COMPANIES EXPLAINED

1. History and Founding

Walmart was founded in 1962 by Sam Walton in Rogers, Arkansas, with a simple vision: help people save money so they can live better. Walton’s focus on cost leadership and rural market penetration allowed the company to expand rapidly across the United States.

Throughout the 1980s and 1990s, Walmart became a dominant force in American retail, pioneering supply chain innovations and scaling its network of supercenters. The company went global in the 1990s, entering markets like Mexico, the UK, and China. Today, Walmart operates over 10,000 stores worldwide and has evolved into an omnichannel powerhouse that blends physical retail with eCommerce.

2. Sector and Industry

Walmart operates in the global retail sector, primarily within:

• Discount Retail: Supercenters, Neighborhood Markets, and general merchandise stores
• Wholesale: Sam’s Club, a membership-based warehouse club
• eCommerce: Walmart.com, Flipkart (India), and other digital platforms

Walmart competes with a wide range of companies depending on the segment, including:

• Amazon – for eCommerce and logistics dominance
• Costco – in the warehouse club and bulk retail space
• Target – for value-focused, omnichannel retail
• Regional and international grocers and retailers

3. Revenue Streams – How Walmart Makes Money

a) Retail Sales (Primary Revenue Driver – Over 90%)

• Grocery and Consumables: Fresh food, household items, and essentials make up a large portion of U.S. revenue.
• General Merchandise: Electronics, apparel, home goods, and seasonal items sold in stores and online.
• Private Label Products: High-margin brands like Great Value and Equate improve profitability.

b) Membership and Services

• Sam’s Club: Membership fees and bulk retail purchases through warehouse-style stores.
• Walmart+ Subscription: Offers free delivery, fuel discounts, and mobile scan-and-go features.
• Financial Services: Check cashing, money transfers, and the Walmart MoneyCard.

c) eCommerce & Marketplace

• Online Sales: Direct-to-consumer products via Walmart.com and international platforms.
• Marketplace Commissions: Third-party sellers pay fees to list products on Walmart’s online marketplace.
• Fulfillment Services: Walmart Fulfillment Services (WFS) supports logistics for third-party vendors.

d) Advertising (Emerging Revenue Stream)

• Walmart Connect: Retail media network allowing brands to advertise across Walmart’s digital properties.

4. Competitive Advantage & Strengths

• Global Scale & Distribution: Operates thousands of stores and fulfillment centers worldwide, giving it unmatched buying power and logistical efficiency.
• Everyday Low Prices (EDLP): Core pricing strategy that attracts value-conscious consumers and builds customer loyalty.
• Omni-channel Integration: Seamless experience across physical stores, eCommerce, mobile apps, and delivery/pickup services.
• Private Label Brands: In-house brands offer better margins and customer stickiness.
• Tech & Automation: Heavy investment in AI, robotics, supply chain software, and predictive analytics to improve efficiency and service.
• Data & Retail Media: Monetizing customer data through targeted advertising on Walmart Connect.

5. Strategic Ecosystem & Partnerships

• Supplier Network: Works with thousands of suppliers worldwide to ensure cost-effective and consistent product availability across categories.
• Technology Partnerships: Collaborates with companies like Microsoft and Google Cloud for digital transformation, AI, and cloud infrastructure.
• Retail Media Ecosystem: Walmart Connect partners with major brands to deliver targeted advertising, using shopper data for better ROI.
• Financial Services Alliances: Partnered with fintech firms (like Ribbit Capital) to launch financial products and expand access to banking services.
• Healthcare Collaborations: Teams up with health providers and insurers to launch Walmart Health clinics and telehealth platforms.
• Marketplace Sellers: Expanding its eCommerce ecosystem by onboarding third-party sellers through Walmart Marketplace and fulfillment services.

6. Risks & Challenges for Investors

• Thin Profit Margins: As a low-price retailer, Walmart operates on very tight margins, which are vulnerable to inflation and rising operational costs.
• Labor Costs & Workforce Issues: Increased wage pressures, labor unionization efforts, and employee turnover can impact profitability.
• eCommerce Competition: Fierce competition from Amazon and other digital-first platforms puts pressure on Walmart’s online growth and pricing strategy.
• Supply Chain Disruptions: Global logistics issues and geopolitical events can hinder inventory flow and availability.
• International Market Risks: Challenges in countries like China and the U.K. have shown that Walmart's global strategy may not always succeed.
• Reputational Risk: Issues around data privacy, working conditions, or ethical sourcing can damage Walmart’s brand perception.

7. Future Growth Opportunities

• eCommerce Acceleration: Walmart is heavily investing in online shopping, same-day delivery, and fulfillment centers to challenge Amazon's dominance.
• Walmart Connect (Advertising): Developing its own retail media platform to monetize website and app traffic through targeted ads.
• Healthcare Expansion: Launching Walmart Health clinics, telehealth services, and affordable prescriptions to enter the $4 trillion U.S. healthcare market.
• Fintech and Digital Banking: Walmart is building financial tools like digital wallets and lending services through partnerships and acquisitions.
• Private Label Growth: Expanding exclusive, high-margin brands such as Great Value and Equate to boost profitability.
• International Opportunities: Strengthening operations in Mexico, Chile, and India (Flipkart) while adjusting to local market dynamics.

8. Conclusion – Why Investors Care

Walmart’s unmatched scale, operational efficiency, and evolving omni-channel strategy make it a cornerstone of the global retail industry. Its ability to generate consistent cash flow, adapt to digital trends, and invest in future-facing sectors like healthcare and fintech sets it apart from traditional retailers. For investors, Walmart offers stability, resilience, and long-term growth potential—making it an attractive holding in both defensive and growth-oriented portfolios.