With Wal-Mart's sales being flat last month, worst performance in years, they're now desperate to avoid their first YoY sales decline. Note the word "sales" - not "profits". And note that Wal-Mart can keep cutting prices longer than other retailers can stay in business.
Not good news for Circuit City, Best Buy, Home Depot, etc, who'll have to match 'em or get whacked.
Yes, this is the part of the retail cycle where it gets really ugly.
Enjoy shoppers! But not too much, since you'll be unemployed very soon.
Now Wal-Mart Cuts Appliance Prices, Too
Wal-Mart Extends Holiday Price Cuts to Appliances, After Slashing Electronics and Toys
Wal-Mart shoppers got another early Christmas present on Friday when the world's largest retailer cut prices on appliances a week after slashing them on electronics and before that, toys.
Wal-Mart Stores Inc. -- worried that holiday sales could be sluggish -- has been aggressively slashing prices in a strategy that many of its rivals seem likely to follow, turning a boon for consumers into what may be a bane for retail profits.
November 11, 2006
America's retailers getting clobbered by the bursting bubble and a desperate Wal-Mart
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14 comments:
I don't think the prices were an issue in their declining sales. People don't like Wal-Mart because of their shady business tactics that have been exposed more recently. I think people just don't feel good about shopping there anymore.
Aimee I agree. I have never shopped at Walmart because I felt their business model bad for all the mom and pop stores and because they buy too much from China instead of America. I remember when I was young (still didn't shop there) but heard people praise Sam Walton for his store because it promoted "Buy America" What happened? Greed.
Also, I think maybe people are beginning to get tired of buying junk. How many crappy clothes, toys, cheap imports can one buy? Most people don't have room in their house, let alone their garages for the crap they've bought and don't need.
Walmart might be lowering prices to dump inventory before the real economic slowdown begins. Just a possibility.
Wal-Mart is getting killed because
1) The illegal mexicans who are their growth machine are now unemployed REIC in many cases
2) The working poor who are their base are getting killed by real inflation and declining incomes
3) Middle class people are turning away from them due to emotional reasons - a boycott if you will. Also going to grocers who have organics, pleasant stores and similar merchandise
4) Competition has gotten wiser and stronger in response to Wal-Mart
5) The price difference was narrowing as other retailers got more efficient, and people were electing to shop elsewhere versus whore themselves out by going to the dirty and boring Wal-Mart stores which weren't that much cheaper anymore
So, desperate times call for desperate measures, and Wal-Mart is now pursuing a policy of "crush 'em on price" - no matter what that does to their profits. They need to restart the growth engine and grab market share, and will worry about profits later
But, alas, for a company their size, that will now lead to "going out of business" signs all over the American retail landscape.
Just watch. This will be a big story as it plays out. You'll hear "unfair trade practices", a populist Congressional rebellion against this Great-Chinese-Distribution-System, and possibly a call to break up the monopoly
Y is everyone saying Walmart is lowering prices? I went there
(aginst my better judgement) with the wife and kids...prices look the same to me HIGH! $80 on junk!
Fox, I finally agree with you,
"people are beginning to get tired of buying junk. How many crappy clothes, toys, cheap imports can one buy?"
When you buy something and it falls apart, you dont run back and buy another piece of crap. I think after ten years of buying the junk at walmart people are getting weerie of purchasing it again, pretty soon you've bought one of everything at walmart and its all broken.
I'm too poor to shop walmart, I cant afford to buy everything twice.
I will not and have not spent one cent in a WalMart and tell everyone to do the same and on the lighter side the WalMart in my area is #7 on the top ten list for "Serious and Violent" crime in the nation.
Why do people buy appliances and clothes at walmart?
I have always bought non-durable goods like mouthwash, toothpaste, laundry detergent, chewing gum, misc office supplies, pet food, motor oil,etc...
Grocery stores charge more for the same stuff and the selection is much less. I've never bought anything that plug into a wall, uses a battery, or is furniture in your home at Walmart.
Most of this stuff is produced in the US anyway and Walmart does not have a big margin of profit on it.
People who buy a Walmart Sanyo TV and expect it to perform like a name brand for 1/3 of the price are just stupid.
Walmart is okay if you are selective in what you buy.
Bork,
There was an article last week which dtailed what Keith was talking about. The articl etalked about big screen TV s and how in its ambition to crush the competition Walmart reduced the price from a competitive $1,700 to around $1,200.
Walmart has also taken to heart the bashings that it gets because they know that all the bad press really does sink in to the buyer's psyche. So they have pledged to reduce energy consumption and got Al Gore to say nice things about them for doing so.
Walmart has also started to redesign their stores. When they unveiled the design at a presser a Target exec was present. He said that they were ripping off Target's store setup. The Walmart spokesman said "So?".
"5) The price difference was narrowing as other retailers got more efficient, and people were electing to shop elsewhere versus whore themselves out by going to the dirty and boring Wal-Mart stores which weren't that much cheaper anymore"
I think you just read my mind.
I was there last week, and it was nasty. My free time is too important to me to spend it in such a depressing place.
(there might be nicer prisions)
Also, the three things I was "price checking" there were easily found at other, less odious big box stores for CHEAPER!
I say to Walmart "Smell ya later!"
They are building a new Wal-Mart store a few miles from me. No one in the community seemed to want it, but the city told area residents to shut it or Wal-Mart could just build a block away instead and all the sales tax would go to a different town.
What they are building doesn't look anything like the typical Wal-Mart. It's still huge, but they've tried to make the exterior more aesthetically pleasing and it almost looks as if they are tryong to hide the store behind a ton of landscaping and large brick walls. Maybe that was a compromise they made with the locals.
I won't spend money at Wal-Mart because I think Sam Walton's spawn are despicable, but I will go inside when it opens and see if they've managed to make it even remotely pleasant.
"They are building a new Wal-Mart store a few miles from me. No one in the community seemed to want it, but the city told area residents to shut it or Wal-Mart could just build a block away instead and all the sales tax would go to a different town."
Sounds like Sandy Utah??
Foxwoodlief, the "Buy America" campaign died when Sam did. The new bosses believe in profits and stock prices uber alles.
As for Wal-Mart, I try to avoid that place as much as possible. Aside from the shady business tactics, their stores have become s#!+holes where if some turd rips open a package, the store management just tapes over the box and tries to sell it at full price (I've seen this happen several times). Plus, I noticed that several stores have empty spaces where products should be..
Unless they are ONLY peoeple selling the product (which is becoming less common), I either go to Target or K-Mart first.
I don't shop at Walmart because it's always too crowded. But what's with all the bashing? Walmart represents a true open economy of supply and demand. Capitalism at its finest. Very efficient. So what if mom and pop shops are squeezed out? We are now in a global economy and we shouldn't impede advancement, so either you keep up or fall behind. If my job no longer pays me what I think I am worth, I find another job or acquire a skill that pays more. I'm not going to try to unionize and blackmail to try to force a company to pay me more than my skills are worth. If you don't like what Walmart pays? THEN DON"T WORK FOR THEM! Quit your whining. You can always make yourself more valuable or you can move to Cuba....You will get a guaranteed living wage there and you can have no skills at all! It's called Communism.
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