Wal-Mart goes back to 'low prices' to boost sales

Posted May 17th 2007 8:45AM by Brian White
Filed under: Products and Services, Competitive Strategy, Wal-Mart (WMT)

Wal-Mart Stores Inc. (NYSE: WMT) can't seem to find a strategy and stick to it -- at least in its U.S. market.

The company's recent quarterly results release featured CEO Lee Scott saying that the world's largest retailer would be returning to its roots and lowering prices over the summer to goose sales. Didn't Wal-Mart, just last year, say that it wanted to take the focus away from lower prices (while still maintaining them) and lure higher-ticket, higher-margin shoppers into stores?

Did that strategy not work, or did the company not give it enough time? Here we are in May 2007 and sales at the retailer haven't picked up nor have profits gone up appreciably. So when all else fails, Wal-Mart returns to is ultra-discounting strategy. How droll.

Wal-Mart's latest profit expectations were met by cost-cutting measures at its stores, international sales growth and its Sam's Club division. Organic profit growth did not materialize at its U.S. store base, the biggest part of its business.

So, with that in mind, I'm guessing that the company is partially abandoning hope of finding profits through higher margins at its Wal-Mart stores and is looking to make that up elsewhere (outside its core business).

Does that sound a little odd? It does to mine.

Tags: Lee Scott, LeeScott, Wal-Mart Stores, Inc., Wal-martStores,Inc., Wal_Mart, WMT

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Reader Comments (Page 1 of 1)

5-17-2007 @ 3:28PM

William Martin said...

I still can't believe WMT 's upper management inability to grasp "the big picture" . Brian and I could have run the company just as well and probably better during this time. What do you think Brian? We could not have done any worst you think?Billy Martin

5-17-2007 @ 3:49PM

Brian White said...

I'll say this, Billy: the back-and-forth strategy and corporate messaging Wal-Mart continues to send (low prices or higher margin focus? Which is it) can become maddening. In studying the retailer, it's been like Jeckyll and Hyde recently. The strategy (in the U.S.) is a mess, marketing is even goofier and its international plans are still not proven insofar as partnering with India's Bharti and China's Trust-Mart. What will 2007 hold? Possible the dismissal of Lee Scott is Wal-Mart cannot get its act together publicly. I'm no Wal-Mart basher (it gets a fair shake like every company I cover), but from where I sit there are many things needing fixing in Bentonville.