Monday, April 11, 2011

Wal-Mart (WMT) Beating Low-Price Drum Again

With the so-called recovery not really happening, Wal-Mart (NYSE:WMT) wisely is launching a campaign to target its base customer which made the store the success that it was by hitting hard at its low-price advantage.

Wal-Mart lost its way several years ago when it attempted to move beyond its core customer to a more upscale consumer by moving into higher end clothing lines, which was a disaster and massive failure.

Even after that the company still kept playing around with the design of the store, clearing out all those bargains in the middle of the aisles in hopes of attracting those that weren't bargain hunters and preferred wider aisles and less clutter. Again, a big disaster.

Wal-Mart forgot what made them what they were, and with competitors like dollar stores, and others, emerging all around the landscape in the U.S., they started losing sales as customers got the impression they were more of a mid-price store than the former discount leader they had been.

Now that gas prices are high again and inflation soaring, Wal-Mart is scrambling to get back their discount swagger in order to appeal to consumers whose main goal is to decrease spending in an ongoing weak economy.

Duncan MacNaughton, chief merchandising officer at Wal-Mart said, "We have lost our customer confidence ... in having the lowest price."

Wal-Mart needs to rid itself of whoever it is, or they are, who are attempting to make them into the image of Target (NYSE:TGT) rather than what brought them past success.

The economy is a long way from recovery, and it's doubtful the wages of the even recent past will be sustainable whenever there is a sustainable recovery. That means the discount retailers should enjoy a bonanza of revenue and earnings increases in the years ahead, and Wal-Mart needs to completely and totally abandon its efforts to become something they have no business and knowledge of becoming.

If they don't, they'll struggle for years to come as a store without an identity, which appeals to no demographic in particular.

Wal-Mart was trading at $52.88, gaining $0.34, or 0.65 percent, as of 2:37 PM EDT.

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