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Slow Sales and Strategy Change Bring Discounts Back to Wal-Mart

File under: Shopping News, Wal-Mart

Walmart.com

Fisher-Price Power Wheels Cadillac Escalade Ride-On TruckInteresting story in the Washington Post about a strategy shift at Wal-Mart. After slow October sales (0.5% increase) and expectation of flat November sales, the company is likely to return to basics by focusing on low prices rather than variety and what could be considered innovation.

At the root of this problem is a cultural issue. The company’s core customers remain middle to lower income households, many in rural parts of the country where the super-sized Wal-Mart has always been the low-cost catchall store. With high gas prices and flat wages, lower-income households have less to spend. The company didn’t help its cause by introducing trendier items, such as its Metro7 clothing line, which failed to catch on in 900 rural “heartland” stores. Wal-Mart‘s CFO said it best: “We’re continuing to work longer-term to improve the balance between fashion and core essentials in our stores.”

So what does that mean for shoppers? Expect major discounts on brand name products in the upcoming weeks leading up to “Black Friday”. The article sites examples of price slashes such as “Dora the Explorer Talking Kitchen” being reduced from $89.94 to $65 and a “Fisher-Price Power Wheels Cadillac Escalade Ride-On Truck” dropping from $279.37 to $249. Finally, Wal-Mart is back to emphasizing its Rollback which have long been a symbol of discounted merchandise.

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November 3rd, 2006 | Permalink

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