With Sales Up, Walmart Woos The Struggling

Walmart

While Wal-Mart Stores says its first-quarter sales and earnings both hit record levels, it is worried about its struggling customer base, and the company unveiled steep price rollbacks to win them over.

The Bentonville, Ark.-based retailer says sales for the quarter climbed 6% to $99.1 billion. But comparable-store sales in the U.S. actually declined 1.4%, and it is expecting a further drop in the U.S. of 2% in the coming quarter.

Separately, the company announced another round of deep price rollbacks on 22 favorite foods and everyday items, slashing an additional 30% off these products, citing evidence that its core customer is still feeling pinched by the economy. It says its research has found that mothers across the U.S. continue to worry about finances, with 75% searching for dollar-stretching deals.

For 78%, saving money on basic items and everyday purchases is "critical." And 71% say they are putting greater personal responsibility on their spending habits. Because these latest cuts focus on pantry essentials, the company says they are "the most significant rollbacks in the company's history." Walmart estimates the reductions will save the average Walmart grocery shopper an additional $28 each week.

Walmart's results come just as BDO releases its new retail survey, which reports that doubts about the economy continue to keep retail execs awake at night -- 96% describe it as the leading risk that stores face in the coming year. The Chicago-based professional services firm, which surveyed executives at the 100 largest publicly held retail chains, says that concerns over U.S. and foreign suppliers and vendors, cited by 86%, came in a distant second.

Some 85% have concerns about competition and consolidation, while 84% are worried about credit availability and company debt. Surprisingly, only 49% are fearful about financial market turmoil, a drastic reduction from the 97% who were cited as concerned in the last survey.

"Although the economy has improved over 2009, retailers are still concerned about general economic conditions, unemployment and consumer credit," the company says in its report. "The April 2010 sales results confirmed that the consumer rebound is still a work in progress. Until consumer spending is fueled from actual income growth and not savings accounts, retailers have modest expectations for a consumer comeback."

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1 comment about "With Sales Up, Walmart Woos The Struggling ".
  1. Kevin Horne from Lairig Marketing , May 19, 2010 at 1:43 p.m.

    This is a Walmart-only probleim IMHO

    http://lairigmarketing.typepad.com/lairig_marketing/2010/05/walmart-fallmart.html