The Walmart Paradox

Walmart’s same-store sales were down 1.4% during its most recent quarter. So what does that mean about the state of the overall economy?

There are two theories.

Some make the argument that the economy is improving, and consumers are now “trading up.” Stronger sales at Target and other chains are used as evidence of this uptick.

Others say, though, that Walmart is a bellwether for the overall economy, and its low sales are evidence of a still-struggling consumer in the face of a unemployment rate that isn’t making a whole lot of improvement. For their part, Walmart executives say customers can’t afford to get to their stores because of high gas prices.

What is your take? Is a struggling Walmart the result of a still-struggling, or improving, economy?

4 Responses to “The Walmart Paradox”

  1. 1 gmorgan May 20, 2010 at 8:00 am

    Interesting they say it is due to high gas prices, gas is down in our area and I just heard a forecast of it dropping by 20 cents a gallon over the next couple of months.

    I think they are seeing falling profits due to people getting fed up with their business practices as much as the economy. people are realizing they treat their employees badly, look at the numerous lawsuits over hiring and pay and benefit issues, anyone who has ever been a vendor of theirs or built for them know how awful they can be, and back in Sam’s day when it was all about “Buy American”, now, good luck finding anything American made in their stores, not that it’s to much better elsewhere.

    I think people have realized, their prices aren’t that much better than you can get at numerous other places that are much nicer and friendlier places, and I do think business practices are catching up to them.

  2. 2 David Larsson May 20, 2010 at 8:58 am

    Wal-Mart: “The entire comp decline this quarter was due to traffic, as average ticket was positive.” (from transcript of earnings call)

    Target: Total transactions +2% (from earnings call)

    How different are their customers? Maybe things are getting better for Target customers, worse for Wal-Mart customers?

  3. 3 James May 20, 2010 at 11:54 am

    I agree with gmorgan. The fact is Walmart is meeting better competition from Target, Kohl’s, other specailty retail, and especially from the grocery chains. Frankly, claiming gas prices are keeping customers away is ridiculous, whoever said that needs to be shown the door, preferably the backdoor. I also agree that consumers are tiring of Walmart’s penchant for poor quality, marginal service, and an overall unpleasant shopping experience. We have stopped shopping there. We have found that we can do better and get what we want at Costco, Kohls, and our local Anchored Grocery center.
    I have ranted and raved about the negative impact Walmart has on our economy and our culture numerous times on this blog, maybe the public is starting to understand that Walmart is not the “American values” enterprise they once were. Frankly I think if Sam was alive today he would be furious at the decline in standards I see in the stores. They are spoiled by success and it shows.

  4. 4 Scott Davis May 20, 2010 at 3:14 pm

    I’m sure I could look it up, but to add to the discussion, how were their internet sales?

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May 2010

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