Walmart Gets Laser-Focused on Lowest Prices Again Walmart (WMT) has put out an APB for shoppers: "We have the lowest prices all the time. Period."

This week, the nation's biggest retailer detailed its $2 billion plan to "reinvest" in low prices, expressly in areas such as food and consumables, to drive more traffic to its 3,868 U.S. stores.

During a presentation at a CIBC World Markets conference, Duncan Mac Naughton, executive vice president and chief merchandising officer, also outlined Walmart's other key priorities: to add more nutritious and high-end food to stores, such as USDA Choice beef; rework its poorly performing clothing business; and enhance its appeal to ethnic minorities with more merchandise tailored to their tastes.

Restoring its Bargain Cred

Walmart's move to regain its status as the nation's bargain emporium comes in response to the rise of dollar stores, which won over large swathes of new shoppers during the recession. It's also a course correction aimed at remedying its own missteps.

Over the past three years, the retailer unleashed a bevy of promotions that muddled its original everyday-low-price message, Mac Naughton said. That led customers to begin to question whether they could still expect Walmart to have the lowest prices, he said. The promotions "fractured some of that trust," said Mac Naughton. "That's why we're so focused on consistent pricing now."

Making sure the price is right is crucial as the U.S. consumer "is still facing some significant headwinds," Mac Naughton said. Although the recession has been officially over for a few years now, 23 million Americans are still officially unemployed, gas prices are high and rising, and economic growth is anemic, he noted.

Making Sure the Price is Right

Walmart has turned to Nielsen, the ratings company, to provide granular data on how other U.S. retailers price their goods to make sure its own merchandise is well priced. And the retailer is getting its bargain-spot message out to shoppers with new TV spots that trump its everyday low prices and price-matching policies.

In food, for example, the company will now match competitors' lowest price on beef.

And, as part of its Great For You campaign, Walmart is partnering with suppliers to work more nutritious, affordable food into its product mix. "We're taking out the sugars, the trans fats," Mac Naughton said. "You shouldn't have to be affluent to afford healthier food."

Walmart is also working to keep costs low on health and wellness products such as over-the-counter medications and pharmacy drugs in a bid to "embrace some of the people in the U.S. who have lost some pharmacy benefits," he said.

The renewed focus on low prices is expected to erode profit margins somewhat, but that's OK with Walmart, Mac Naughton said. The chain intends to offset that by boosting productivity.

Back to Clothing Basics, Appealing to Diverse Shoppers

While pricing credibility is a new problem for Walmart, it's plagued department stores for years. To that end, J.C. Penney (JCP) and other retailers like regional chain Stein Mart are now addressing the issue by eliminating sales events and switching to everyday low price models.

Beyond its renewed pricing push, Walmart has been struggling to fix its lackluster clothing department. A few years ago, the chains apparel strategy included a broad move toward more upscale fashions. That strategy failed. Today, it's "focused on two things: quality and basics," Mac Naughton said.

Now, about 50% of clothing sales are expected to come from basic items like underwear, socks and jeans. "It's that simple: That's what the customer wants [from us]," he said. Most of the remaining mix (40%) will be fashion basics such as polo shirts -- "nothing too crazy," said Mac Naughton. Just 10% will be devoted to trendy fashion items.

And while Walmart has always prided itself on crafting what it calls stores of the community, this is the year the chain is fine-tuning its food and non-food merchandise to more effectively appeal to Hispanics, Asians and African Americans, in part by leveraging Nielsen data, Mac Naughton said.

These shoppers represent a "huge opportunity," he said.

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oldtingrl

Walmart is definitely not the cheapest store in my area. Their meat is VERY expensive, and their rollback prices are a joke. I have bought items for a certain price for months, then to find them jump in price and have a rollback tag announcing the change. I always thought rollback was defined as lower prices, not higher. :( They've lost 90% of my business to HEB, Walgreens, and Dollar General. It is very doubtful I will fall into their supercenter trap again.

April 25 2012 at 4:53 PM Report abuse rate up rate down Reply
Greg

Say what you want but America does shop at Walmart. I wonder when they will start matching internet prices in the store. If that happens ..lookout Amazon. However, if they focus on the things mentioned in the article it will be bad news for major apparel stores and food store chains.

I think they should focus on the internet market as well as their retail stores. Their problem will be that you can not be everything to everybody all the time. I feel that the strong niche marketers will be the ones who flourish and the deal of the day websites like Cheapometer.com.

April 03 2012 at 10:31 PM Report abuse rate up rate down Reply
Tom

Walmart cant' touch Aldi's food prices. Not even close. End of discussion.

April 02 2012 at 5:59 AM Report abuse +1 rate up rate down Reply
xu

Walmart no longer the lowest price in US. Normally Target and sometimes CVS have lower price than Walmart. I believe those senior managers saw very few people shop there. So they tried to make fake statement that they are going to lower the price.

April 01 2012 at 12:51 AM Report abuse rate up rate down Reply
SMITH

Yeah right. Lowest prices ever???? I just went to wal-mart a few days back and noticed their chicken had went up 10% per pound. It was the same through out the store. Wash rags, underwear, shampoo, dog food, you name it had went up between 10-200%. I'm not sure who is pushing this propaganda about "lowest prices ever" but they must be getting a huge kick back from wal-mart. Also whoever tracks the inflation numbers in this country are DEAD WRONG. Inflation where I live at runs between 10-100% a year on basic items like toilet paper, food, clothing, and other necessities.

March 31 2012 at 7:22 PM Report abuse rate up rate down Reply
tmc8080

Walmart tends to get caught up in it's price maching game with Target and they are NOT a good sense of the overall market. Target's become very consumer savvy preying on consumer sentiment about how much an item "SHOULD" cost.. and when you have that going on it promotes price inflation and padding the bottom line. One example: 13 oz of Dandruff Shampoo $1 (at a dollar store) vs $3.99 for 25.7oz of the "STORE BRAND"-- want a brand name..that'll set you back about $3-5 MORE! So 2 of the dollar store items are CHEAPER than the walmart so-called low price! If you can mange to get it at a flea market instead of a dollar store, you typically save sales tax too!

March 31 2012 at 12:27 PM Report abuse rate up rate down Reply
bdgrizcp

One thing Walmart in south FL needs to do is hire more cashiers. It's the biggest problem I have with that company. Selection and prices are generally better than Target--but not by much. Target has better atmosphere, fewer hyperactive screaming kids and no PA system. And they smell better.

March 30 2012 at 7:21 AM Report abuse rate up rate down Reply
bdgrizcp

One thing Walmart in south FL needs to do is hire more cashiers. It's the biggest problem I have with that company. Selection and prices are generally better than Target--but not by much. Target has better atmosphere, fewer hyperactive screaming kids and no PA system. And they smell better.

March 30 2012 at 7:21 AM Report abuse rate up rate down Reply
jmtlfix

Oh boy, they will be extorting their suppliers again. They have driven many into bankruptcy, forced many to manufacturer goods OUTSIDE of the Us (China) to bring costs down, or they foece manufacturers to cheapen the quality of thier products to meet the lower cost objectives. Not only that, Walmart gives the perception they are a "house" of values when really only a few hundred items are priced low (food priced lower, general merchandise priced with competition generally. This is a pure capitalist model....the kind that brought about much gevernment regulation tp control capitalistic exploitation. Job creation...yeah a lot of low paying jobs you can't make a living with (unless you happen to be in upper management). Not too mention they have put many mom and pop business out. Eliminate the competion and then you can price anything they way you want not you have a captive consumer. Boo to Walmart

March 30 2012 at 7:12 AM Report abuse +1 rate up rate down Reply
SGT RIKER

When the government says there isjobs, walmarts the only jobs not going south and east thats what your polticians wants you to get a job at when both parties send our jobs overseas, they expect you to pay your bills off 7 to 8 dollars an hour while the walmart family basq in there billions rapping its employees and customers.

March 30 2012 at 1:27 AM Report abuse rate up rate down Reply