Wal-Mart’s Next Move

In Tom Randall’s Bloomberg article “Wal-Mart Now Draws More Solar Power than 38 US States”, Randall describes Wal-Mart’s newest strategic move to gear the company towards future success. Wal-Mart has begun to take advantage of the vast amount of space on the roof top of their monster stores to generate solar energy production. They had a 40% surge in installations in the second quarter of this year, and they now have access to more than 89 megawatts of capacity for solar energy capacity, which is enough energy to power 22,250 US homes.

The article compares Wal-Mart’s adoption of solar power generation to its decision to sell beer in its stores. When Wal-Mart decides that an endeavor is going to be profitable, they throw themselves head on into the movement. Prices of solar panels have fallen 60% since June 2011, and solar panel installation prices have fallen 30%. This means that Wal-Mart has taken advantage of the cuts in costs to be on the forefront of the mega store movement to produce solar power. With so many units already in place, the company is strategically positioned to sell solar power at reduced costs to consumers. Although this may cause other stores to not be able to produce solar power profitably, it would be good for the consumers who are buying cheap solar power. Could this be a monopoly that has greater consumer surplus than the alternative competitive market?

3 thoughts on “Wal-Mart’s Next Move

  1. Walmart investing in solar panels will reduce costs… but might it also make future decisions a bit more difficult? As seen with Sears and other stores which first opened stores in large urban centers, Walmart’s positioning and extra fixed assets it puts into its store may improve marginal costs or hurt its strategic opportunities in the future. Could Walmart investing now and lowering the prices of solar panels only help its competitors like Target make cheaper fixed asset investments int he future?

  2. It seems plausible that the increased investment in physical locations might harm Walmart, reducing the scope of its options. However, this move will also reduce costs, which in the short to medium run will give Walmart an advantage over rivals.

  3. I don’t think this move hurts Walmart’s future. If the company decides to move locations, the solar panels will add to a building’s appeal and make them easier to sell. Plus, in the short run, marginal costs should be lowered.

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