Groceries a Bigger Part of Wal-Mart’s Business
It’s no secret why stores without a heritage in food have gone after the grocery
market. Groceries bring in shoppers more frequently. If retailers can capture
more of those trips, then perhaps they can get customers buying higher profit
products in other parts of the store, as well. North American chains, including
dollar stores, drugstores, home improvement outlets and mass merchandisers,
have to varying degrees tried out food as a way to capture greater share
Perhaps the most identifiably successful in this regard has been Wal-Mart.
Back in the 1980s when it opened its first Sam’s Club (1983) and Supercenter
(1988), it was fashionable to debate whether the company had the chops to make
it in the food business. Today, Wal-Mart Stores is the largest grocer in the
business and last year food reached 51 percent of its sales. That was up from
49 percent in 2008.
Categories that lost share of Wal-Mart’s total business included apparel,
which dropped one point to 10 percent. Hardlines also fell by one percent to
12 percent of Wal-Mart’s total. All other categories were unchanged.
Grocery share of Wal-Mart’s business is likely to increase as the chain recently
announced it would engage in a major rollback on prices to help attract
more shoppers following disappointing results in recent quarters.
Question: How has Wal-Mart changed the grocery retailing landscape, in your
opinion? Does there come a point where the smaller penny profits associated
with grocery sales begin to hurt businesses such as Wal-Mart that are pricing
these categories to drive store traffic?