Is Walmart A Monopoly?. Walmart is the world’s largest retailer. According to Forbes, it is the world’s largest company by revenue, but Walmart is not a monopoly because it faces competition from major retailers like Kroger, Target, etc. And it also has to compete with local retailers in various countries.
Walmart has a 26% share in the US grocery market, whereas Kroger has 10%, and the remaining share belongs to various supermarket chains like Target, Wholefoods, etc. The 40% of the grocery industry share is still with small players. Walmart is the biggest retailer in the US with a 14% market share, but Amazon is catching up rapidly with a 9% market share. Hence, Walmart isn’t a Monopoly, but it’s bigger than its competitors.
What is a Monopoly?
A Company/Corporation becomes a Monopoly when it offers unique services that no other company is offering, and it has very little competition in the market. A Monopoly business controls the whole market, and other businesses are at the mercy of the monopoly company.
Walmart does not satisfy the criteria of a Monopoly corporation because neither it offers unique services nor it controls the whole retail market, and it is facing competition from other retail companies like Amazon, Kroger, etc. who are scaling up rapidly and might catch up with Walmart.
Why isn’t Walmart a Monopoly?
A Monopoly is unique. Google is a monopoly because there is no other search engine that can compete with Google because of its size, revenue, and service quality, but the same isn’t true about Walmart. Walmart has an advantage in the retail business because of its size and smooth supply chain. It can offer heavy discounts and still make profits.
Let’s study the features of a Monopoly company to understand why Walmart isn’t a Monopoly.
Characteristics of a Monopoly
- Maximum profits- A Monopoly maximizes profits. Walmart’s revenue was $559 billion in 2021, the highest among retail companies. Walmart is profitable because it checks competition, provides smooth distribution and sticks to its core value of the discount.
- No competition- Monopolies face little to zero competition in their business, but Walmart has a hoard of competitors, and to stay ahead, Walmart has to bring innovation and change like any other market structure.
- Controls the whole market- Walmart has the first-mover advantage, and over the years, the supermarket chain has garnered a loyal customer base who continue to drive the company’s revenues. Walmart doesn’t control the whole retail market. Amazon and Kroger are scaling up. Retail companies are competing with each other and not against a single monopoly because Walmart isn’t a monopoly.
- Supply chain control- A monopoly controls the whole supply and demand chain in the market where other companies have to follow the guidelines of the Monopoly and co-operate with them. Walmart does not hold such power in the retail market. Instead, it competes with other businesses for customers, products, and discounts.
- Price control- Monopolies in the market control the price of most of the items because they are huge and own most of the market share. Walmart simply offers discounts because it has a larger and smoother supply chain than other retail corporations.
Walmart does not fit the criteria of a Monopoly. It is bigger because of its size and unique market structure. Other companies are giving competition to Walmart and not following Walmart.
Why is Walmart more successful than other retailers?
Walmart isn’t successful because it is a monopoly but because of its market structure. Here are a few reasons why Walmart’s success might look like a Monopoly when it’s not.
- Walmart generates huge revenues because of its everyday discounts.
- Walmart managers control the inventory and supply chain for their store, and there is no central authority to decide on supplies in a store which helps Walmart remain profitable.
- They have direct contact with manufacturers that reduces operations costs and makes Walmart successful.
- When Sam Walton started Walmart, he wanted to give discounts, and Walmart still focuses on providing discounts, and that has been their core business strategy not just in the US but in other markets as well.
- Walmart has been a failure in Brazil and South Korea. This shows that Walmart isn’t a monopoly, and it is competing like other retail businesses.
To Conclude
Walmart is more of an Oligopoly. A market structure where many businesses compete with each other and remain independent. No one controls nobody. Walmart is big in size and revenue, which makes it possible to offer discounts and remain profitable, but Walmart is far from a Monopoly. Globalization has left people with many choices, and in today’s world, a retail business can’t become a Monopoly.
Frequently asked questions
1. Which companies are monopolies in the US?
A. Companies like Apple Inc. and Google are monopolies because of their unique service and huge customer base. However, Monopolies are in decline in the US.
2. Why isn’t Walmart a monopoly?
A. Walmart isn’t a monopoly because it faces tough competition in the retail market, and Globalization has given a huge number of choices to customers.
3. Why is Walmart mistaken as a monopoly sometimes?
A. Walmart offers low prices and that forces other retailers to do the same to compete but Walmart simply follows its business strategy to earn its revenue. Hence, it is mistaken as a monopoly sometimes.
