Walmart Introduces "New/Old" Strategy - "Everyday Low Prices"

What is old is now new. At a recent Goldman Sachs conference, Walmart U.S. President and CEO Bill Simon announced his strategy for the behemoth retailer. "Everyday low prices" is the strategy to generate sales in the struggling U.S. division.

The strategy is the former motto, until being replaced by "Save Money Live Better". So why this, why now? The U.S. division represents nearly $266 billion, two-thirds, of the company's $400 billion yearly sales. With Walmart U.S. sales declining 1.6% for the first half of the year, all eyes will be on Simon.

Bill Simon has been in his role since June 2010 and doesn't expect a turn around until the holiday season.

Does the world's largest retailer really need 6 months to turn around sagging U.S. sales? According to Bill Simon, momentum won't show up until the "fourth quarter". With Walmart's core shopper still battling unemployment and high gas prices, the fourth quarter its critical to its overall success.

As a former Chief Operating Officer, could this downward skid in sales been diverted? All signs point to yes. As Chief Operating Officer, Simon was responsible for the execution of company initiatives. One of the company initiatives is to grow sales I presume.

Over the course of the past few years, product assortment has diminished during remodel projects better known as, Project Impact. The stores were in better condition, but the merchandise was streamlined to attract a higher end customer. Now customers have reacted by shopping at other outlets. The recession has eased and customers are no longer forced to trade down.

Simon went on to state the deep discounts during the summer months didn't work and thus focus is back on "everyday low prices". The timing was right, but Rollbacks were more of a perception and not realized sale increases.

On top of lack luster sales, competition from rival Target is intensifying. A 5% discount when using the in-store credit card and P-Fresh initiative, stocking of fresh foods, could have "some impact" according to Simon. But the leader is "very positive and optimistic".

Six months is a drop in the bucket in the retail world. Simon will have to act fast to prove he can handle the task of turning around a division of the world's largest retailer.

Resource: marketwatch.com