Wal-Mart loosing steam

I have been following stories related to Wal-Mart for last 5-6 years. I couldn't resist my temptation to blog when Wall Street Journal wrote about Wal-Mart loosing steam in the article "Wal-Mart Era Wanes Amid Big Shifts in Retail". The retail sector in general had been lagging behind for last few quarters, mainly due to meltdown of sub-prime mortgage, credit crunch and rise in unemployment. Little did I know that company is also struggling with other macro issues as change in consumer's taste and competition from other discount retailers. It almost appeared that the company had perfected it's game-plan, after all in just over 30 years it became the world's largest company with a humble beginning in rural Arkansas.

Wal-Mart competitor's are offering convenience, quality, larger selection and better service. Most of all, consumers are now preferring quality over price. They want new things to show up on shelves; this is something that's not very easy for Wal-Mart to achieve given it's humongous size. Perhaps, Wal-Mart's Supply Chain is not geared for such rapid change in product offerings. Target, which has just-about one-fourth Market Cap as compared with Wal-Mart, offers better products, cleaner stores, and best of all almost at the same price.

These days consumers also demand quality along with better pricing, and in many cases they are willing to pay an extra for better service. For instance, take the case of Apple stores. Apple stores are widely successful, mainly due to "friendly hospitality" and the "cool-factor" at the store; none of which are seen at Wal-Mart stores.

We have to see how Wal-Mart reacts to the new dynamics of the retail-place and maintains its position.