Wal-Mart reveals shifting strategies

Posted by Josette Dunn on 20th September 2010

The president and CEO of Wal-Mart US Bill Simon has detailed the retail giant’s shifting strategy, which was hinted at in its second-quarter results last month.Speaking at the Goldman Sachs Retail Conference on Wednesday (15 September), Simon said that the retailer was refocusing on its EDLP offer, as “the very aggressive Rollback campaign we had in place that was designed to drive traffic and stimulate sales” did not do what the retailer hoped it would do. “It did not drive sales or traffic,” he said.

The retailer is shifting its focus from having the lowest price on individual items to focusing on having the “lowest price on a basket of goods,” he insisted, adding that “EDLP is what our customer has come to expect from us and that is what we are going to deliver”.

The retailer is also refocusing on its supplier relationships, with Simon saying he is spending a lot of time meeting with its suppliers, saying: “We are open for business and we want to sell your product, that assortment is important to us and that new products are our engine, as well as yours.”

Describing Wal-Mart’s position around private-label and branded products, he said: “We are a house of brands. We prefer to sell national brands. They show our product better – excuse me – our value better. When the price of Oreos in my store is less than the price of Oreos in a competitor’s store, there is no doubt who the price leader is and where the basket win is. And we would prefer to show that as value.”

Wal-Mart is still seeing a “challenging” time for its consumers, Simon said, seeing customers come in at 11pm at the end of the month, waiting for their government benefits to be activated at midnight and then buy basic items like baby formula, milk, bread and eggs.

“And if you really think about it, the only reason somebody gets out in the middle of the night and buys baby formula is that they need it, and they’ve been waiting for it,” Simon insisted. “But if you are there at midnight, you are there for a reason. And we have to look at that and we have to watch that and we have a commitment to serve those customers who need that. And we are very, very focused on that.”

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