Walmart to New zealand and Australia PDF

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Market evaluation to take Walmart to NZ & Australia...

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Global Business Strategy INTL 706

Walmart to Australia and New Zealand

1

Table of Content

Industry Chosen….................................................................................2 Company within industry…....................................................................3 Australia…............................................................................................. 4 New Zealand…...................................................................................... 7 Conclusion and Recommendations….....................................................9 References…......................................................................................... 10

Industry chosen: Retail Industry We have chosen Retail Industry. Retail industry is primarily engaged with selling goods to the customers and providing services through stores to the general public (Sector, 2018). Large retail firms have their own warehouse facilities, manufacturing options and production units. Over the past few decades, there have been tremendous change in retail industry. In some part of the world retail industry is dominated by small stores, whereas large retailers have managed to set up huge supply chains, distribution chain, finance and marketing management and plans, and inventory management system (Investopedia, 2018). Most retail companies are small business, employs about 50 or less people. The big chain retailers make a lot more industry sales. Some retail industries are seasonal and only up in the holiday season. Most of the retail industry has small margins and high sales (Franchisehelp.com, 2018). Competition in retail industry is increasing day by day. Each retailer tries to differentiate itself from the competition. They use different strategies to provide best customer service. Some different types of retailers are department stores, discounters, and demographic (Investopedia, 2018). Major risks with retail industry are competitions, changing consumer trend, and economic risks. Global retail sales were $22 trillion in 2016, and expected to reach $27.7 trillion by 2020. In united states, retail industry is directly employing 29 million people and generating $1.2 trillion in labor income. Walmart has been a leader in retail industry since decade. other major brands dominating

retail

industry

(Franchisehelp.com, 2018).

are

Costco,

CVS,

Home

Depot,

Target,

and

Lowe’s

Company within Industry: Walmart Walmart is one of the biggest retailers founded by Sam Walton on July 2, 1962. Sam’s continuous effort to provide best customer service and great value made Walmart a number one retailer in the market. The company went public in 1970. By the time under great leadership of Sam, Walmart has opened thousands of stores in the U.S and expanded to internationally. Walmart is creating opportunities and bringing values around the globe. Walmart operates over 11,700 stores under 65 banners in 28 countries and ecommerce websites. Walmart offers fresh food combined with general merchandise for the broadest selection of the products under one roof at unbeatable price (Corporate.walmart.com, 2018). Walmart supports local, diverse and small businesses. As a major retailer Walmart helps farmers, manufacturers, and small businesses around the world through sourcing and other initiatives. It promotes locally grown products and connects small producers to global supply chain. Walmart manages an average of $32billion in inventory (Corporate.walmart.com, 2018). Walmart is focused on highly structured and advanced supply chain management. In 1980 Walmart has started to work directly with manufacturers to cut cost. Walmart manufactures are responsible to manage products in Walmart warehouse. Walmart has made strategic partnership with suppliers and offered them potential of high volume purchases in exchange for lowest possible prices. The network of global supplier, warehouses, and retail store is behaving like one firm. Supplier have been delivering products to Walmart’s distribution centers where the products are cross docked and then delivered to Walmart stores (Lu, 2018). Walmart recognizes opportunities to provide better customer service and best shopping experience.

Australia Country Analysis Australia is one of the wealthiest Asia- Pacific nations which offers a huge market with the outstanding opportunities for the businesses. The major areas of business includes retail trade, manufacturing, wholesale, mining, and finance. Australia has high income inequality rate accounted as 47 percent of country’s income. Australia has ranked one of the best country to live in and to start the business. It is the 6th largest country in the world by land mass. Population: 23,232,413 Major Language: English 72.7 percent Major Religion: Christianity Average Age: 38.7 years

(Men- 37.9 years, Women- 39.5 years)

Life Expectancy Ratio: 82.3; Men 79.8 , Women 84.9 Education Expenditure: 5.2 percent of GDP Area: 7,741,220 sq km Purchasing Power Parity (GDP): $1.235 trillion Unemployment rate: 5.6 percent Inflation rate: 2 percent GDP: $1.205 trillion USD Currency: Australian Dollar ( 1 AUD = 0.96 CAD) Competitor Analysis One of the big competitors in Australia of Walmart is Coles Supermarket owned by Coles Group. Coles is the largest retail chain in Australia with 28.8 % market shares which offers

services like general merchandise, fresh food, groceries, liquor and fuel, financial, and online services. It has a huge market in Australia with over 100,000 employees and 807 location. It has a market capital of $18.3 million. Another competitor is Woolworths which holds 32.2 percent of the total grocery market with total 995 locations and 111,000 employees. Woolworths and Coles together dominates 80 percent of the Australian market. Coles Supermarket revenue is $33 billion AUD as per 2017 whereas Woolworth is accounted for $36.56 billion AUD in 2017. Share of total grocery market

Source: Roy Morgan, 2018

Market Analysis and Assessment of potential to enter the market Australia has more than 140,000 retail businesses in the country and it accounts for 4.1% of the GDP and 10.7% of the employment. It is one of the most diverse industries in the country and

shows diversity in terms of the retail format, business, competition within sectors, region and the nature of good sold. Australian retail industry is a sector which shows sudden rise and downfall. Online retailing and global retailers are posing threat the conventional retail industry in the country. Online retailing represents 6 percent of the total retail sales in Australia. There are many regulations for the retailers in the country. The major ones are the regulations on planning and zoning, regulations on trading hours. Both these regulations are regarded as anti-competitive. The retail sales has shown a downward growth over the past decade as the consumers have developed the habit of saving their income and also started spending more on non-retail services. There has been a lot of entry of overseas retailers and an increased use of online platforms which give the consumers a large range of options to choose from. The evolving technology along with the customers who are so tech savvy and affluent is giving the online retailers an advantage over the others. There have not been much signs of retail market industry showing any notable growth in the near future. The competition is also very high as there are already 38 of the top 250 retailers in the world are operating in Australia.(Australian Government Productivity Commission, 2011) After considering these economic scenarios and the other issues, it has to be concluded that now is not the right time for a company like Walmart to start their operations in Australia. The stiff competition from the international retailers in the Australian market will give a hard time to Walmart if they decide to start operations in the country.

New Zealand Country Analysis New Zealand is one of the wealthy country in the world. According to World Bank, it is the #1 place to run a business followed by nearly 189 economies of different countries and has many opportunities to grow and it also promotes foreign trade in the country. The index given by World Bank indicates that it New Zealand government is promoting foreign trade continuously by having a fair share each year and is regularly looking at the retail industry. As this country has very competitive market and it has many opportunities to grow a business. New Zealand is a country with 4,754,402 population located in the southwestern Pacific ocean. Its population is mostly Indigenous and European people who settled over there in early 19th century. Following are some of the country profiles which indicates it as a good country with a good GDP. Total Population: 4,754,402 Million ( July 2018) Age structure: 0-14 years: 19.69% (male 454,982/female 432,877) 15-24 years: 13.35% (male 309,707/female 292,586) 25-54 years: 39.82% (male 900,374/female 895,615) 55-64 years: 11.89% (male 261,097/female 275,151) 65 years and over: 15.25% (male 318,089/female 369,849) (2017 est.) Life Expectancy at Birth: Male 79.1 years Female 83.5 years Language: English, Maori, Hindi, Samoan, French, and Northern Chinese. Birth Rate: 13.2 birth per 1000 population

Death rate: 7.5 deaths per 1000 population Net Migration rate: 2.2 migration per 1000 population Education Expenditure: 6.3 percent of GDP Population Growth Rate: 0.79 percent

Competitor Analysis 4 Four Square is a grocery store in New Zealand with nearly 280 stores across the country. They sell meat, freshly made food products, variety of grocery, beer and wine. They have additional services like in-store bakery, ATM machine, postal service, dry cleaning drop-off. Other major competitors is Kmart having 200 stores across New Zealand. They are into home and entertainment, kids and toys, men and women wear, and sports appliances.

Market Analysis and potential to enter into market New Zealand is continuously a growing market with the aspect of business. It has a very big chain of retail market such as Countdown, foodstuffs, foursquare, fresh choice and is crowded with many domestic players in retail market. Our main part of market in New Zealand would be Auckland and Christchurch. Even though the retail market is very competitive in New Zealand but the government is taking many preventive measures to make it easy to do business in this country. Moreover, the GDP of this country is 185 billion USD and the employment rate is 67.7% which is a good potential for the company to enter into the market. The retail sales in New Zealand market is constantly growing which was only 31.15 USD billion in 2008 and reached to 40.75 in 2016 which shows that it is progressing by time.

In the scenario, Walmart can have a competitive advantage over the market through following a unique selling method and following some strategies.

Conclusion and Recommendations The retail market in Australia is at a stage of decline. The threat from online retailers is very high and there are many rules in Australia that are anti-competitive to the retailers. There has not been any signs of recovery of the retail industry. Due to these reasons, Australia doesn’t have favourable conditions right now to start their business in Australia. Even if they find ways to tackle the threats of the online retailers, there are a large number of international retailers who are in play in the retail market of Australia at the present scenario. Hence, it is better if the Walmart waits for a better opportunity to start their business in the Australia at a later time.

10

New Zealand is a country that supports the retail business and shows favourable economic conditions. The retail business in the country is growing day by day. Walmart, with their unique strategies can gain a competitive advantage over other firms in the country. Hence, it can be concluded that New Zealand is a country where Walmart can start their business.

References: BBC

News.

(2018).

Australia

country

profile.

[online]

Available

at:

https://www.bbc.com/news/world-asia-15674351 [Accessed 17 Aug. 2018]. Burch, D., & Goss, J. (1999). Global sourcing and retail chains: Shifting relationships of production in australian agri-foods. Rural Sociology, 64(2), 334-350. Cia.gov. (2018). The World Factbook — Central Intelligence Agency. [online] Available at: https://www.cia.gov/library/publications/the-world-factbook/geos/as.html [Accessed 17 Aug. 2018]. Corporate.walmart.com.

(2018).

Leadership.

[online]

Available

at:

https://corporate.walmart.com/our-story/leadership [Accessed 12 Aug. 2018]. Franchisehelp.com. (2018). Retail Industry Analysis 2018 - Cost & Trends. [online] Available

at:

https://www.franchisehelp.com/industry-reports/retail-industry-analysis-2018-cost-tren ds/ [Accessed 12 Aug. 2018]. Glynn, J. (2017, December 7). Economy Slows as Corporate Australia Parties but Consumers Stay Home. Wall Street Journal - Online Edition. p. 1.

Heritage.org. (2018). Australia Economy: Population, GDP, Inflation, Business, Trade, FDI,

Corruption.

[online]

Available

at:

https://www.heritage.org/index/country/australia [Accessed 17 Aug. 2018]. Investopedia. (2018). The Industry Handbook: The Retailing Industry. [online] Available at: https://www.investopedia.com/features/industryhandbook/retail.asp [Accessed 12 Aug. 2018]. New

Zealand

Demographics

Profile

2018.

(2018).

Retrieved

from

https://www.indexmundi.com/new_zealand/demographics_profile.html Pash, C. (2018). The 3 threats to Australian retailers in 2018. [online] Business Insider Australia.

Available

at:

https://www.businessinsider.com.au/the-3-threats-to-australian-retailers-in-2018-20181 [Accessed 17 Aug. 2018]. Pc.gov.au.

(2018).

Inquiry

report.

[online]

Available

at:

https://www.pc.gov.au/inquiries/completed/retail-industry/report [Accessed 17 Aug. 2018]. Rumbens, D. (2018). Retail Forecasts May 2018: Who benefits from online disruption? | Deloitte Australia | Deloitte Access Economics. [online] Deloitte. Available at: https://www2.deloitte.com/au/en/pages/media-releases/articles/retail-forecasts.html [Accessed 17 Aug. 2018]. Sector, I. (2018). Home - Canadian retail trade industry. [online] Ic.gc.ca. Available at: http://www.ic.gc.ca/eic/site/retra-comde.nsf/eng/Home [Accessed 12 Aug. 2018]....