WAL-MART’S OLIGOPOLISTIC COMPETITIVENESS

Wal-Mart’s Oligopolistic Competitiveness in the Discounted Retail Industry

Market Structure of the Retail Industry

In the retailing industry, business competition- can either be a pure competition, monopolistic competition, pure monopoly, or become an oligopolistic (Dunne, Lusch & Carver, 2013). Berger (2017) observes that the industry’s competitive environment is changing from a pure competitive one to become an oligopoly. Today, there exist larger retailers that have a wide range of products to sell, all under one roof and at reduced prices. The development has negatively affected the growth of smaller retailers such as the malls. Wal-Mart is an example of such a larger retailer that is changing the competitive environment to make it harder for new entrants (Zhu, Singh & Manuszak, 2007). An oligopoly is described as a competitive environment that comprises of only a few large firms competing against each other unlike in monopolistic competition where many small firms compete (Dunne, et al., 2013). Thus, Wal-Mart is an oligopoly since it competes with only a few competitors that are able to sustain their business in the discounted retail industry (Berger, 2017). 

Wal-Mart’s Pricing Strategy

As Dunne, et al. (2013) argue, Wal-Mart has focused on the pricing strategy to gain a competitive advantage by reducing its product prices by close to 40% from its competitor prices, as other competitors focus on other areas of competitive differentiation. Wal-Mart has managed to sustain its pricing strategy with the help of its innovations that has improved its communication systems and technological developments. The continued success of its pricing strategy to attract more customers has enabled Wal-Mart to continue reducing its prices making it become the dominant retailer in the discounted retail industry (Marcilla, 2014). 

References

Berger, J. T. (2017). Is retailing becoming an oligopoly? Wiglaf Journal. Retrieved from https://www.wiglafjournal.com/corporate/2017/10/is-retailing-becoming-an-oligopoly/.

Dunne, P. M., Lusch, R. F. & Carver, J. R. (2013). Retailing 8^th ed.: The retail environment. Mason: Cengage Learning.

Marcilla, L. B. (2014). Business analysis for Wal-Mart, a grocery retail chain, and improvement proposals. Retrieved from https://riunet.upv.es/bitstream/handle/10251/44289/Business%20analysis%20for%20Walmart%20FINAL%20TFC%20Laura%20Barber%C3%A1%20Marcilla.pdf?sequence=1.Zhu, T., Singh, V. & Manuszak, M. D. (2007). Market structure and competition in the retail discount industry. Journal of Marketing Research, 46(4). Doi:10.1509/jmkr.46.4.453.