Wal-Mart (NYSE:WMT) has shown third quarter profits but the retailer still needs support

World’s most successful retailer Wal-Mart (NYSE:WMT) have secured profits in its third quarter of the year but the Company needs help regarding its domestic saturation, sluggish sales, image problem, mixed international results and operational efficiency.

Its Comparable Store Sales have seen an increase of 0.5% domestically and 0.4% in domestic Sam’s clubs. Total sales of the company are reported to be more than $118.1 billion this year, which is an increase of 2.8% over the previous year. Wal-Mart (NYSE:WMT) showed an increase in earnings from $4.92 to $5.02.

Despite this results Wal-Mart (NYSE:WMT) needs to deal with some problems in order to survive in the long run. Opening new markets in urban centers in the US has become a big challenge for the retailer. After years of US market expansion Wal-Mart (NYSE:WMT) is running out of real estate. Half of the Americans already live 10 minute drive away from a Wal-Mart (NYSE:WMT) store; this is mainly due to the retailers 1988 strategy of opening as many superstores as possible – a successful strategy so far – but now things have changed as the competition and saturation has increased and it has become harder and harder to find places to erect new stores.

Normally a business dominates a market when it opens more stores in densely populated urban areas. Unfortunately Wal-Mart (NYSE:WMT) stores are already in dense urban areas where the Company’s big box format is an unlikely fit. Even if the company locates a suitable site it still has to face opposition from the neighborhood concerned about traffic congestion and negative impact on local stores and merchants.

According to a few reports traffic within existing stores has slowed down and it has become a challenge to attract more loyal customers. The company has also been facing problems to stay in the Global competition, which is already home to numerous other retailers. Expanding Worldwide according to some experts has become vital for the company, which they consider is a remedy to domestic saturation. Wal-Mart’s (NYSE:WMT) operations in Germany and South Korea have already been shattered by the local competition.

Wal-Mart’s (NYSE:WMT) Japanese subsidiary also continues to lose money. Another genuine concern for the company is its image and goodwill problem, which in the recent years have started to decline. According to a survey many Americans think that Wal-Mart (NYSE:WMT) is evil and for now the company’s focus should be on retaining its declined reputation and rebuilding itself as a good corporate citizen by working more on Corporate Social Responsibility.

The company’s image mainly declined because of strikes and protests against its waging policy, which according to the employees of Wal-Mart (NYSE:WMT) is not fair at all. The recent health budget cuts also didn’t do well for the retailer’s image in the market.

The company also suffers from lack of operational efficiency and doesn’t have much equity in its supply chain. Wal-Mart (NYSE:WMT) needs to find new opportunities to reduce its costs, and should work on its supply chains to eliminate inefficiencies. Moreover Wal-Mart (NYSE:WMT) announced plans, a long time ago, to establish radio frequency identification technology, but still has not done anything about it.