Saturday, April 10, 2010

Wal-Mart's (NYSE:WMT) Secret Weapon Back

Wal-Mart (NYSE:WMT) has always gone back to their secret weapon, or rather, not-so-secret weapon of lowering prices when sales start to slow down, and that's the case again as the giant retailer has announced they're again cutting prices on 10,000 products or more to entice customers back to their stores.

Having said that, there's doubt as whether customers, especially middle-class customers, have in fact been leaving the store because their circumstances have improved, implying they were a temporary phenomenon related to the recession, or they've found prices for a number of items close to Wal-Mart's prices, making a trip to the retail discounter irrelevant.

Wal-Mart claims it's not the abandoning of the stores by middle-class shoppers because conditions have improved, but rather the latter, that food and electronic prices have fallen to the place where competitors can compete closely with them, the reason they're returning to a focus on price as their chief competitive weapon.

The company added they're not going to stop with the cuts on 10,000 items, but plan on expanding that in the months ahead with the help of a number of their suppliers, who they're asking to cut prices as well.

In return, Wal-Mart will spotlight the products on their shelves, which should result in increased sales for their partners.

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