Denialism

WSJ: Wal-Mart Era Wanes

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by

Chris
in

Maybe Americans’ bad taste can be reformed! Gary McWilliams reports:

The Wal-Mart Era, the retailer’s time of overwhelming business and social influence in America, is drawing to a close.

[…]

Rival retailers lured Americans away from Wal-Mart’s low-price promise by offering greater convenience, more selection, higher quality, or better service. Amid the country’s growing affluence, Wal-Mart has struggled to overhaul its down-market, politically incorrect image while other discounters pitched themselves as more upscale and more palatable alternatives. The Internet has changed shoppers’ preferences and eroded the commanding influence Wal-Mart had over its suppliers.

As a result, American shoppers are increasingly looking for qualities that Wal-Mart has trouble providing. “For the first time in a long time, quality has a chance to gain on price,” says Lee Peterson, a vice president at Dublin, Ohio-based brand consulting firm WD Partners Inc.

[…]

The company’s unquenchable thirst for scale has been the secret to its market-changing power. “What we are is a ‘supercenter’ with one-stop shopping,” said Wal-Mart’s Vice Chairman John Menzer at an investors’ conference last month. The company expects each year to build another 170 to 190 of the 200,000-square-foot supercenters that are its hallmark and convert 500 smaller discount stores to the bigger format over the next five years. “We would love to wave a magic wand and [make] every one of our discount stores a supercenter,” he says.

But that very focus on scale is now a weakness, for the world has changed on Wal-Mart. The big-box retailing formula that drove Wal-Mart’s success is making it difficult for the retailer to evolve. Consumers are demanding more freshness and choice, which means that foods and new clothing designs must appear on shelves more frequently. They are also demanding more personalized service. Making such changes is difficult for Wal-Mart’s supercenters, which ascended to the top of retailing by superior efficiency, uniformity and scale.

Comments

  1. Ted

    Oh, oh.

    First technology offset lack of wage growth and accounted for the improving lifestyle of the current generation, and now the “pay raise” that America received by having Wal*Marts close by looks to be in jeopardy. Technology better be steppin’ up to make up the diff.

    But really:

    Amid the country’s growing affluence, Wal-Mart has struggled to overhaul its down-market,…

    Growing affluence? Oh, those people at WSJ!

    Not to worry though, when the other shoe drops, like maybe with the dollar decline, we’ll forego upscale stores like Target and head back to Wal*Mart in droves.

    Reply
  2. Keith

    If the dollar keeps dropping, we’ll skip going back to Wall*Mart and go straight to thrift stores and the army of Hobos.

    Reply
  3. factician

    This brings back to mind this old link:

    http://pileofphotos.com/walmart.jpg

    Reply
  4. threetorches

    “Quality has a chance to gain on price.”

    Yep, with that economy surging, consumer credit rolling out, home equity at all-time highs, and…
    Oh, wait. That’s right… the economy is slowing, consumer credit is contracting, home equity is shot, and millions of Americans have no health-care insurance.

    Sounds like Wal-Mart still has potential growth, after all.

    Reply
  5. LanceR

    The Big Lie: Say something often enough, loudly enough, and people may start to believe it in the face of the evidence. “The economy is doing great!” I’m making half what I was before Chimpy was elected. “Amid the country’s growing affluence…” Yeah. If you sit around waiting for your dividend check to come in, you’re doing really well. The rest of us are screwed.

    Reply
  6. KevinC

    Wasn’t there just a study that showed Wal-Mart really didn’t have lower prices on products. Maybe WM’s problem is that the consumers are finally figuring that out.

    Reply
  7. Chris H

    I think that when the Journal talks about Americans with growing affluence, they are talking about their readers, not everyone else!

    Reply
  8. Qalmlea

    I can’t say about everywhere else, but in my little corner of Idaho, Wal-Mart is less expensive on most products. Win-Co matches them on food items, but not on health and beauty products, or housewares. However, I avoid Wal-Mart except on items with either a significant price difference or for items I can’t find anywhere else. Why? Because ever since it became a Supercenter, it’s been way too crowded for my tastes. I try to go there between 10 pm and 10 am, because 90% of the rest of the time, it’s packed.

    Reply
  9. Chris H

    This is going to sound crazy, but I’ve never been to a supercenter, and have never bought anything at Walmart! I don’t even know where on is in San Francisco.

    Reply
  10. SLC

    The supermarkets in the Washington, D.C. area are whacky. There are certain items that none of them carry and are only available at WalMart. For instance, Entenmanns’ large chocolate chip cookies are only available at WalMart (at least in Northern Virginia).

    Reply
  11. Gerry L

    I’m in Week 5 of an 8-week round-the-country trip, and thus far I have avoided going into WalMart. I’ve passed several superstores and opted to find smaller regional grocery chains. I don’t know that I’ll be able to avoid WM in some of the places I’ll be stopping, however. It’s not a pledge to a dying relative or anything, just a test of my willingness to really put my money where my mouth is.

    Reply
  12. Alan Kellogg

    Wal-Mart’s buying agent can be credited for a lot of Wal-Mart’s drop in sales volume. Once you could buy Hunts Pudding 4 packs for about a dollar. Now you can only get the multi-packs. And only in two or three flavors. Variety has dropped, as has value fo the dollar.

    In addition, customer load has increased, but checkout stands are still being manned at the old rate. The company is not expanding personnel per store and the resulting delays means people are going elsewhere for the stuff they need. Thus you’re seeing more and more people who buy in bulk, but don’t see the membership stores as providing them with any real value.

    Add in companies offering big sales on items in an attempt to get people to buy their stuff when it’s regular price, and you have situations when your regular store will have the same manufacturers at a better price, and greater selection, than at Wal-Mart.

    Even worse for someone like me is that Wal-Mart is not public transit friendly. Made worse by the fact my home county isn’t public transit friendly; even when the topography is.

    Our utterly screwed up agricultural policy is a matter for another post.

    Reply
  13. Ex-drone

    I imagine that Wal-Mart has developed a niche that will be cyclically filled by some retailer from now on. Any waning here will not be permanent.

    Reply
  14. Brendan S

    Walmart isn’t waining. It’s just failing to post huge growth. Which is the real problem with economics in this country, is that, to be very successful, you have to keep growing. If you find a nice niche, and fill the roll well, you FAILED. Because your niche is only so big. I used to be a manager for Best Buy, and they run into the same problem. Their market segment is full, and they still do rather well for themselves, but they aren’t growing hugely, so they’re a failure!

    Reply
  15. Wal-Mart Hater

    I have a Wal-Mart one block away from my house. I will drive a clear 5 miles in the other direction for my groceries. I hate Wal-Mart, they are too big, understaffed, crowded. I hate that they have 20+ registers and on a Saturday only 5 are open. I refuse to shop at Wal-Mart, I hope they go under…

    Reply

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