Wal*Mart's pricing strategy backfires

According to an article in Time magazine, Wal*Mart's most recent round of price-cutting has been a failure:

Earlier this year, the retailer tried to spark sluggish U.S. sales by lowering its prices - already bargains - even further. One analyst called it "an initiative that screams: Price! Price! Price!" These rollbacks, as they are known in Walmartspeak and in the company's advertising, were intended to overwhelm the shopper. ... Walmart expected a flood of customers to its stores, which would help lift the company's stock out of its rut and get Walmart rolling again.

Instead, cutting prices depressed sales, as shoppers took the bargains and ran. For the quarter ending July 31, Walmart's U.S. same-store sales fell 1.8%. The company's same-store sales have now fallen for five straight quarters. Of the rollback strategy, Bill Simon, the president and CEO of Walmart U.S., told investors at a September conference, "It did not do what we had hoped it would do. It did, however, drive price perception. It did not drive sales or traffic." As a result, Walmart rolled back the deeper discounts, and prices started inching upward this summer.

The article goes on to talk about how all those recent expensive renovations you had to suffer through weren't as successful as expected, either. It's an interesting look at how we, as consumers, are still able to direct the choices Wal*Mart makes, so go check it out.

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3 Responses to Wal*Mart's pricing strategy backfires

  1. Professor says:

    I work part-time for Walmart currently and it is amazing to me the choices they've been making in the company that is just driving the customers away. Their head is so far up their @ss that they can't make an intelligent decision. I know from surfing various collecting forums that people cannot find many good figures, two lines especially suffering are Star Wars vintage and Marvel Universe. Well the reason is, the SMART system Walmart uses to order. Walmart managers are gently encouraged (a.k.a. they get fatter bonuses) to not allow manual ordering in the store but rely solely on the SMART system. Well the SMART system doesn't work because their electronic inventories are always, always off so orders are never made and the shelf/peg remains empty. Additionally managers are not finalizing manual orders in order to line their pockets so the shelf/peg remains empty. This is just one example of how Walmart is ignoring the customer and driving them away.

    • Jason says:

      Based on part time ignorance. Bonuses come from a combination of sales, profit and inventory turn, not excess inventory. Yet another example of speaking on something we know nothing about.

      • monkey boy says:

        well i'll gladly defer to your infinite knowledge as a "jason" over this person who actually works at wal-mart...

        i'm not saying you aren't right, but you offer absolutely no credentials or qualifications to back up your claim.

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