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Wal-Mart's low price dilemma

Tuesday, February 21, 2012 - 01:53

Feb. 21 - The retail giant missed profit forecasts but won back some consumers during the holidays in a sign cut-throat pricing means part of the American population is still penny-pinching to make ends meet. Bobbi Rebell reports.

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Wal-Mart brought holiday cheer to its consumers this holiday season, but at the expense of its own bottom line. Aggressive price cuts to compete with dollar stores and other discounters got registers ringing but earnings took a hit. Candace Corlett is president of consulting firm WSL Strategic Retail- which did a study called "Where did the Wal-Mart Shopper go" - says Wal-Mart's image is confusing to customers: SOUNDBITE: CANDACE CORLETT, PRESIDENT, WSL STRATEGIC RETAIL (ENGLISH) SAYING: "Wal-Mart's reason for being was 'we stand for the lowest price every day. We don't run sales we don't use coupons.' And that ground has shifted and if half of its shoppers say 'I don't know if Wal-Mart has the lowest price' that is a problem." The recession should have been a big win for Wal-Mart, only it wasn't. Wal-Mart's store traffic declined until recently and the company saw nine consecutive quarters of sales decline at stores opened at least a year. But a turnaround plan is showing some success with sales up over the last two quarters. The company has brought back a wider variety of products- and a holiday layaway plan to lure shoppers from dollar stores and other competitors. But economic factors beyond Wal-Mart's control- like gasoline prices - are putting pressure on even loyal Wal-Mart shoppers' limited budgets. SOUNDBITE: CANDACE CORLETT, PRESIDENT, WSL STRATEGIC RETAIL (ENGLISH) SAYING: "She doesn't have as much money to spend. So she is still in Wal-Mart, she still loves her Wal-Mart, but can't buy as much. She can't put all the extra things in the cart that added up the ring. She has to keep taking things out." And for Wal-Mart that means continuing to cut prices in the coming months- hoping to convince consumers to keep coming back. Bobbi Rebell, Reuters.

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Wal-Mart's low price dilemma

Tuesday, February 21, 2012 - 01:53