The Power of Retail

All is not well in Wal-Mart. It has been reported that senior executives are concerned that the company’s core strength of low prices is working against them. The company has been trying to create a more upscale version of itself and has been struggling to find the right niche. The report further states that due to this, the company “is not seen as a smart choice” for several categories such as clothing, home decor, electronics, prescriptions and groceries.

This confidential report has been made by the company’s advertising agency GSD&M Advertising which is a division of Omnicom, who interviewed its consumers. The report’s most telling comment is that customer perceive low prices to be low quality, even for branded products such as high-definition TVs. It’s rival Target has reinvented itself over the past few years is seen as new and improved, while Wal-Mart is considered as ‘old and outdated’ by consumers.

Wal-Mart denied the findings of the report and said it was outdated, as sales in categories such as pharmacy, electronics and grocery have been very strong. It will be interesting to see how this pans out in the coming year. Wal-Mart has created such a niche for itself for low prices and only low prices, that customers have nothing else to value it for.

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