Wal-Mart’s crossover plan still works
Sales are up, as budget-minded people lured by low-priced groceries make the retailer’s supplies their one-stop shopping option. Wal-Mart’s crossover plan still works
20 years ago Wal-Mart Stores (WMT) starting the first steps in what would turn out to be a violent move into the food business grocery. It was an intended bet that the series could extend its cut-rate method beyond general merchandise. The thinking at head office in Bentonville, Ark., was that consumers would flock in to purchase food at each day low prices and then stay to buy all thing else for the household, from Hanes boxer shorts to Tide detergent.
It turned out to be an outstanding strategy. In new years, as Wal-Mart grew into the most powerful and world’s largest retailer, executives there have sometimes seemed to be avaricious for new ways to produce, such as moving into high trend apparel, a plan that failed dramatically, and sending sales into non-positive territory. But as the America economy flounders and Americans are looking for negotiates that will stretch every buck, Wal-Mart’s food passageway are thronged yet again.
That was clear in Wal-Mart’s February results, Mar. 6. Sales released at stores open at least 1 year rose 2.6 percent, mostly from enlargement in groceries. That may not hum like a lot, but 2.6 percent growth is quite an achievement today, given that lots of retailers are struggling to job any sales gains at all as customers cut back. Rival Target’s (TGT) deal for the same period, for example, grew a mere 0.5 percent. “There are a few weekly and daily purchases like groceries that consumers have to make, despite of how the financial system is performing,” says Frank Badillo, senior economist at researcher TNS Retail Forward.
Via: Businessweek.com