Wal-Mart Stores, Inc. (WMT) Struggles with Competition and Unemployment Rates


On CNBC, Wal-Mart Stores, Inc. (NYSE:WMT) CEO for the U.S., Bill Simon, discussed how the company is trying to cope with its new challenges amid industrywide stress.

Wal-Mart Stores

The executive said they are fighting hard to regain sales, although he admitted that their core consumers were still facing economic challenges that have reduced their purchase power.

The company is witnessing weakening demand in the U.S. especially in the same-stores where sales have either dropped or remained stagnant over the last five quarters thanks to the competition from drugstores and dollar stores such as Dollar General Corp. (NYSE:DG).

According to Mr. Simon, Wal-Mart Stores, Inc. (NYSE:WMT) are not making good sales because of the unemployment headache, which means a critical mass of its core consumers are not shopping.

He noted that although unemployment figures have dropped to their “lowest levels in six years,” it appears like consumer retailers are not part of the job growth.

“The unemployment numbers particularly have been difficult to read with the number of people dropping out of the workforce. I think it’s going to take a while, six months or a year for those numbers to balance out,” he observed.

The reason Wal-Mart Stores, Inc. (NYSE:WMT) is facing competition is that the gap between its prices and those at competing stores has reduced, thus exposing it to the market brutality.

In order to counter the competition, the company is moving to small-format stores. Wal-Mart Stores, Inc. (NYSE:WMT) has plans to open a greater number of such stores this year especially targeting urban consumers.

The retailer has been meeting with small busses as it looks for new vendors to boost its product roster and hopefully accelerate sales.

Distribution deals are a big opportunity for the company just as competitive pricing that has always been the distinguishing factor at Wal-Mart Stores, Inc. (NYSE:WMT).

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