Wal-Mart Brings Cheer To The Festive Season- Announces Price Cuts Across Products
The world’s biggest retailer Wal-Mart Stores recently announced that is has cut prices on 100 electronic items including plasma televisions, digital cameras and mobile phones. Price cuts include a $500 reduction on a Panasonic 42-inch plasma television to $1,294. This follows the earlier price cuts announced on a collection of toys and games which had boosted sales volume. The world’s biggest retailer is aggressively cutting prices as it tries to raise weak sales at its U.S. stores.
Last month, the retailer had started selling more than 100 toys for $10 each. Walmart.com cut prices on 10 unreleased hardcover books to $10 each, fuelling a price war with its online competitor Amazon.com. Both online retailers then cut their prices on those books to $9 each, after which Walmart.com reduced a penny more off that price and was selling them for $8.99 each amounting to discounts of nearly 60 percent off the cover price.
With the latest round of price cuts Wal-Mart Stores is clearly taking its aggressive price cutting into new levels as the economy shows hints of recovery. Earlier the company was more focused on discounts for necessities such as food that drove sales in the downturn. But now its aggressive strategy is spreading rapidly to other goods being sold online as well as in the company’s stores. These moves clearly show that Wal-Mart is seeking new avenues to dominate in addition to continuing with its bread and butter business.
The current economic downturn has turned to be a boon for Wal-Mart shoppers as they trade down and look for deals. While many retailers have seen decline in sales and some like Circuit City have filed for bankruptcy, Wal-Mart has strategically attracted shoppers with discounted food, medicine and consumer electronics. According to estimates since January, Wal-Mart’s share of the U.S. retail market has risen 0.85 percentage points to 11.3 percent.
The company particularly is trying to tap the online market. In August Walmart.com announced that it would allow some retailers to sell goods on its site. The company also recently announced home delivery of health and beauty items brought online.
Wal-Mart is using the price strategy because its other strategies have failed in recent months. The retailer had earlier tried to attract more high income shoppers by offering trendier fashion. Also by shifting its advertising away from a low- price focus the company had tried to change its image in the mind of consumers. Both these moves however did not help in boosting sales. Then the company tried its hand at remodelling old stores. All these moves bombarded as can be seen by a poor 0.5 percent rise in October sales at U.S. stores open at least a year. This is the company’s worst monthly performance since December 2000 when the recession was just about setting in.
The company then went back to its time tested strategy of price cut to boost its sales, as it enters the holiday season where it earns nearly a third of its sales and profits. Other retailers are likely to follow if they want to avoid being overpowered by Wal-Mart’s deals.
Going forward the company plans to cut prices on 10,000 items this holiday season. So shoppers keep your eyes and ears open for more deals or better follow this section for more updates.
