John Boccuzzi, Jr.

Wal-Mart Taking Hits Over Price, Selection

March 9, 2010

FROM RETAILWIRE:
Two separate articles conclude that Wal-Mart Stores is having a tougher go of it since the economy began to rebound, in part because a wide variety of competitors have found ways to beat the world's largest retailer on price. Do you see Wal-Mart as being more vulnerable to competition today than in the past?      [more...]

This discussion is timely for me as I travel North America visiting top supermarket retailers to discuss programs that can help them compete with Walmart on price. The great news for traditional supermarkets is price is not the only factor Walmart needs to be concerned with over the next few years.

1) Pricing - Several retailers beat Walmart on pricing across multiple categories. HEB is probably the best example.

2) Experience - Stores that have focused on shopping experience will benefit as the economy improves. Visit a Hy-Vee, Meijer or Stater Bros. and you will see what I am talking about.

3) Sourcing/Quality - All retailers need to be careful of this. Just look at the Walmart brand cat food Special Kitty's recall as an example of price effecting quality and safety. The scariest part about that recall is the Ontario based manufacturer for that brand, Menu Foods, actually was a contract manufacturer for over 150 PL and national brands. (Source: "Cornered" by Barry Lynn)

4) Private Brands - When a retailer makes an outstanding private brand that can compete with national brands it is truly a barrier of entry. Great example is Trader Joe's and Ahold.

5) Consumer Programs - There are some exciting options available now to retailers that can help them drive prices down for shoppers and still make money. Retailers and manufacturers need to keep an open mind and explore new ways of working together creating a win, win. Not to mention a 3rd win for the shopper.

So yes, after visiting some of the best supermarket and drug retailers in North America, I can confidently say that Walmart should be concerned about competition. The warning to other retailers is this: Walmart can easily improve all of the areas above. Your goal should be to focus on the areas that mean the most to you and your shoppers and don't be one of the best, be the best in your market.