The Wal-Mart era over? | Arkansas Blog

Wednesday, October 3, 2007

The Wal-Mart era over?

Posted By on Wed, Oct 3, 2007 at 8:22 AM

Page One, Wall Street Journal, has a watershed-style headline -- "Wal-Mart Era Wanes Amid Big Shifts in Retail." I'm not ready to write off the Bentonville behemoth, but the smug Arkansas assumptions about the inevitablity of Wal-Mart success and regular stock price doubling should already have been put to rest by six years or so of moribund stock performance.

The Wal-Mart Era, the retailer's time of overwhelming business and social influence in America, is drawing to a close.

Using a combination of low prices and relentless expansion, Wal-Mart Stores Inc. emerged from rural Arkansas in the 1970s to reshape the world's largest economy. Its co-founder, Sam Walton, taught Americans to demand ever-lower prices and instructed businesses on running a lean company. His company helped boost America's overall productivity, lowered the inflation rate, and strengthened the buying power for millions of people. Over time, it also accelerated the drive to manufacture products in Asia, drove countless small shops out of business, and sped the decline of Main Street. Those changes are permanent.

Today, though, Wal-Mart's influence over the retail universe is slipping. In fact, the industry's titan is scrambling to keep up with swifter rivals that are redefining the business all around it. It can still disrupt prices, as it did last year by cutting some generic prescriptions to $4. But success is no longer guaranteed.

Rival retailers lured Americans away from Wal-Mart's low-price promise by offering greater convenience, more selection, higher quality, or better service. Amid the country's growing affluence, Wal-Mart has struggled to overhaul its down-market, politically incorrect image while other discounters pitched themselves as more upscale and more palatable alternatives. The Internet has changed shoppers' preferences and eroded the commanding influence Wal-Mart had over its suppliers.

As a result, American shoppers are increasingly looking for qualities that Wal-Mart has trouble providing.

This is a fascinating story about the ways competitors have cut into Wal-Mart, in part with convenience. Even Kroger has successfully battled the Wal-Mart supercenter explosion with upscale and ready-to-eat products.

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