The retail industry has been holding their breath waiting to see which way Wal-Mart (WMT) will go in its holiday strategy. With numbers coming out that they only had a miniscule 0.5 percent gain in same-store sales in October, the answer has come: they will aggressively compete based upon using price as their primary weapon; especially in high-demand categories such as toys and electronics during the Christmas season.
“The news from Wal-Mart is definitely discouraging,” Ken Perkins, president of RetailMetrics LLC, said Thursday. “They are going to be very price-aggressive. And it is going to have an effect on everyone. It is going to force other retailers to cut their prices, which in turn will squeeze their profit margins.”
The two major problems for Wal-Mart was their ill-fated foray into trying to introduce a trendy women's fashion line which just didn't fit into the purpose of the company at all; that and the remodeling efforts that disrupted customers all across the nation.
photo: AP
Chief Executive Officer H. Lee Scott spoke to analysts in October saying that they will go back to their strength of selling general goods for low prices, adding that there was way too much emphasis on higher-end clothing.
At the same time, their chief competitor Target enjoyed a 3.9 percent increase in same-store sales.
One great lesson from all of this, like we always say at managersrealm, is to keep with that which is the purpose of your company. We always need to remind ourselves of this. If Wal-Mart can get off course; so can we.
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