With little to celebrate during the economic downturn, U.S. independent retailers received a brief moment of happiness when big box store, Walmart, fell victim to the recession along with the rest of Main Street USA. Reported in Independent Retailer Magazine’s June 2011 issue, Walmart decided to renovate, believing that low prices and a clean appearance would work in its favor as it attempted, ‘to appeal to a more well heeled shopper,’ during the recession. Unfortunately, Walmart’s efforts were unsuccessful, encountering one of the longest slides in domestic same store sales in its retail history. The Wall Street Journal confirms, saying, “Walmart’s U.S. business, which accounts for 62 percent of its $419 billion in annual revenue, has reported declining sales at stores open at least a year for two consecutive years.” Walmart’s current fixes to the continual plunge in sales are bold, and to some retailers, brash, such as its idea for an express store.
Initial Recovery Solutions
Looking to solve its decline in sales, Walmart’s new in-store marketing strategy incorporates a new remodeling plan, taking a more cluttered approach. Sales aren’t necessarily a result of customers’ wants or needs, but a lot of times about perception. As Ben DiSanti, senior VP of planning and perspectives for TPN, tells The Seattle Times, “Messiness, or pallets in the middle of an aisle, is also a cue for value.” A lesson learned by Walmart, fewer items represent expensive prices, while more items represent discount prices.
Another solution implemented for investor reassurance is Walmart’s $15 billion share buyback plan. Shareholders involved in the program are no longer burdened by dropping stock price, but those holding on to their stock are watching as the Walton Family’s control increases. As the Bloomberg report states in a recent article, “Repurchases have boosted the founding Walton family’s ownership to about 48 percent as of March from 38 percent in March 2003. It’s estimated the family may gain a majority of the shares by the end of next year.”
Independent Retailers Not Sold on Walmart’s Recent Solution
As Walmart is running out of locations for its big shopping centers, and running out of ideas to boost its declining revenue, the company is looking to roll out a nationwide implementation of smaller stores. For those dollar stores and other indie retailers that have gained new business from Walmart’s recent struggle, the 350 Walmart express convenience stores are a threat. These 15,000 square-foot stores will allow the company to enter urban markets as well as some rural towns. For those discount stores thriving post-recession with added brand name products and competitive pricing, Walmart threatens a warring front in customer sales.
To read more on Walmart’s express store initiative, click HERE.