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Is Walmart Losing its Grip on Shoppers?

8/17/2011
The Walmart shopper's value perception has dramatically changed, according to a new research report that surveyed nearly 1,500 Walmart Shoppers. A continuing recessionary mindset coupled with lower priced competitors are driving shoppers to other retail destinations, according to WSL/Strategic Retail's How America Shops report.
 
"Walmart's losing its competitive price advantage, its raison d'etre, is unique to it; EDLP has been the essence of 'who it is' for decades," said Wendy Liebmann, CEO, WSL/Strategic Retail, in an interview with RIS News. "This is not a big box issue; it's a Walmart issue."
 
Significant findings of the report include:
  • The price king has been toppled. 86 percent of Walmart shoppers no longer believe that Walmart has the lowest prices. Every brick and mortar retailer lowered prices and shouted sales throughout the recession, while the Internet became the go-to place for shoppers in search of the lowest price. If Walmart no longer stands for everyday low price (EDLP), what does it stand for?
  • Where did the Walmart shopper go? The Walmart Shopper is finding better shopping elsewhere, including dollar stores, supermarkets and other mass merchants. "The most frequent core shoppers are still in the [Walmart] store, but they have less money to spend and so are always looking for a better deal," says Liebmann. "If Walmart can convince them that it has the best deal every day, they will hopefully not be so tempted to go elsewhere."
  • The recession is not over for Walmart shoppers. 82 percent of the retailer's shoppers say they haven't seen any improvement in their financial situation in the past year, and 70 percent don't expect their finances to get better next year. The economic downturn, credit crunch and higher gas prices, among other factors, squeezed the discretionary spending out of the wallets of Walmart shoppers.
While these findings may be troubling for the world's largest retailer, it doesn’t diminish its stronghold over the global retail market. Even though same-store sales declined in the first quarter of 2011, net sales increased 4.4 percent, and Walmart's international operations continue to grow.
 
Liebmann believes some of Walmart's recent tactical moves, such as adopting smaller formats and committing to open stores in underserved areas, point in the right direction.
 
"Smaller formats will certainly bring Walmart to underserved areas, and will help it compete more directly with dollar stores — a good thing," says Liebmann. "And smaller formats will provide less tempting, more convenient options to those shoppers who don't want to be tempted by the breadth of Walmart's big-box offer. But she questions whether or not these tactics will resolve the fundamental EDLP issue.
 
With its credibility diminishing as the low cost leader, Candace Corlett, president of WSL/Strategic Retail, suggests that consumer product companies and other manufacturers analyze their exposure and re-evaluate the way they do business with Walmart.
 
“The world's largest retailer is certainly not going to disappear, however, it will no longer dominate the U.S. retail landscape the way it once did," closes Corlett.

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