By GARY MCWILLIAMS
The Wall Street Journal
The Wal-Mart Era, the retailer's time of overwhelming business and social influence in America, is drawing to a close.
Wal-Mart's influence over the retail universe is slipping. In fact, the industry's titan is scrambling to keep up with swifter rivals that are redefining the business all around it. It can still disrupt prices, as it did last year by cutting some generic prescriptions to $4. But success is no longer guaranteed.
Rival retailers lured Americans away from Wal-Mart's low-price promise by offering greater convenience, more selection, higher quality, or better service. Amid the country's growing affluence, Wal-Mart has struggled to overhaul its down-market, politically incorrect image while other discounters pitched themselves as more upscale and more palatable alternatives. The Internet has changed shoppers' preferences and eroded the commanding influence Wal-Mart had over its suppliers.
As a result, American shoppers are increasingly looking for qualities that Wal-Mart has trouble providing. ''For the first time in a long time, quality has a chance to gain on price,'' says Lee Peterson, a vice president at Dublin, Ohio-based brand consulting firm WD Partners Inc.
Wal-Mart declined to make an executive available for an interview and declined to respond to written questions.
For 10 years through 2005, Wal-Mart's sales gains at stores open at least a year averaged 5.2 percent. So far this year, its comparable-store sales, a measure of market share, is up just 1.3 percent. The pricing gap between Wal-Mart and rivals has narrowed, and more customers are now choosing convenience over wading through a supercenter.
That compares with comparable-store gains of 4.6 percent at Target, which markets itself as a trend-setting discounter, and 6 percent at membership-club rival Costco Wholesale Corp., which peddles $500 Bordeaux wines and $4,000 Cartier watches. While Wal-Mart has been portrayed as a ruthless employer, Costco has been praised for providing some of the best employee benefits in retail.
As Wal-Mart's influence erodes, so does its allure to manufacturers. Burt P. Flickinger III, managing director of retail consulting firm Strategy Resource Group, says Wal-Mart now takes a back seat to regional grocery and national drug chains when it comes to striking deals. He says some manufacturers now sell their wares faster at other retailers. ''Four of the top 10 consumer-products companies say they can move merchandise faster with Walgreen and CVS,'' says Mr. Flickinger, who came up with the estimate from his talks with consumer-products firms. Such retailers have been rewarded with lower costs and better sales gains.
http://money.aol.com/news/articles/_a/wal-mart-era-wanes-amid-big-shifts-in/n20071003105409990014
The Wall Street Journal
The Wal-Mart Era, the retailer's time of overwhelming business and social influence in America, is drawing to a close.
Wal-Mart's influence over the retail universe is slipping. In fact, the industry's titan is scrambling to keep up with swifter rivals that are redefining the business all around it. It can still disrupt prices, as it did last year by cutting some generic prescriptions to $4. But success is no longer guaranteed.
Rival retailers lured Americans away from Wal-Mart's low-price promise by offering greater convenience, more selection, higher quality, or better service. Amid the country's growing affluence, Wal-Mart has struggled to overhaul its down-market, politically incorrect image while other discounters pitched themselves as more upscale and more palatable alternatives. The Internet has changed shoppers' preferences and eroded the commanding influence Wal-Mart had over its suppliers.
As a result, American shoppers are increasingly looking for qualities that Wal-Mart has trouble providing. ''For the first time in a long time, quality has a chance to gain on price,'' says Lee Peterson, a vice president at Dublin, Ohio-based brand consulting firm WD Partners Inc.
Wal-Mart declined to make an executive available for an interview and declined to respond to written questions.
For 10 years through 2005, Wal-Mart's sales gains at stores open at least a year averaged 5.2 percent. So far this year, its comparable-store sales, a measure of market share, is up just 1.3 percent. The pricing gap between Wal-Mart and rivals has narrowed, and more customers are now choosing convenience over wading through a supercenter.
That compares with comparable-store gains of 4.6 percent at Target, which markets itself as a trend-setting discounter, and 6 percent at membership-club rival Costco Wholesale Corp., which peddles $500 Bordeaux wines and $4,000 Cartier watches. While Wal-Mart has been portrayed as a ruthless employer, Costco has been praised for providing some of the best employee benefits in retail.
As Wal-Mart's influence erodes, so does its allure to manufacturers. Burt P. Flickinger III, managing director of retail consulting firm Strategy Resource Group, says Wal-Mart now takes a back seat to regional grocery and national drug chains when it comes to striking deals. He says some manufacturers now sell their wares faster at other retailers. ''Four of the top 10 consumer-products companies say they can move merchandise faster with Walgreen and CVS,'' says Mr. Flickinger, who came up with the estimate from his talks with consumer-products firms. Such retailers have been rewarded with lower costs and better sales gains.
http://money.aol.com/news/articles/_a/wal-mart-era-wanes-amid-big-shifts-in/n20071003105409990014
