Wal-Mart tries to boost ailing sales

The nation's largest retailer has been in a nerve-wracking US slump. Can it revive its sluggish business? With video updates.

By Kim Peterson Mar 21, 2011 1:48PM
Credit: (©Mel Evans/AP)
Caption: Wal-Mart StoreThe economy is slowly coming back to life, but you wouldn't know it by looking at Wal-Mart (WMT).

The nation's largest retailer has stalled, unable to climb out of the worst U.S. sales spiral in its history. For seven straight quarters, U.S. sales have dropped -- an alarming trend that the company is scrambling to break.

The company made some bad calculations, particularly as the economy was heading downhill. The stock has been a nonperformer, dropping nearly 6% in the past year to $51.89. Its three-year stock performance isn't pretty.

What went wrong at Wal-Mart? Here are four huge problems that the company needs to address:

Dollar stores
. The company was blindsided by the rise of the small discount store. The recession pushed more people to shop at Dollar Tree (DLTR), Family Dollar (FDO) and Dollar General (DG), and they kept shopping there even when the economy began to improve.

Dollar stores are particularly competitive with cleaning supplies, medicines and other household items. Why pay three times more at Wal-Mart?

So instead of trying to beat 'em, Wal-Mart is joining 'em. The company wants to do its own version of dollar stores with small neighborhood markets selling food and consumer staples.

Bad sales strategy. When the economy lost its footing, Wal-Mart tried hard to appeal to wealthier shoppers who were trading down. It remodeled its stores to make them cleaner and prettier, according to The Wall Street Journal. It brought in pricier, more fashionable clothes. It cut down on clutter, removed some items and upped its prices.

That alienated Wal-Mart's core shopper, and it really didn't draw in the upper-income shopper either. "Sometimes we will try things, and sometimes they work and sometimes they don't," chief executive Mike Duke told the Journal.

Confusing pricing. Wal-Mart tried aggressive price rollbacks last April, cutting prices on about 10,000 items. Sales continued to fall, however, and by October it was reversing those rollbacks.

What kind of message does that send shoppers? Is Wal-Mart the place for bargains or not? Now, says William Simon, the head of U.S. sales, the company will go back to everyday low prices across the board in hopes of attracting households earning $30,000 to $70,000 a year.

"A lot of things have distracted us from our pricing mission," Simon told the Journal. "We got enamored with presentation as an example. We walked people through our (remodeled) stores, and they were gorgeous. But they cost more."

Shoppers' changing habits. People don't want to rely as much on credit anymore. They like to pay with cash when they can. They live on a month-to-month budget, they spend less at the register, and when the money runs low, they shop at the dollar store.

All of that runs against Wal-Mart's business model. Wal-Mart specializes in the supersized laundry detergent and prices that, while still a deal, are higher than what people want to pay.

Wal-Mart hoped people would ditch those habits as the economy improved, but that isn't proving to be the case. So now Wal-Mart is the one downsizing, giving customers the smaller quantities and lower prices that they want.

"Wal-Mart leadership has to realize that what made Wal-Mart once great isn't going to make it great in 2020," writes business consultant Adam Hartung. "Instead of obsessing about execution, Wal-Mart has to become a lot better at competing in new markets. And that means competing in new ways. Mostly, fundamentally different ways."

25Comments
Mar 24, 2011 8:31PM
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Wow Wal Mart admits they made some mistakes!!! not only did they make the mistakes with sales they also have made a lot of mistakes with the way associates are treated, if they are realizing these mistakes maybe they should go back to the way SAM WALTON wanted his stores to run he was about the consumers and  the people that worked for him and Wal Mart has lost sight of this because the CEOs have dollar signs in their eyes and their hands in the cookie jar they have forgotten about the little people...
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Walmart abandoned their American middle class consumer years ago by actively and efficiently forcing U.S. manufacturers to source their consumer goods in China.

 

Then they bypassed the U.S. manufacturer by directly sourcing the product from the manufacturers Asian suppliers.

 

Walmart's customer is in China now. They had better start swallowing all the globalization crap they fed the rest of us if they wish to compete.

 

.

 

 

Mar 21, 2011 4:28PM
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Walmart has changed and not for the good. They don't carry the things that people want and increased the number of  products with the slimmest of margins....food. This makes no sense and is not what made Walmart  successful. If folks want upscale they'll go to Target. At Walmart folks are looking for price more than anything. The store in my area has a very "shallow" inventory and is not price competitive by any stretch of the imagination..
Mar 22, 2011 9:08AM
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Wal-Mart has done everything required to fail! They have reversed Sam's promise to never buy from other countries--- to only buy foreign  country merchandise. They mistreated and abused their employees, they destroyed small family owned business, they developed a haven for illegal workers, they have bullied their way in non accepting communities and the list goes on and on.
This said " It takes only 5 mins. to lose a customer you spent years to develop"
Their day for accountability is here.

Mar 24, 2011 9:55PM
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Wal-Mart has forgotten the four things that made them great.

1) Awesome Customer Service

2) Cared about their associates

3) Great low prices

4) Quality Merchandise

Now the only thing Wal-Mart seems to care about are these two things;

1)  A Low Price

2) Making more than the other guy

What does Wal-Mart need to do to get back into good graces with America?

We can talk about it all day however it is up them to figure it out and implement it.

Mar 22, 2011 7:59AM
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The more and more global Walmart has become the more and more the stores in the US have suffered. Poor quality merchandise, poor customer service, dirty cluttered stores, lack of selection of products and higher prices. The longer Sam Walton has been dead the less the stores are what he conceived many years ago. Target has the same prices where I live and much nicer place to shop. Sad thing is all the big chain discounters have run the mom and pop specialty stores out of business and there is no where to buy unique items other than online....so if you need it today forget it.
Mar 21, 2011 7:07PM
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We live in Huntley, IL.  If we shop after 4 pm the shelves are empty. WAL MART if you are going to sell groceries you must stock the shelves. It's kind of basic but you don't have many people that know what a grocery store is all about.  It's about the neighborhood!
Mar 22, 2011 11:16PM
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I am glad that I did a search and found this article: for a long time I have seen a decline in the Las Vegas, NV area stores. They are simply terrible. The last 5 times I have gone to Walmart to buy items I have bought for years they have either been out or no longer carry the items.

They spent decades destroying the little guys and their specialty inventory and when the got the upper hand they urinate on the consumer and cut costs by cutting selection and inventory.

I used to respect them because there was a time I could go there and find what I was looking for no matter how obscure it may have seen. I loved them. Now, I hate Walmart and do everything I can to avoid them.



Mar 22, 2011 8:47AM
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 The store in our area is like a flea market, you cannot make a shopping list and hope to find what you need. The suits need to be aware that you cannot sell it if it is not there.I love when the suits make a vist to the store and the front ends and backends look full and they seem happy, but the sox section is empty, the cereal section is selling open space and the meat case has 88 cent hot dogs instead of Hebrew national brand. Low end people want good products not crap and want it when they visit the store.
Mar 24, 2011 10:50PM
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They have to quit getting rid of their best workers like they have been doing.  They get rid of people that should be under the disabilities act which is something they are doing alot of just to get rid of full time employees to pay parttime and the new ones they hire are not the best of employees they just don't care.  The have to wake up.  The pricing is going up and have less things people want.  They also don't have enough people on the floor to help customers and they better fix that people are stopping there shopping at Wal Mart because of all their cut downs just to make more money for the upper people.
Mar 21, 2011 11:56PM
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If Wal-Mart's would pay there associates a decent wage maybe they would have decent employees that understand customer service.... but I bet the Walton family needs every million it can get!
 
 
Mar 24, 2011 10:22PM
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Walmart, step it up.  You have enough educated people not in the workforce to put to work, this improves your customer service. Pay them a decent wage and I am not talking about 9.00 an hour.  Pay them enough to keep them working there, moving up the ranks.

 

Don't clutter the aisles, cuddos on the drive up pharmacy, that will be a huge hit.

 

Bring in more american made products, label them off so people know, see if they are selling.

 

The world is changing and you better start right now.

Mar 23, 2011 8:52AM
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Wal-Mart has forced me to go back sometimes to my local retailers as the local stores have much better fruits and vegtables,fish,meats and do not have specialty products like Italian Roast beef etc. etc. and a place like Kohl&;s has a better selection of clothes. In addition, they now have the medicines for $4.00/10.00 .They devote allot of space to automotive yet some stores force the mechanic to ring the register and stop working on your car. At Wal-Mart in Florida they have cashiers on the register that fixes this problem.

The dollar stores,Kohls, the lack of good veggies, automotive,meds, product selection are all taking a piece of Wal-Marts customer base.

I liked the roll backs but go back to "low everyday prices" 

Mar 22, 2011 6:28AM
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The only way Wal-Mart will get there consumers back is to stop outsourcing to foreign countries such as china.  If I wanted to poison my children I'l  leave the doors to the household cleaners open.  Every time I HAVE TO shop at Wal-Mart, because they've closed down quality stores in my area with there cheep crap, I leave empty handed anyway because they have no selection or dont carry what the average consumer needs.   I say down with Wal-Mart and let the small buisiness have a chance!!!!!!

Mar 23, 2011 8:29PM
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They should stall and if nothing else, go out of business. They are called "the Chinese Warehouse" for a reason. Why should we buy CRAP from a store that makes it millions that sell products from a country that someday could overrun the US, WE NEED TO START BUYING U.S. MADE GOODS and stop supporting these foreign companies.  Their products are inferior which makes their longevity short lived,.  Also, any company that leaves the U.S. should have it's products banned from being imported to the U.S.
Mar 26, 2011 8:43AM
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I too use to work for "Wally World".  I left because of how they treat employees.  There is no way a single person can live on their pay rate, and the try to afford their 'benefits'.  If you can afford paying the $3000-5000 deductable first, then getting medical (doesn't include prescriptions in the deductable) at less than $9/hr,, and still meet your living expenses you are definitely better at survivng than I am.  I had less than $100 a month for food and gas to get to work each month.  Then there was how I was treated.  And nothing can be done at a store level to help the customer complaints.  That's why you're told to call the 800 number.  And I don't think that helps either.  Many many times I was told 'I know the prices are lower here because of your low pay, but I can't afford anywhere else.  And as soon as I can I'm leaving Walmart forever' by customers.  I even have had people say to me "my sympathy to you for working at Walmart".  Is that what Sam Walmart wanted the average person to feel about his company?  Or that his family is rolling in bucks while most of the employees can't feed themselves or children?  Cant afford to go to the doctor?  I may not be better financially, but medically I'm definitely better not working there, even my doctor has said she has never seen me looking and being so well since I left them.

Mar 26, 2011 6:34AM
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Why would upper to middle wage earners be interested in shopping at Walmart stores? "Super" stores are not better they are bigger. Consumers who dislike crowded parking lots, crowded shopping, excessive walking and dealing with security check points don't shop at Walmart. And seniors (approaching over a quarter of the U.S. population) many of whom either don't desire or can't manage walking those extra steps don't shop Walmart. Walmart invested heavily in the super store and unfortunately will fail big. They have a limited appeal. If Target matches Walmart's aggressive approach to building super centers it too will fail big.
Mar 24, 2011 11:43PM
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Wal-Mart's time has come.Just like sears,montgomery-ward,K-mart,etc

They are all about GREEEEEEED .They are China's outlet store .I would never buy their tainted sea food and old repackaged meats if they was .10 cents a pound.

You know you are getting close to a Wal-Mart plastic bags in the trees,bushes ,near by lots.

If Sam Walton came back for a look ,he would be shocked.

Did I mention I would love to see them self destruct.

Mar 26, 2011 11:27AM
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1. Wal mart has done away with their layaway dept.  BAD move all around.  People relied on that especially for their school clothing and CHRISTMAS items.  There are other LARGE stores that still offer layaway.  Toys R Us, K-Mart and a few others....

2.  The clothing is poorly made. Materials are thin and almost see through.  Is this the image we want for ourselves and our young children ?  To look like TRAMPS ??

3. Concord, NC.  Wal Mart.  I have used their site to store option for 3 baby items I could not find anywhere.  They came to the store and I went to pick them up. It took over 10 minutes to find an associate to get the package. Then...  She did not know how to ring out the sale.(  Keep in mind that the items are pre paid on line. ) She called over another employee...who knew nothing...  and a third....who knew the same !   FINALLY , 30 minutes later,  The final employee, a manager,  happened to walk by and checked me out !!! 

Mar 25, 2011 12:51AM
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Customer Service goes a long way to improve Wal-Mart.  What I have seen in my Philadelphia area Wal-Mart on most days is under staffing at the cash registers.  I have seen days where there were three cash registers open with twenty people or more standing in each line.  I often wondered if management let six or seven employees go to lunch all at once.  Then what happens is the under paid employees on duty try their best to work as slow as they can.   This is not employees fault, it is managements fault.  Teach customer service often and maybe i wouldn't mind waiting in long lines until the rest of the staff gets back from lunch.   

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