retail news in context, analysis with attitude

Advertising Age has a piece analyzing Walmart’s US problems, looking at reasons why the company has seen stagnant or declining US same store sales for nine consecutive quarters.

Part of the problem, the story suggests, is that Walmart no longer has the kind of low price dominance that it used to have; there are simply too many competitors - ranging from Target to Amazon, dollar stores to limited assortment stores - that are able to challenge Walmart’s “always low prices” claims on this score.

“So what happens,” Ad Age writes, “when a brand built on low prices doesn't have such low prices anymore? People notice. That's caused some to buy less, particularly in a bad economy. So the productivity loop has morphed into a vicious circle.”

Another problem, the story suggests, is that as store growth slowed in the US, Walmart had to increase its margins in order to meet the profitability desires of the investor class - in some ways putting the priorities of Wall Street ahead of the priorities of Main Street.

And, analysts say, there is an addition trend working against Walmart: a feeling that “the supercenter heyday is over as boomers age out of child-rearing years, millennials delay having kids and big stock-up trips decline.” Which means that Walmart may have to move away from the supercenter-centric strategy it has embraced over the past decade because it gave the company the highest return-on-investment (ROI), and start investing in smaller stores (supermarkets and convenience store-sized units) and internet operations.
KC's View:
Even the Roman Empire went into decline ... and so it is not entirely surprising that a powerhouse like Walmart eventually would run into strategic issues ... especially at a time when there are so many shifts taking place in geography (people moving to urban environments) demography (boomers getting older), and culture (the embrace of the digital world by the next generation of shoppers).

Walmart is placing some big bets when it would be easier to only hedge them, and I think this is probably the right way to go. (Not that Walmart gives a rat’s patootie about my approval...)