Too Cheap To Shop

august 16, 2005

What happens when you cater to the cheapest bastards in the world? You lose sales when gas prices go up because they are too cheap to drive to your store. Wal-Mart just reported their smallest quarterly gain since 2001 and it doesn't look any better anytime soon. Target and JC Penny, who cater to more mid- to higher-income shoppers, did well during this same quarter and have better future outlooks. Wal-Mart is trying to change the merchandise they are selling to be trendier like Target and Penny, but there are questions to whether or not that can turn business around for Wal-Mart. "They have to keep up because the competition is offering more interesting merchandise," said Philip M. Zahn, retail analyst at Fitch Ratings. "They have to offer more than low prices if they want to generate faster growth." But, can Wal-Mart really change the image of "Low Prices" that they have steadfastly beaten into everyone's head? Wal-Mart may have become too large for their own good.

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