Wal-Mart (WMT) To Rollback Prices Even More as Recession Recedes - WSJ (TGT, KR)
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According to a Wall Street Journal article today, Wal-Mart Stores Inc. (NYSE: WMT) is aiming to reduce prices even more in hopes to reverse several months of sliding U.S. sales.
Being the world's largest retailer has its perks; for Wal-Mart the perk is that it offers some of the lowest prices to the consumer as its negotiation power is unparalleled.
Sales at stores open at least one-year have moved lower, and other retailers have seen a corresponding increase in their sales. What that suggests to analysts is that Wal-Mart is having some trouble hanging on to its middle-class customer.
In efforts to retain that customer base in the climate of increasing economic stability and consumer confidence, Wal-Mart is cutting prices on 10,000 items in its stores. No word on the exact size of the cuts or specific products to be discounted were released.
Placards throughout the stores, and advertisements will alert customers to the cuts.
One analyst thinks that, though the cuts will produce a near-term sales boost, the hope is to intensify the loyalty of shoppers who chose to shop at Wal-Mart during the recession.
Wal-Mart, however, is continuing to post solid profits on increasing product margins, so they're not in the hurt-box yet. The now-widened margins also allow the retailer some wiggle-room when it comes to lowering their prices again. Should Wal-Mart influence suppliers to also reduce their margins, the price drops could be even more dramatic.
The cuts will surely put more pressure on others, such as Kroger (NYSE: KR) and Target (NYSE: TGT).
Kroger CEO David Dillion noted recently that he has weapons such as service, selection, and cleanliness to combat Wal-Mart's pricing schemes.
However, a J.P. Morgan analyst recently surveyed the price of 31 items, and found that his basket of goods priced up 2.3% from the prior month.
Being the world's largest retailer has its perks; for Wal-Mart the perk is that it offers some of the lowest prices to the consumer as its negotiation power is unparalleled.
Sales at stores open at least one-year have moved lower, and other retailers have seen a corresponding increase in their sales. What that suggests to analysts is that Wal-Mart is having some trouble hanging on to its middle-class customer.
In efforts to retain that customer base in the climate of increasing economic stability and consumer confidence, Wal-Mart is cutting prices on 10,000 items in its stores. No word on the exact size of the cuts or specific products to be discounted were released.
Placards throughout the stores, and advertisements will alert customers to the cuts.
One analyst thinks that, though the cuts will produce a near-term sales boost, the hope is to intensify the loyalty of shoppers who chose to shop at Wal-Mart during the recession.
Wal-Mart, however, is continuing to post solid profits on increasing product margins, so they're not in the hurt-box yet. The now-widened margins also allow the retailer some wiggle-room when it comes to lowering their prices again. Should Wal-Mart influence suppliers to also reduce their margins, the price drops could be even more dramatic.
The cuts will surely put more pressure on others, such as Kroger (NYSE: KR) and Target (NYSE: TGT).
Kroger CEO David Dillion noted recently that he has weapons such as service, selection, and cleanliness to combat Wal-Mart's pricing schemes.
However, a J.P. Morgan analyst recently surveyed the price of 31 items, and found that his basket of goods priced up 2.3% from the prior month.
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