Wal-Mart going back to basics to reverse sales decline
In an effort to reverse recent U.S. sales declines, Wal-Mart Stores Inc. is bringing back thousands of items to its stores, lowering prices and launching a new advertising campaign to promote its price-match policy.
The nation’s largest retailer announced Monday that it would broaden its assortment by 8,500 items, or 11%, for an average store. It’s an about-face for Wal-Mart, which had reduced its offerings in recent years to spruce up its stores and appeal to more affluent shoppers.
That earlier decision, which drove many customers away, was considered a huge misstep by analysts. Wal-Mart, which is contending with growing competition from dollar stores, has reported seven straight quarters of sales declines at U.S. stores open at least a year, an important measure of a retailer’s health.
The latest initiative, being heralded as a back-to-basics move, comes at a time when consumers are feeling the strain of higher prices for gasoline, food and clothing. It’s aimed at boosting the company’s relevance as a “one-stop shop,” Duncan Mac Naughton, chief merchandising officer of Wal-Mart U.S., said in a call with reporters.
“If you want the product, we’re going to make it available for you,” he said. “That’s really the core concept of what we’re doing.”
The Bentonville, Ark.-based retailer is bringing back or expanding its offerings of products including pasta, beverages, snacks, paper towels, toilet paper, laundry detergent, fishing rods, fabric, crafts and health and wellness items. Some of the additions will be based on market, such as snow blowers and ice hockey merchandise in colder regions. The process is expected to take several months to complete.
To make room for the additional merchandise, the company plans to increase the height of its shelves and put some products in the middle of aisles, Mac Naughton said.
Wal-Mart also said it would check on rivals’ prices more often and would work with its suppliers to lower the cost per item and pass those savings on to customers.
Shares of Wal-Mart rose 28 cents to $52.82 on Monday.
David Schick, an analyst at Stifel, Nicolaus & Co., said it was unclear whether Wal-Mart’s latest move would succeed in winning back shoppers.
“The strategy is in flux,” he said. “Wal-Mart has a lot of ideas on how to improve the business, but it’s really hard to turn this battleship, and the consumers are not in great shape right now.”
