Wal-Mart Stores Inc.'s (NYSE: WMT) new Chief Executive Mike Duke will have his hands full once he takes control of the world's largest retailer on Sunday.
For one thing, the economy continues to struggle. Gross Domestic Product fell 3.8% in the fourth quarter, the most since 1982. Consumer spending fell 3.5% in the quarter as unsold goods continued to pile up. Though consumer confidence rose to a four-month high, it was still weaker than expected.
Some have argued that the weak economy benefits Wal-Mart because as money gets tight people are interested in finding bargains. Funny how you don't hear the jokes about Wal-Mart shoppers being low-class much any longer. I know plenty of college-educated people who shop in the store, and without fear of ridicule.
To be sure, though, the Bentonville, Ark. company has said it is not immune to the economic slowdown.
The question facing Duke and Wal-Mart investors is whether the chain can keep these new customers, particularly as Target Corp. (NYSE: TGT) among others try to lure them away with low prices. Moreover, as Reuters notes, the food inflation that helped bolster sales growth in 2008 has moderated.
The company also has to contend with the weakness in the Chinese economy. Last month, the chain offered huge discounts to lure customers to its stores in China. And you have to wonder whether the company's Chinese suppliers will boost prices to Wal-Mart. Will the company then have to raise its already low prices? Those questions are yet to be answered.
One of the biggest challenges Duke may face is in Washington. Support is growing in Congress to make it easier for workers to join unions. When President Obama says that unions are part of the solution and not the problem, that must send shivers up the spine of the strongly anti-union company.
Shares of Wal-Mart actually rose last year, quite a feat for any company, let alone a retailer. But that was then and this is now. There will be no honeymoon for the new corporate chief. Duke is like a beginning swimmer who has been thrown in the deep end of the pool: either he will sink or swim, but he won't have much time to figure out to keep his head above water.
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Reader Comments (Page 5 of 11)
2-01-2009 @ 6:24PM
my2cents said...
I do not shop at Wal*Mart. I always shop at Target. Even if I have to pay a few cents more for an item. Walmart is messy and trashy. I would never buy electronics from Wal*Mart because I think they sale 2nd quality products. I had a friend buy a flat-panel TV there and it stopped working in 6 months. I stopped going there about a year ago because it was always full of low class shoppers. Every time I left that place I was irritated and in a bad mood.
2-07-2009 @ 8:31PM
Glenna said...
Wal-Mart sucks! They don't care about their employees or customers. All they care about is the all American dollar.
2-01-2009 @ 6:26PM
TEXAN said...
Why single out WalMart for stuff that falls apart. Stuff I buy at Home Depot, Lowes, Target, Sears, and the automobiles made in America all fall apart too...and they are NOT cheap. Most all are made of parts from overseas, if they are not all made overseas. The campaign of "look for the Union label" as a buy American deal lasted until folks all figured out that those goods were not made quality either. So stop bashing WalMart because they are anti-union. Most all of the American consumer public are ANTI union...the only folks PRO union are the union organizers and the union people too stupid to see they no longer have a good deal going. WalMart is an American company, doing what ALL American companies are doing...trying to keep their costs as low as possible, so that their prices are affordable to a nation whose TAXES on business AND people are too high and are going to get higher. What do you want...free stuff? Or would you then hate their customer service department too.
2-01-2009 @ 6:26PM
J.H.C. said...
You know what, if you don't work for Walmart, SHUT THE HELL UP!! You just sound like a dumbass to those of us who do. Walmart's starting rate is above minimum wage. My husband and I both work for Walmart, we have a daughter, we both make good money, WE ARE NOT ON WELFARE, and we have affordable medical insurance. The last thing we need is people like you telling us we NEED to be more American, we NEED the union, maybe you all NEED to F**K off. Some of us NEED Walmart, that is where we work, this is how we live, and we are quite happy thank you.
2-01-2009 @ 6:28PM
bigbttmgrl said...
I remember when walmart first came out here where I live...it was great! All you heard was American made! Now it's China and Mexico...where is the American? China?
And I'd also like to know where layaway went mr wallymart CEO? You know us poor people might could afford to have some things if you rich suckers would give that back!
2-01-2009 @ 6:35PM
Scott said...
To all the "Buy American" people I have two questions:
Question 1: A year ago I spent a month in Indonesia and my aprtment had American Standard toilets. I flew around on Garuda in a Boeing plane (90% of dreamliner sales are going to foreign countries). Every restaurant in the country had coca cola. There was a Dunkin' Donuts, Starbuck, KFC, and Outback Steak House down the street from me. I saw ACE hardware stores and bought American peanut butter at the supermarket. I saw people using Microsoft Software.
For those of you who think it is unpatriotic and wrong of us to buy products made in Asia, do you still expect them to buy all these things from us?
Question 2: If we decide we aren't going to buy stuff from China anymore, are we still going to expect them to purchase our government bonds to keep our economy afloat?
2-01-2009 @ 6:35PM
Coronadope said...
I keep hearing how Wal-Mart has driven Mom & Pop Stores out of business. EVERY big chain store from K-Mart to Best Buy to Home Depot has done that to some extent. I keep hearing how Wal-Mart sells cheap Chinese "junk"...Yet they sell the EXACT SAME brands and models as the "local" stores. I keep hearing how Wal-Mart "gets around" laboe laws and pays poorly. Bull. Employess there make the SAME hourly wage and have the SAME benefits as EVERYONE does who works in retail stores. As a matter of fact they probably average slightly better. And as for the author of this article knowing "college educated" people who now shop at Wal-Mart.....What an elitest thing to say! I Have a college degree. I have owned my own company for 16 years. My wife holds TWO degrees and we have shopped at Wal-Mart ever since they came to our state. We're not so stuck up as to not want to save money.
2-01-2009 @ 6:35PM
Fred said...
Walmart...where dreams come true for the trailer park class people...suitable trash for Trailer Trash...
2-01-2009 @ 6:35PM
trailblaze1130 said...
Wal Mart...You don't need a new CEO, you only need to treat folks like you first did.
2-01-2009 @ 6:38PM
prbloom said...
My husband works at Wally World. He can't get full time hours, so we can't get healthcare that worth anything! He would love to be working in his own field, IT, but there aren't any jobs right now because companies are out sourcing those jobs too! I think at least unions would force companies to have better healthcare!
2-01-2009 @ 6:48PM
al maynes said...
It is NOT the governments place to further unions. Since when do we need the damn feds in every part of our lives? Don't like wal-mart? Don't shop there! Don't like there wages? Heres a tip for you dummies.....DON'T WORK THERE! Simple ain't it!
2-01-2009 @ 6:51PM
Stacie said...
First of all, Mike, you should realize that if the first 3 didn't work then you probably shouldn't have bought the fourth. Kinda makes ya wonder huh...anyhow, I worked for Wal-mart for over 3 years. I will say that it was some of the best pay that I had received up to that point and still better than many jobs that are available out there today. No employee should be complaining right now with the job market as it is. However, no it was not a pleasant company to work for. They advertise that they are family friendly and so on and that is just not true. As far as the pay goes, yes it was good but not worth it for someone that has three children and was a single mother at the time. I still shop there if necessary though and would much rather pay their prices than some of the other retailers out there. That's why so many places are going out of business...they just can't compete.
2-01-2009 @ 6:54PM
Annee said...
Hey goofy people, Walmart couldn't stock its shelves with goods only made in America.
And most of what is available is too expensive for the Walmart customer.
My biggest beef with Walmart - customer service. (What's THAT? they say)
2-01-2009 @ 9:35PM
just me said...
CHECK PRICES,, THEY DON'T HAVE THE LOWEST PRICES ANY LONGER
2-01-2009 @ 7:00PM
gardinermob said...
If you don't want to work at a Union shop, don't apply for the job !
2-01-2009 @ 7:14PM
Rick L said...
From the article:
"One of the biggest challenges Duke may face is in Washington. Support is growing in Congress to make it easier for workers to join unions."
The bill before congress would eliminate the secret ballot for employees to vote whether or not to unionize a business.
2-01-2009 @ 7:02PM
BRIAN said...
I AGREE WITH FORMER EMPLOYEE,,
2-01-2009 @ 7:19PM
Sherri said...
I work for walmart and I love my job! I get paid very well and have benefits. I also DID NOT get laid off there, when I was laid off from my "full-time" job. (started at walmart just weekends when so called full-time job was slow). Now, when I asked for more hours, I was given them, and given health insurance which I lost when I was laid off due to plant closing. I have only ever had one really rude customer, and besides her everyone is nice to me, including management. Please don't complain about how "bad" walmart treats it's employees, unless you are one and have been treated badly. (then look and see how your work performance is and whether you deserved to be treated badly. Thanks for listening! :)
2-01-2009 @ 7:08PM
MBRUNO1952 said...
Sewachsmuth, I work for a union company. Believe me, those union members do not get paid plenty. They are
average wages, for skilled employees,
and the employees put in alot of OT to
make more than $50M a year. Believe me,
$50M a year, before taxes, isnot alot of money lately, especially now.
The problem is not with union employees,
but with union and company executives,
who make boo-koo bucks, just like your politicians!
2-01-2009 @ 8:14PM
hookmrl said...
any one could ceo china mart just show up how many illegals do they hire and the freez on the people that work hard for them they are scum