Walmart, whose core shoppers are being hit particularly hard by the stagnant economy and rising gasoline prices, faces new headwinds in its efforts to boost same-store sales in the United States.


Walmart, Bloomberg News, Kroger Co., Dollar General Corp., Target Corp., Cleveland Research Co. analyst Jeff Stinson, WSL Strategic Retail, WSL chief executive officer Wendy Liebmann, Morgan Stanley, Walmart U.S. president and chief executive officer Bill Simon, William Blair & Co. Growth Stock Conference
























































































































































































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Inside This Issue - News

Walmart’s Dilemma

August 22nd, 2011

BENTONVILLE, Ark. – Walmart, whose core shoppers are being hit particularly hard by the stagnant economy and rising gasoline prices, faces new headwinds in its efforts to boost same-store sales in the United States.

Walmart stores open at least a year tallied 82.8 million fewer visits through the first five months of the current fiscal year, according to an internal memo obtained by Bloomberg News. That amounts to a 2.6% drop in store visits, the news organization reported, at a time when such rival retailers as Kroger Co., Dollar General Corp. and Target Corp. posted gains.

"The biggest issue remains weak store traffic," Cleveland Research Co. analyst Jeff Stinson wrote in a report quoted by Bloomberg. "We believe sales have slowed in the second quarter and are running below plan primarily due to further traffic declines."

Two recent shopper surveys detail the challenges Walmart faces in turning that around.
Despite Walmart’s plan to reemphasize everyday-low prices, for example, a survey of nearly 1,500 Walmart shoppers conducted by the retail consulting firm WSL Strategic Retail found that 86% no longer believe Walmart has the lowest prices.

The problem, according to WSL Strategic Retail, is that nearly every brick-and-mortar retailer has lowered prices and conducted sales during the recession in a bid to lure shoppers, causing Walmart’s price leadership message to get lost in the shuffle. Moreover, the Internet has emerged as the go-to place for shoppers seeking the absolute lowest price, the ­report says.

Another challenge is that the Walmart shopper is finding better options elsewhere, including dollar stores, supermarkets and other discounters. And finally, the recession continues to hit Walmart’s shoppers hard, with 82% of the retailer’s customers saying they have seen no improvement in their financial situation in the past year, and 70% saying they do not expect their finances to get better next year.

"Our report suggests that Walmart needs to better address the demands of its shopper today in order to regain relevance," said WSL chief executive officer Wendy Liebmann.

Another shopper survey, conducted by Morgan Stanley, agrees that Walmart has lost some of its reputation as a low-price leader.

Walmart, meanwhile, is striving to rebuild its price leadership reputation while ensuring that its big-box stores deliver everything its customers need in a single shopping trip.

"That’s why we’ve got to deliver breadth of assortment and everyday-low prices with a price-match guarantee," Walmart U.S. president and chief executive officer Bill Simon said in June at the William Blair & Co. Growth Stock Conference.

"Because if we want our customers to come to a Supercenter, we’ve got to make sure we have everything they want so they don’t have to go somewhere else, and have the prices that they can trust. If we do that the Supercenter becomes very efficient, and with high gas prices you go to one place and buy everything. Combine that with our ability to offer a smaller format closer to the customer and I like where we’re headed; I’m very optimistic. We’ve got to get through this rough patch in same-store sales, but the strategy is effective, I like it, and it’s working."

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