Wal-Mart cuts more prices

Posted Jul 23rd 2007 8:01AM by Douglas McIntyre
Filed under: Industry, Consumer Experience, Competitive Strategy, Wal-Mart (WMT), Best Buy (BBY), Costco Wholesale (COST)

The world's largest retailer will cut prices on 16,000 items, focusing on merchandise for the back-to-school season. According to Wal-Mart (NYSE: WMT), "Families with school-age children are expected to spend on average $563 this year on back to school." The company claims it can save customers up to 50% on some school supplies.

Wal-Mart is indicating in a new ad campaign that it can help offset high gas prices.

What the company does not say is what the promotion will cost the company. It clearly wants to strike back at retailers, including Best Buy (NYSE: BBY) and Costco (NASDAQ: COST), who have seen more rapid rising same-store sales in the US. But picking up share is often costly.

Wal-Mart is now engaged in a perilous balancing act. On the one hand, it needs to cut prices to bring traffic to its stores. It is also using new marketing techniques like allowing customers to buy items online and pick them up at stores. The shoppers picking up their orders are buying additional merchandise as they come to the retailer.

Price cuts, however, affect margin. One thing Wal-Mart cannot afford is to present Wall Street with falling same-store sales and slowing profit growth. Therein lies the trouble.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Tags: bby, best buy, BestBuy, cost, costco, inthenews, wal-mart, wmt

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Reader Comments (Page 1 of 1)

7-24-2007 @ 6:27PM

THOM said...

Walmart has always been the best thing that has come along for consumers. High value for your dollar spent. Say what you will about them BUT they deliver the goods. I laugh at those people we know who were so against the Walmart coming to town BUT guess who you run into when you're there? That's right! Those very same people who do have other choices as to where to shop are shopping at the dreaded 'Walmart'. Like my Grand kids say. Can you take us to Walmart? You bet I can! Thanks Walmart!

7-24-2007 @ 7:31PM

Louise Weeks said...

When wal-mart first opened here in Florida , you could find many ,many things that said " made in america " and some of thier advertisements stated that they were supporting those businessess in america !! As the years have gone by , you would have to be blind to not notice that at this time very little " made in america " products ( if any ) is available in thier stores !!! I wonder why that is ???? Could it be because of PROFIT / money ??? I think so !! Now most of what we see is made in china , korea , japan ete. etc. I do the best I can to NOT shop at wal-marts because of this and will continue to do so . Shame on you wal-mart for not using american made,yet most of your money comes from americans !!

7-25-2007 @ 11:18PM

pammie said...

well what stores do you shop at most all stores have the same products as a wal-mart. also alot of factories
have moved to other countries to cut costs on labor.
i shop at a number of different stores but i save the most money at WAL-MART!!!