Walmart's Durable Competitive Advantage: What Investors Need to Know

Walmart (NASDAQ: WMT) built its reputation on offering low prices on a wide range of products. Many consider it Walmart's main competitive advantage. If someone shopping at Target wants to check what the same product is selling for elsewhere, they check Walmart. Most customers aren't leaving Walmart for lower prices elsewhere.

That low-price business model is still intact. But over the last several years, the retail giant has added convenience as another competitive advantage. It's not only becoming easier to shop, but also to receive what you purchased.

Let's examine Walmart's convenience as an additional competitive advantage, and see why this company could reward shareholders for years to come.

Image source: Getty Images.

Walmart has stores everywhere

If you're traveling across the U.S. and you pull off a highway into a community, you will inevitably encounter a Walmart store in short order. That's because the retailer has 4,611 retail sites in the U.S. (as well as 601 Sam's Clubs) and roughly 5,743 additional sites across the globe.

In the U.S., those sites include 3,566 U.S. Walmart Supercenters, which can pack in a lot of offerings in just one space. Those large stores can also contain pharmacies, auto services, vision centers, health clinics, banking facilities, tech services, fast-food chains, and more. In some locations, you can walk in for an oil change or new tires for your car and pick up groceries for the week while you wait.

Walmart also offers membership perks

The idea of Walmart entering the subscription business may have sounded odd back in 2020, but it was a way to further enhance the customer experience and generate more revenue. With a Walmart+ membership, customers gained access to perks like free shipping options, free pharmacy delivery, and free returns from home.

For Walmart, it's a way to boost revenue through increased customer loyalty, as people with a membership may feel more inclined to shop at the retailer to get the most out of their subscription plan. So far, Walmart+ seems to be working out for the company.

"In the U.S., Walmart+ membership income was strong, up double-digit percentages, as our core offering as well as newer benefits like our OnePay CashRewards credit card continue to resonate with members," management said on the company's earnings call for its fiscal fourth quarter of 2026 (which ended Jan. 31, 2026).

Expanded delivery

Walmart is also making the shopping experience more convenient, even if you aren't in its stores. In January 2025, the retailer rolled out same-day pharmacy delivery across most U.S. states. It also offers curbside pickup for everything from laundry detergent to pet treats, as well as an express delivery option at select stores, where items can be delivered to customers' homes in two hours or less.

In addition, the retailer is testing drone deliveries to get orders to customers even faster, planning to have them available at 270 locations in the U.S. by the end of 2027.

Walmart is working to make shopping easier

As a legacy retailer, Walmart is still keeping up with the times, tapping into the power of artificial intelligence (AI) through Sparky AI, its shopping assistant.

With Sparky, customers can ask for recommendations and product reviews. How AI can help businesses can be vague, but Walmart offers specifics: Customers who use Sparky have order values that are 35% higher than those who don't use the AI agent.

Why Walmart is a stock to buy and hold for the next decade

The retail space is crowded, with Walmart competing against Target, Amazon, Costco Wholesale, and others for attention and dollars. Its principal advantage had been low prices, but all the additional convenience mentioned above is now another competitive advantage. That means low prices may first get people in the door or shopping online, but convenience will keep them coming back to Walmart, helping the company grow its revenue.

With a forward price-to-earnings ratio of 43.2, shares look expensive. It's not the kind of company that would jump out to a value investor as a bargain. Still, throw in a dividend payment that's been hiked for 53 consecutive years, and you have a consumer staples stock with growing competitive advantages that's worth considering owning for a decade or more.

Jack Delaney has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Costco Wholesale, Target, and Walmart. The Motley Fool has a disclosure policy.