Wal-Mart Stores Inc. (NYSE: WMT) will cut prices until it can cut no more. Or, on the other hand, cut them until it can no longer make money. Perhaps it does not matter too much in management’s eyes. It has to keep market share in a world in which it has watched same-store sales of the world’s largest retailer spin down slowly. Why not cut throughout the holiday to keep or improve share?
After already setting lower prices for the balance of the holiday, and offering free shipping to nearly everyone, Walmart further set down price points. At Walmart.com, “hundreds of rollbacks just added” screams from the middle of the page.
Walmart.com must be drawing fairly well. The site is as slow as a snail.
Offers are set into three sets of categories, without the shopper knowing why. The first of these is “clearance,” which presumably means Walmart’s inventory is high and it needs to clear these items out immediately. Then there are the “rollbacks” themselves. Walmart may not make money on these. The usual retail theory is that they bring shoppers through the metaphorical door. Once inside, customers will buy one or more items on which Walmart can make money. The third category is “best seller.” Perhaps people will buy something they think other people want.
Walmart’s stated plan for Walmart.com is that it will take more and more of the e-commerce pie. It has spent hundreds of millions of dollars on the initiative. Walmart executives claim that 4% of U.S. sales are via the Internet. Wall Street will get to know whether the retailer can improve this during a busy holiday. If not, all those “rollbacks” will not have helped the company reach its target.
Walmart will win this holiday, no matter what, in a sense. Management may need good holiday sales, but it is not desperate for them. Somewhere in the towns or neighborhoods where most Walmart stores are based, there is also a J.C. Penney Co. Inc. (NYSE: JCP) outlet, a Sears Holdings Corp. (NASDAQ: SHLD) Sears or Kmart store, and a RadioShack Corp. (NYSE: RSH) location. For these retailers, the difference between a good holiday or a bad one could determine whether the companies remain in business next year.