retail news in context, analysis with attitude

Bloomberg BusinessWeek reports that in a conference call about the company’s most recent quarterly results. Bill Simon, president/CEO of Walmart’s US division, made the following comments:

“The importance of delivering everyday low prices has never been greater, as our customers are consolidating trips due to higher gas prices. Our greatest priority remains to grow (sales at stores open at least a year). Rising gas prices, high unemployment and increasing inflation continue to be the most important issues facing our customers today. One in five Walmart moms lists gasoline as a top expense behind housing and car payments. We continue to be prepared to help her with low prices and broad assortment during this time of uncertainty.

“The paycheck cycle remains pronounced. During the quarter, we saw continued pressure from ongoing macroeconomic conditions, as customers continued to trade down to opening price points and some private-label products. Our grocery inflation was approximately 1 percent during the quarter, with the greatest impact on perishables.”
KC's View:
It is ironic - at precisely the kind of time that you would think that Walmart’s “always low prices” approach would be thriving, the company is thrashing around trying to find the answer to stagnant US same store sales. The question is whether the small, food-oriented stores that it is planning will provide an adequate response to its competitive ennui.

It must be perplexing for the folks down in Bentonville to read passages such as this one in the Pioneer Press:

“At Target, shoppers are inching back to prerecession patterns. Consumers do remain wary and high gas prices aren't helping, executives say. Yet for six straight quarters, Target's same-store sales have risen, including a 2 percent gain in the quarter announced Wednesday.

“But at Walmart, the recession drags on. For eight consecutive quarters, its same-store sales have fallen as America's largest retailer struggles to turn things around.

“The split reveals the new landscape of the U.S. economy, where hardship still haunts lower-income households - a core Walmart group - even as Target's more middle-class consumers regain their footing.”