After years of deteriorating same-store sales, Wal-Mart plans to curtail spending on expansion in the U.S. The spending pullback might give other grocers and convenience stores the opportunity to reverse the trend that has seen Wal-Mart eat up local market share at their expense
“It’s difficult to reverse that trend when Wal-Mart is still adding stores,” Britt Beemer, chairman of America’s Research Group, a consumer behavior marketing firm based in Charleston, S.C., told The Cincinnati Enquirer.
But Wal-Mart says it now plans to plow more money into share buybacks and spend more time and effort into bolstering its existing stores.
As competition increases, the pressure on price also is growing. Traditional grocers are countering with price drops where they can, even as they try to convince shoppers that a bigger selection and more personal service may be worth a slightly higher price. But Wal-Mart still has the clear advantage, according to many industry watchers.
With two of every five Wal-Mart customers living check-to-check, no-frills still has a great appeal, said Goldman & Sachs Co. retail investment analyst John Heinbockel, based in New York City.
“At the end of the day, the really price-driven customer goes to Wal-Mart,” Heinbockel said. “The person who cares about a lot of different things goes to a traditional supermarket.”
Those price-conscious shoppers have helped Wal-Mart maintain its position as the largest food seller in the nation, despite softening sales, the report said.
An April equity research report from Citigroup Global Markets, a New York City-based investment banking concern, found that Wal-Mart remained the No. 1 food retailer in the huge $483 billion food retail industry by a wide margin, and it’s still considered the biggest threat to established grocers.