Amid Sales Slump, Walmart Returns to Low-Price Roots

But will move stop 7 straight quarters of sales declines?

   
Amid Sales Slump, Walmart Returns to Low-Price Roots

The new Walmart (NYSE: WMT)  is a lot like the old Walmart. The big box retailer is launching a national TV ad campaign this week to highlight it’s focus on low prices, drive home the Walmart price match policy and bring back customers who have jumped ship.

But the question consumers should ask themselves is whether a promise of low prices is all that matters. If it is, Walmart could fight its way back. And if not, it could be another rough year for the king of retail.

The ad campaign bears the slogan “Low Prices. Every Day. On Everything.” The move is a subtle rebranding of the old “Everyday Low Prices” tagline — a phrase that, coupled with a bouncy yellow smiley face that rolled back prices, made up TV commercials that were the hallmark of Walmart’s heyday. But as the Great Recession slammed consumers, retailers of all shapes and sizes raced to the bottom with low prices to lure reluctant shoppers.

And without the leverage of ultra-low prices, Walmart has become just another store. Revenue flatlined in fiscal 2010 – up less than 1%. And though Walmart no longer releases monthly sales figures, the pain has been evident in quarterly numbers. For Q4, Walmart saw a -1.1% decline in same store sales to mark the seventh straight quarterly decline.

Meanwhile, smaller stores with smaller prices — Family Dollar (NYSE: FDO), Dollar Tree (NASDAQ: DLTR) and Dollar General (NYSE: DG) to name a few — began eating Walmart’s lunch.

Walmart has tried several tricks recently to turn things around. Most recently, there was news in September that Walmart was focusing on product selection and a flashy announcement in January with Michelle Obama that promised Walmart would focus on healthy food options. Obviously, if you look at the latest numbers, neither of those moves appear to have moved the needle yet.

So will a return to its roots help Walmart bring back customers who no longer trust it has the lowest prices and have moved on? Maybe. But Walmart has an uphill battle with many consumers regardless of how low its prices go. Recent hearings on broad-based sexual discrimination at Walmart has left a bad taste in the mouth of many shoppers. Then there’s the old concerns over the sprawling suburban blight and tangled traffic patterns some have come to associate with Walmart Supercenters.

Then again, in these cash-strapped times a lot of people are rethinking their household budgets. The timing may be perfect for Walmart to make a comeback.

Jeff Reeves is editor of InvestorPlace.com. As of this writing, he did not own a position in any of the stocks or funds named here. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.


Article printed from InvestorPlace Media, http://investorplace.com/2011/04/walmart-nyse-wmt-low-price-sale/.

©2014 InvestorPlace Media, LLC

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