Walmart Reduces Food and Staple Prices

SHARE:

Email

Print

LinkedIn

Facebook

Twitter

April 20, 2010

Attempting to reverse a slow down in U.S. sales in recent months, Walmart cut prices on approximately 10,000 items, primarily food and staple products, “to reinforce its reputation as a discount leader,” according to a Wall Street Journal report.

Walmart declined to reveal the depth of the price cuts, but the rollbacks are evident in stores nationwide. The world’s largest retailers benefited considerably from the economic downturn when cost-conscious consumers more frequently shopped at the discounter’s stores.

However, same-store sales in the U.S. have declined recently, “while other retailers have started to see an uptick in consumers' discretionary spending. That suggests to some analysts that Wal-Mart is having trouble hanging on to middle-class shoppers,” the report said.

Meanwhile, Walmart executives attribute the recent sales decline to general food and electronics price deflation, which is starting to ease.

"We felt we needed to increase the intensity and excitement with our customer, especially the feeling that Wal-Mart has great deals," Chief Marketing Officer Stephen Quinn told the Wall Street Journal.

Quinn added that Walmart expects to expand price cuts over the next few months with supplier support. "It forces them to sharpen their pencils a little bit and see what they can do to be a part of this," he said. "Obviously they are competing with each other to get space and visibility at Wal-Mart."

The price-cutting move is being criticized by retailing experts as confusing since consumers already consider Walmart the low-price leader.

While the price reductions will likely hurt competing grocers, the target is most likely no-frills discounters such as Aldi, Save-A-Lot and dollar store who are gaining low-income and middle-income shoppers, according to the report.

SBD Views: Over the last six to nine months a big question in the industry centered on how Walmart’s attempt to increase margins at the expense of a central focus on price and item merchandising would work. The question has been answered –– when customer visits drop and market baskets decline… roll back prices! While I don’t think Walmart will reverse most of their moves to clean up stores and increase margins, it’s clear we are going to see a return to more focused price and item merchandising. It will now be interesting to see if these moves can both reverse the decline and win shoppers back who have opted for dollar stores and hard discounters. –– John Failla for Store Brands Decisions.

Read These Related Articles:

• Wal-Mart and Kroger Recall Select Store Brand Dairy Products
• Wal-Mart Downsizes and Recasts its Marketside Web Site
• Food Safety: A Store Brand Equity Investment
• Holiday Price Wars Could Make Consumers Big Winners
• Wal-Mart Offers Suppliers Financing Option

Most Read

Guest Columns

Grocery Aisle Innovation Key to Retailer and Consumer Cost Savings

Retailers are redesigning the aisle, appealing to environmentally friendly consumers and capitalizing on market trends to make their private label brands more competitive.

Source: Tetra Pak Inc.

How to Develop a Private Label Expression Aligned with Retail Brand Strategy

By creating private label as a marketing tool rather than just a price alternative, retailers gain the opportunity to tell a complete brand story while simultaneously boosting customer loyalty.

Source: CBX

Using the Store Banner to Endorse Private Label Architecture

Although the economic downturn accelerated private label growth in Europe, there was another key driver -- retailers started to brand their stores.

Source: IPLC

See All Guest Columns »

Press Releases