Everyone's favorite mega-retailer, Wal-Mart Stores, Inc. (NYSE: WMT), has announced that it will be more aggressive this holiday season with its price chopping strategy. It will rollback 20% more items than it did in the 2006 holiday shopping season.The retailer reduced the prices on 15,000 items this week alone in what may be its biggest push in quite some time to get more customers in stores this holiday season. Although I'm repeating myself from prior Wal-Mart posts, the point is still valid: the retailer seems incapable of conceiving any growth strategy outside of the pricing arena.
Wal-Mart has said that it wants to recruit higher-end customers in stores who will spend more money on higher-margin products, yet it continues to default to low prices as a main tactic. Perhaps the retailer wants the pseudo-affluent to see just how much they can really save by shopping at its locations? Your guess is as good as mine at this point.
But with its "Save Money, Live Better" corporate slogan, the focus appears to be pricing, first and foremost. Global Insight, a financial analysis form, says that Wal-Mart saved the average family $652 over the busy October through December shopping months last year. I would easily call that "saving money."
Bill Simon, executive vice president and chief operating officer for the retailer, added "In an effort to help stretch the dollar, we're giving customers an early start on holiday savings with even more targeted price cuts to come." Well, well. Wal-Mart has been a boon and drain on the country in the last 15 years (depending on who you ask), but it may never be able to get away from being perceived as a deep discounter. For some, that is just fine. For shareholders sitting on stagnant Wal-Mart shares who prefer more growth in profit than in foot traffic, that may not sit so well.
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Reader Comments (Page 1 of 1)
10-18-2007 @ 1:31PM
roudy11z said...
I still believe lower prices will win over high end store higher prices in the end. If this does not happen in the next few quarters then I will consider selling half of my WMT stock and buy one or two of these high end stores stock?
10-18-2007 @ 5:46PM
Mike said...
Stack em' high and sell em' low.
-Sam Walton