NEW YORK: Shoppers can expect to find great discounts and bargain offers this holiday season as the world's biggest retailer Wal-Mart said it will slash prices to make up for poor sales in October.
The high street giant on Thursday reported disappointing October sales and added that the slump could likely continue into November. Same-store sales rose a mere 0.3 percent which was barely offset by the 2 percent growth at the retailer's Sam's Club division. When combined, the same-store group sales inched up at 0.5 percent.
The retailer blamed a flawed merchandizing strategy for the poor performance. A line of women's fashion clothing that it had introduced failed to make cash registers ring. The dent on sales was deepened with disruptions caused by a store remodeling program.
Besides, November being a month when low-income group consumers defer shopping to the holiday season, the down-trend looks likely to continue this month. October sales were largely mixed for US retailers. While Federated, J.C. Penney and Saks reported an encouraging rise in sales, stores like Pacific Sunwear and BJ's Wholesale Club saw sales declining. Large retailers Target and Costco also reported lackluster business.
To ensure customers are lured back into its stores for the holiday season, Wal-Mart has outlined several price rollbacks which will be marketed with an aggressive advertising blitz. Tom Schoewe, the retailer's chief financial officer, said there would be new brand offerings, better product presentations and a larger range of accessories, besides efforts to reinforce value pricing. Another factor that the retailer counts on is the decline in gasoline prices which means the consumer will find her extravagance hurting household finances less than every year.
The holiday season strategy is expected to ensure “price leadership position” for Wal-Mart in the last quarter. Wal-mart's announcement will mean the start of a fierce price war in the retail market where the only beneficiary would be the consumer. Retailers would be forced to keep margins as slim as is possible to make sure full year earnings remain in the black.
