Wal-Mart Returns to “Low Price” Core Message

Wal-Mart’s Holiday Strategy Proved a Timely One [New York Times]

Twelve months ago, long before fears of a recession loomed, senior executives at Wal-Mart Stores hatched a plan to “disrupt the marketplace” during the 2007 holiday season, said Eduardo Castro-Wright, the chief executive of the company’s United States division.

The chain was well known for one-upping its rivals with aggressive tactics like opening stores an hour early on the day after Thanksgiving, known as Black Friday. But executives wanted to try something even bolder: several early-morning product discounts throughout November and December that mimicked Black Friday.

Nobody had ever tried it before, and it risked alienating shoppers, but Mr. Castro-Wright signed off on it, arguing that it would attract shoppers who “don’t want to deal with the hassle of Black Friday, but are more than willing to get a high-definition DVR for the right price,” he recalled in an interview.

Wal-Mart’s timing proved impeccable, as thousands of Christmas shoppers, worried about their pocketbooks amid a housing downturn and a weakening economy, flooded the chain’s stores looking for bargains.

In an interview Thursday, Mr. Castro-Wright said Wal-Mart’s strong performance over the holiday season — capped by a 2.7 percent increase in same-store sales in December, including Sam’s Club stores, in a month when its rivals’ sales plunged — was a result of painstaking planning. That planning recognized, with unusual prescience, that consumers would be focused on value this season.

After a period of experimentation with sleeker fashion and upscale merchandise, like skinny jeans, Wal-Mart in 2007 returned with a vengeance to the strategy that built it into the world’s largest retailer: low prices.

Nobody at the chain predicted the deep economic unease that had settled in by the start of the holiday season. But once consumers started pulling back, Wal-Mart was poised to benefit more than any other big chain.

Competitors like Target scrambled to adapt, but Target’s reputation for good design did not prove as effective as Wal-Mart’s renewed emphasis on price. Target’s December sales fell 5 percent at stores open at least a year, giving Wal-Mart a resounding victory over its archrival.

“Wal-Mart was perfectly suited for this economy,” said Bill Dreher, an analyst at Deutsche Bank Securities.

From the beginning of November until Christmas Eve, Wal-Mart hammered home the message of bargains through aggressive price cuts and advertising, which carried the new slogan, “Save Money. Live Better.”

In one holiday TV commercial, the question, “What will you do with your savings?” from Wal-Mart was answered by showing a grinning boy riding a bicycle with a big red gift bow atop the handlebars. Mr. Castro-Wright said, “We made it clear that, without any doubt, we are the price leader across the store.”

A digital video recorder, one of Wal-Mart’s top sellers, was priced at $99 during one promotion. “It sold out in minutes,” Mr. Castro-Wright said. A novel display called the Baking Center paired baking supplies like flour and oil with cookware like muffin trays and whisks, lifting sales of every category it encompassed.

Wal-Mart said it recorded its strongest sales in the grocery, pharmacy and electronics departments. On big shopping days, like Black Friday, the chain opened most, if not all, of its cash registers this season, scoring high points with shoppers in consumer surveys.

Wal-Mart did not succeed in every department. Clothing and housewares sales remained lackluster, Mr. Castro-Wright acknowledged.

Still, he said, he is pleased with Wal-Mart’s performance. “Things you have worked on sometimes play out as you intended,” he said.

Posted by Alex Goldschmidt on Friday, January 11, 2008

COMMENTS

Wal Mart is a crooked business.  They force their employees to go on Welfare and or Social Security for their healthcare because they aren’t being paid enough.  And mosst of the products are from China, these products are produced by workers in China who work in steatshop conditions and a not paid what theydeserve.  And the employees aren’t paid enough because the higher-ups pocket most of the profits instead of paying for better healthcare fore employees, and they out and out lie in their commercials, look closely when at a Wal Mart, do the employees look really happy?  I know someone who was fired from working at our Wal Mart because she has disabilities, and I know a lot the just quit.
I will try to not shop there because I don’t want to support their abuses and unscrupulous behavior just to make money.

Stephanie in Western PA
Saturday, January 12 at 12:54 PM

Stephanie: Way to go!!If we’re not part of the solution,we’re part of the problem.

ddrb in
Saturday, January 12 at 03:14 PM

“Wal Mart is a crooked business.  They force their employees to go on Welfare and or Social Security for their healthcare because they aren’t being paid enough”

They have never forced one employee to do this. The workers are being paid for the work they do; no more no less. It’s not a welfare agency, after all. It is not Wal-Mart’s fault that the vast majority of these people have poor skills or make bad life choices.

economic in e.g
Sunday, January 13 at 08:41 AM

RE: “They have never forced one employee to do this.”

That’s what people said about child labor laws, the 40 hour work week, and minimum wage. Wal-Mart needs to raise their standards, or the government will do it for them.

Big Target Tim in Indianapolis, IN
Sunday, January 13 at 09:49 AM

Big Target Tim: Tim, I wish I had your faith in our government doing the “right thing” when it comes to enforcing labor standards. I do not see evidence of this,but see evidence to the contrary...What do you think all that W/M lobbying money is being spent on??  Who would benefit most from NOT raising minimum wage levels? Who would benefit greatly from not having higher emissions standards for mobile sources? Who would greatly benefit from not having trade tariffs on imported goods? Who benefits from lax border control -especially now with WalMart Banc de Mexico??I’m certain there are many others that can be added.

ddrb in
Sunday, January 13 at 12:24 PM

Tim

It was the government that passed the laws that you spoke of, but it was the unions that “forced” our government to do it. The fact is without unions and the workers standing together we will be back to the horrible working conditions of the past.

That’s why it is so important for workers to for unions and have a voice in their workplace. Without them; what we had is what we’ll have!

Big D in
Sunday, January 13 at 02:41 PM

Sorry that should be “form unions”

Big D in
Sunday, January 13 at 02:43 PM

“Who would benefit most from NOT raising minimum wage levels? “, DDRB asked

Very low wage earners benefit. Most of these are people in the jobs temporarily, such as students. When the govenrment increases minimum wage, it encourages companies to fire these employees and do without… rather than grossly overpay them (as if the company were a welfare agency).

The minimum wages makes no sense. It is an imaginary value that has nothing to do with what anything is worth. Banning child labor makes sense. Forcing companies to give away massive amounts of unearned money (as the min wage does) makes no sense.

economic in e.g
Sunday, January 13 at 09:48 PM

Big D,

“but it was the unions that “forced” our government to do it.”

If this is true, that the unions ‘forced’ government to do these things, why don’t they just FORCE them to do what your side proposes, ie: living wage and ‘forced’ union representation?  Fact is, the union ‘lobbyists’, lobbied the then Democrat controlled congress to get these laws passed!!  Remember those ‘evil’ lobbyists, that are being talked about lately?  Guess if a lobbyist is ‘against’ what you believe, they are ‘evil’, but, if they are ‘for’ what you believe, then, they are ‘good’, right?

RDS in
Monday, January 14 at 12:13 AM

This article is not even a negative one. Wal-Mart has made some pretty savvy decisions, putting things on sale earlier and whatnot. It’s certainly not a pleasant place to shop, and but it has made some environmental improvements and some employee improvements. I’m still trying to figure out exactly why Wal-Mart is so much worse than Target or anyone else that pays low wages and sells crap from China and other countries where such human rights violations occur. I still shop there, bring in my cloth bag and buy my CFL’s, biodegradable soaps, and insulated mugs (most people at my work use the free disposable paper cups for coffee). Seriously. Everyone says it’s so bad, but I’m still looking for a reason it’s so much worse than the other places. Not a model corporation, to be sure, but I’m thinking it’s also a bit of a scapegoat. And as a dirt-poor student who spends the extra money to get organic bikes to work when the weather permits (which is most of the time), I’m hoping that Scott Lee’s efforts are as substantive as they appear to be, and not just another case of greenwashing by Wal-Mart’s PR team.

d.h. in tucson, az
Monday, January 14 at 02:08 AM

no one hisses and moans about the horrible pay and benefits the other retailers and fast food places pay their workers.how about all the people on welfare and public assistance at these places?funny no one ever says shit about that and has no gripe with that.

matthew vantress in gresham oregon
Monday, January 14 at 05:03 AM

“m still trying to figure out exactly why Wal-Mart is so much worse than Target or anyone else that pays low wages and sells crap from China and other countries where such human rights violations occur”

Yep, you get it d.h.!!

mary in
Monday, January 14 at 07:07 AM

...why Wal-Mart is so much worse...?

Wal-Mart is the biggest! (bigger, in fact, than all their competition combined)

Many of the corrosive business practices they ‘all’ do were instituted by Wal-Mart. Wal-Mart may not have invented the race to the bottom but they are leading the pack to Hell.

Ken V in Texas
Monday, January 14 at 01:50 PM

d.h.,

“Wal-Mart is the biggest!” ~ Ken V.

This seems to be common practice, whenever a company gets to be the ‘biggest’, the ‘gunslingers’ go after it, they hate success!!  Look at Microsoft and A.T.&T;. and how they jumped on them, when they became the ‘biggest’!!  Now, it’s Google’s turn, they are going after them!!  Soon, as Apple turns things completely around and grows to be bigger than Microsoft, you will see the ‘losers’, jumping on them too!! 

80% of all businesses in America are ‘small’ businesses and these people would like to make it 100%, they are anti success and anti growth, not just anti Wal-Mart!!  Does the term ‘class envy’ ring a bell?

RDS in
Tuesday, January 15 at 01:14 AM

I can’t speak for “they” but as for me, I love Microsoft and Google! (Ma Bell is another story.)

Does the term ‘class envy’ ring a bell?

It’s hard not to envy a man (H. Lee Scott) who makes in excess of $10,000 an hour especially when you know he’s not worth it.

Ken V in Texas
Tuesday, January 15 at 03:59 AM

how about the bloated salaries of ceos at costco,target,kohls,k-mart and etc ken at places you shop at regularly?

matthew vantress in gresham oregon
Tuesday, January 15 at 05:49 AM

“It’s hard not to envy a man (H. Lee Scott) who makes in excess of $10,000 an hour especially when you know he’s not worth it. “ - ken

It’s not my business. I’m not paying him. I suspect he’s worth it. Wal-Mart does not like to blow money, so they tend to pay workers for the real worth of their pay at all levels.

As for the “race to the bottom”, it’s great. Who wants to waste money on overprice goods?

economic in
Tuesday, January 15 at 06:31 AM

“That’s what people said about child labor laws, the 40 hour work week, and minimum wage. Wal-Mart needs to raise their standards, or the government will do it for them. “ - Big Target Tim.

Child labor laws are different: Children are not legal consent age. The 40 hour work week and min wage make no sense and are forced on adults who can make their own life choices: why prevent people from working longer hours if they want, and why force companies to fire those who work at low-wage jobs? Abolish both.

economic in e.g
Tuesday, January 15 at 06:35 AM

I suspect he’s worth it.

Your world-view is suspect.

Ken V in Texas
Tuesday, January 15 at 10:01 AM

“or the government will do it for them. “ - Big Target Tim.

Just like the min wage and 40hr work week.  This is the government stepping across the line.

Big T in Rogers
Tuesday, January 15 at 11:16 AM

Big T,

“"or the government will do it for them. “ - Big Target Tim.

People tend to overlook what Wal-Mart raising their wages and benefits, would do to people on ‘fixed’ incomes and ‘small business’!!  Higher wages means, higher prices, which hurts people on fixed incomes and Higher wages and benefits put pressure on small business, to do the same, to compete for employees, which cuts into their profits and could mean the difference between surviving or failure!!

RDS in
Wednesday, January 16 at 12:58 AM

Higher wages and benefits would mean lower profits. The excuse making of causality to higher prices avoids the reality of what has been happening in this economic ecology of WalMart corporate greed and the Walton billionaires that gained from it at the expense of labor. This is the propaganda effort used by the Bentonville ‘war room’ to avoid notice of all the loot taken by those who never worked for it.

It is not unusual to find here the ramblings of the ‘righteousness of selfishness’ Ayn Rand worship imbeciles that cannot and will not recognize the need for labor and the just ‘living wage’ requirements to sustain them. They are expendable and/or can be cheated and are not really part of the tunnel vision mandates of the ‘love of money’ psychopaths and their atheistic moralism that can never have room for reality apart from perceived profits.

WalMart- We are the American Judas of the retail business. We are a poverty engine at the expense of labor, the Walton billionaires tell the real story of prices and profits.

SanDiegoView in
Wednesday, January 16 at 03:30 AM

SDV,

Instead of spouting your usual B.S., answer the question:  How would your ‘living wage’ concept affect people living on ‘fixed incomes’, the homeless and the unemployed?

RDS in
Wednesday, January 16 at 12:28 PM

SDV: In researching “Living Wage"on Wikipedia, I was astonished to learn the 40 hour work week,minimum wages,abolishment of child labor were greatly influenced because of a papal encyclical in 1891 by Pope Leo.The title is Rerum Novarium,and was written as an official outcry against” laissez faire” capitalists and exploiters of human labor. This is well worth a trip to Wikipedia,for so much is so current,yet written well over 100 years ago, and reflects much of many of the points you make so eloquently.

ddrb in
Friday, January 18 at 04:46 PM

ddrb- This is not uncommon dimensional exposure for human exploitation and some kind of conscience willing to stand up for the impoveished, exploited and at times enslaved. A pastor I know recently did a book (Captured by Grace) on the life of John Newton a slave trading sleazebag who received the grace of God through the gift of Jesus Christ and went on to write the lyrics to “Amazing Grace”.
The voice of Martin Luther King Jr. a Baptist preacher stills rings to the soul of this nation about injustice and exploitation. Most nobody remembers why he was in Memphis ( support of striking workers ) where he was assassinated April 4th, 1968. The ‘love of money’ psychopath corporate and business attitude of WalMart wants to keep it that way. Another cultural Bentonville anti-union shish-kebab anyone?

SanDiegoView in
Monday, January 21 at 07:48 AM

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