Things are not looking good for Wal-Mart, Forbes reports:
The discount giant announced over the weekend that its same-store sales for October grew by just 0.5%, the company's most anemic monthly growth rate since 2000. At the same time, a government report shows that consumers kept a firm grip on their wallets in September, boosting spending by just 0.1%, the smallest increase in ten months.With the all-important holiday shopping season around the corner, major retailers are poised for their usual joust over consumer dollars. The battle may be more intense than usual this year, with high gas prices and a general economic slowdown pointing to a deceleration from the rate of spending growth in 2005.
Wall Street, meanwhile, is doing its best to handicap the upcoming slugfest, presenting investors with their best and worst bets on department stores, electronics sellers and specialty stores.
Merrill Lynch is already predicting a lackluster season for big-box discounters Wal-Mart Stores (nyse: WMT - news - people ) and Target (nyse: TGT - news - people ), whose sheer size makes it difficult to drive year-over-year sales.
We’re not much ones for passing moral judgment—pots/kettles, glass houses/stones having nothing to do with our abstention—but perhaps the ‘Mart should think about Karma and her predilection for being a bitch the next time it decides to take away stools from older cashiers in order to encourage them to quit and requiring workers—including those with young children—to be on call 24 hours a day. (Then again, those old people/damn kids probably had it coming).
Wal-Mart's Trailing The Pack [Forbes]
Posted by Lee D, Oct 31, 2006 1:41PM
Karma, shmarma (although it is fun to wish it was).
Fact is, same store sales growth is a harsh mistress, which is why at the same time as new store openings drive the gross sales number higher, same store sales usually grow nicely both during and trailing the expansion phase. But once those markets mature, same store growth gets harder and harder to goose higher.
In their defence, both Wal-mart and Target are better than most at refining their supply chain to meet the product mix needs of diverse markets.
With that variable nailed down, that leaves advertising, which is the biggest source of retailers frustration. It's the old saw: "Half my marketing budget is wasted, but I don't know which half!" Still and all, both W and T have it about as nailed as they could hope for, in the realm of tv lifestyle spots and regional Run Of Print flyers. Never mind that there's probably better ways to do that now...
With both those retailers having nailed the variables under their control that still leaves them at the mercy of the pocketbook of Joe and Jane Paycheck. And if it's going to be a cold Christmas for the working class, then the retailers are going to feel it too.