Fifty years ago in rural America, the big-box concept was a revolutionary idea.

Fifty years ago in rural America, the big-box concept was a revolutionary idea. Shoppers would no longer be held back by limited ranges, phenomenal mark-ups and inconvenient trading hours. Retailing was a hugely inefficient industry at that time, yet Walmart recognised what today seems a very obvious opportunity: reduce costs, pass the savings on to shoppers in the form of lower prices, attract more customers as a result. It’s a self-perpetuating model.

Yet in 2012 the end is nigh for big-box retailers. There are more relevant channels that deliver on that same promise of low prices, wide assortment and convenience – primarily the internet.

Amazon is without a doubt the biggest thorn in Walmart’s side. And it is not alone. Tesco and Carrefour’s recent woes in their domestic markets show how the big-box model is running out of steam.

So what’s a retailer to do? Either adapt or face a similar fortune to those who haven’t (à la Woolworths). Walmart is scrambling to acquire the expertise needed to compete in today’s digital world.

It is exploring opportunities with smaller formats to tap into potentially quite lucrative urban markets. And of course, international growth – bar a not so minor hiccup south of the US border – will be vital for growth.

The biggest challenge for Walmart will be staying true to its name. We know from past experience that Walmart fails when it veers too far from its core.

During the recession, shifting away from EDLP and rationalising its SKU base led to more than two years’ worth of declining like-for-like sales.

Since adding back 10,000 products and restoring its EDLP strategy, both sales and traffic have improved.

However, in today’s consumer-is-king society, low prices and a wide assortment have simply become prerequisites for many, leaving us to question the longevity of Walmart’s business model for future growth.

  • Natalie Berg, along with Bryan Roberts, is co-author of Walmart: Key Insights and Practical Lessons from the World’s Largest Retailer, available on Amazon.