• Ad Age, Tuesday, March 9, 2010 10:42 AM

Wal-Mart is increasingly caught in the middle between higher-end retailers and value players, writes Jack Neff, and has recently lost share to both. Some observers feel that some recent strategies -- such as a sharper focus on margin expansion, culling assortments and promotional display space, and playing marketers off against one another -- are exacerbating the threat to its core positioning as a low-price leader.

Stores that are part of the "Project Impact" remodeling effort have been a big success, according to Strategic Resource Group principal Burt Flickinger, "but the consumer has figured out that Wal-Mart's prices are too high in key categories."

In a sidebar, Neff reports that some suppliers believe Wal-Mart's efforts to cull assortments may be wrongheaded in that it removes regional brands from the shelves, putting it at a disadvantage to local supermarkets. Rivals such as Target and Kroger, he writes, smell blood in the water.

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