{"id":13821,"date":"2014-06-05T22:43:40","date_gmt":"2014-06-05T14:43:40","guid":{"rendered":"https:\/\/canadianinquirer.net\/v1\/?p=13821"},"modified":"2014-06-05T22:43:40","modified_gmt":"2014-06-05T14:43:40","slug":"wal-mart-faces-3-big-challenges-as-it-aims-to-break-out-of-us-sales-malaise","status":"publish","type":"post","link":"https:\/\/canadianinquirer.net\/v1\/2014\/06\/05\/wal-mart-faces-3-big-challenges-as-it-aims-to-break-out-of-us-sales-malaise\/","title":{"rendered":"Wal Mart faces 3 big challenges as it aims to break out of US sales malaise"},"content":{"rendered":"
\"Photo<\/a>
Photo from Walmart Corporate \/ Wikimedia Commons<\/figcaption><\/figure>\n

The world\u2019s largest retailer faces new challenges at a time when low prices and one-stop shopping can be a few clicks away on a tablet computer or mobile phone.<\/span><\/p>\n

Wal-Mart Stores Inc. built its reputation on everyday low prices and convenient supercenters that allow customers to do all their shopping in one place.<\/span><\/p>\n

But revenue at established Wal-Mart stores in the U.S., which account for 60 per cent of the company\u2019s total sales, has declined for five consecutive quarters. Meanwhile, the number of customers has fallen six quarters in a row.<\/span><\/p>\n

Like many other retail chains that cater to working-class Americans, Wal-Mart is a victim of an uneven economic recovery that has benefited well-heeled shoppers more than those in the lower-income rungs. Moreover, shoppers are no longer willing to spend hours in big supercenters. They\u2019re turning to online competitors like Amazon.com, dollar stores and pharmacies.<\/span><\/p>\n

Wal-Mart\u2019s annual shareholders\u2019 meeting on Friday could offer clues as to how Doug McMillon, who became Wal-Mart\u2019s CEO in February, plans to deal with the biggest issues Wal-Mart faces:<\/span><\/p>\n

Cash-strapped shoppers<\/span><\/h6>\n

In an interview with The Associated Press, Bill Simon, CEO and president of Wal-Mart\u2019s U.S. stores division, says the top concerns among its shoppers are lack of jobs and gas prices.<\/span><\/p>\n

Wal-Mart\u2019s customers also still are struggling with a 2 percentage point increase in the Social Security payroll tax since Jan. 1, 2013. Additionally, they\u2019re facing reductions in government food stamp benefits.<\/span><\/p>\n

As a result, Wal-Mart\u2019s customers have changed their shopping habits. They\u2019re switching to chicken from beef, and choosing lower-price brands or store labels on staples like detergent. But they do splurge for special holidays.<\/span><\/p>\n

\u201cIt\u2019s been very choppy as to how they choose to spend,\u201d Simon says.<\/span><\/p>\n

To combat this, Wal-Mart stocks up on small packages at the end of the month when money is tight for customers. It\u2019s also counting on a new money transfer service it says will cut fees for its low-income customers by up to 50 per cent compared with similar services elsewhere.<\/span><\/p>\n

But America\u2019s Research Group\u2019s C. Britt Beemer asks: \u201cHow do you get more money from shoppers whose disposable income is less?\u201d<\/span><\/p>\n

Price pressure<\/span><\/h6>\n

Since the economic recovery, more stores are offering low prices, which has always been a centerpiece of Wal-Mart\u2019s success. As a result, Wal-Mart has had to focus more on cutting its prices.<\/span><\/p>\n

The move seems to be working. According to a Kantar Retail pricing survey conducted last October in the southern New Hampshire and northern Massachusetts area, Dollar General\u2019s basket of 21 categories across staples was 12 cents cheaper at $28.70 than at Wal-Mart. In the previous year, Dollar General was 18 per cent cheaper.<\/span><\/p>\n

And in a separate study conducted a year ago, Amazon\u2019s prices on a basket of 59 items was actually 7 per cent more expensive than Walmart.com and 16 per cent pricier than at its supercenters.<\/span><\/p>\n

Analysts also praise Wal-Mart\u2019s Savings Catcher, an online tool that allows customers to compare Wal-Mart\u2019s prices on thousands of products with those of some competitors. If a lower price is found elsewhere, Wal-Mart refunds the difference in the form of a store credit. Wal-Mart plans to expand the tool nationwide after having tested it in seven markets since March.<\/span><\/p>\n

Still, low prices hurt sales and margins. For the latest quarter that ended on May 2, for instance, sales at Wal-Mart\u2019s U.S. stores that were open at least a year fell 0.1 per cent.<\/span><\/p>\n

Changing shopping habits<\/span><\/h6>\n

Wal-Mart built tons of supercenters in the 1990s, but Americans increasingly are looking at physical stores as pick up locations after they\u2019ve already searched online for goods. Or they\u2019re viewing them as places to make quick trips for bread and milk.<\/span><\/p>\n

Wal-Mart\u2019s supercenters still account for 80 per cent of its 4,000-plus U.S. stores, but the retailer is opening smaller outlets that cater to shoppers looking for more convenience. It now plans to open 270 to 300 small stores during the current fiscal year\u2014double its initial forecast.<\/span><\/p>\n

Meanwhile, Wal-Mart is shoring up its online business. It is testing online grocery delivery. And Wal-Mart more than doubled the number of items it sells online to more than 5 million last year. That helped global online sales increase 30 per cent to $10 billion-plus for the latest fiscal year. The company now sells more than 7 million items online.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

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