new competitors, loss of sales to substitutes, growing bargaining power of suppliers, growing bargaining power of customers, adverse demographic changes, restrictive trade policies, and new regulatory requirements.
Wal-Mart faces competition from general merchandise retailers, warehouse clubs, and supermarket retailers. They are also facing challenges from the discount retail industry. These challenges are coming from both inside the United States and internationally. The top competitors are Target, Kmart, Circuit City, and Bed Bath and Beyond to name a few. Even Sam’s Club is facing stiff competition from Costco. On the supermarket side of the industry, Wal-Mart is facing competition from Kroger’s, Albertson’s, and Safeway, even though these stores are finding it difficult to compete with Wal-Mart’s low prices.
Some of the current challenges Wal-Mart is facing is the ability to expand in areas previously they have not been able to. Currently Wal-Mart really doesn’t have any more room in the United States to grow. Additionally, if they add more stores in the United States they will potentially face an issue with taking sales away from each other. An area in the United States that they could expand into where they have failed in the past is larger cities like New York City. The possible reason behind this is Wal-Marts opposition to unionized labor. Another possible reason is larger cities tend to pride themselves culture and style, not one of Wal-Mart’s attributes. Wal-Mart could expand into other countries, but they need to identify what people of the country need. Their needs and wants will probably be much different than those of its customers in the United States. These challenges are not impossible to overcome, but will require some creativity