US readers will likely know that Wal-Mart has been actively promoting itself as the recession warrior’s grocer with a series of print and television ads promoting its discounted prices on items ranging from breakfast cereal to books to coffins (we are not making this up).
The strategy has burnished Wal-Mart’s image, which had been dinged by its strong anti-union policy and a series of PR gaffes. As Fortune magazine put it in a recent piece entitled “Why we don’t hate Wal-Mart anymore“:
The evil empire doesn’t look so bad, now that Americans have Wall Street to kick around and a new appreciation for those everyday low prices.
But just how low, price wise, can the retailer go? In October, well before the traditional start of the holiday shopping season in the US, Wal-Mart said it would cut prices on 100 popular toys to less than $10.
On Monday, Wal-Mart announced a second wave of price cuts on toys. As Reuters reported, emphasis FT Alphaville’s:
U.S. Walmart stores are cutting prices on 100 toys, like the Buzz Lightyear talking action figure and Star Wars light sabers, by roughly 20 percent to 30 percent.
The cuts are in addition to ones the retailer implemented at the end of September, when it began selling 100 toys for $10 each.
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Wal-Mart has vowed to be the “price leader” this holiday season, and announced plans on October 21 to cut prices every week until Christmas to fend off rivals and win over shoppers.
Wal-Mart’s rivals, notably Target, responded to the retailer’s first salvo with price cuts of their own. But with more than three weeks before the traditional start of price war silliness in the form of Black Friday, as the Friday after Thanksgiving is known, it is not clear that already-struggling retailers can afford to sacrifice anymore of their margins.
Nonetheless, there’s still one major market in which Wal-Mart continues to lag its rivals, as the Google Finance chart below illustrates:
Everyday low prices, indeed.
[UPDATE] John Simley, Wal-Mart’s director of media relations, made the following point in an email to FT Alphaville:
we do consider the first of the year to be an arbitrary starting date. Very few people actually trade in or out of Walmart on that date. I think it’s instructive to look at share price performance over the course of the recession (which, the National Bureau of Economic Research says started in December of 2007). On that measure, Target shares are off about 18%, while Walmart’s are up about 5%. The S&P Retail index, meanwhile, was off about 11%.
Related links:
Wal-mart Announces Hundreds of Millions of Dollars in Price Reductions – Press release via Reuters
Wal-mart wants you to know it’s the cheapest – Wallet Pop
Wal-Mart product purge worries suppliers – FT