Why Walmart Can't Hang Onto Its Customers
They've tried less merchandise, and more merchandise. They've tried more price rollbacks. But slowly and steadily, customers are buying less at established Walmart (WMT) stores, a trend that's been consistent for a solid year now.
Other major chain retailers have seen rebounding comparable-store sales this year, including J.C. Penney (JCP), Macy's (M) and Kohl's Corp. (KSS).
Some thoughts about why Walmart is losing the new customers it lured in the depths of the recession:
- Bad PR. Socially conscious shoppers have always felt guilty shopping low-paying Walmart and buying its scads of China-made goods. The recent round of news that Walmart is the subject of the nation's biggest-ever sex-discrimination class-action lawsuit does not help them with this customer. There's been a steady drumbeat of this kind of thing lately -- stories of towns that are suing to stop the construction of new Walmart stores and its record $27 million payment to settle a California hazardous-waste mishandling lawsuit, just for instance. Definitely a turnoff to some shoppers.
- Poor quality in shoes and apparel. I don't know what, exactly, happened, but the quality in this category seems to have gone down in recent years. In my experience, Walmart clothing now frequently enough needs mending by the time it gets home -- hems unravel or seams separate almost the moment you pass the metal detectors. If you haven't bought a pair of shoes at Walmart lately, let me just say the average lifespan to disintegration around our house seems to be about three weeks. Last week, we shopped at Payless ShoeSource for replacements. And when your quality isn't as good as Payless', you're in trouble.
- Blue-collar rep. Walmart's reputation is that it's the place cash-strapped young families shop, because it's all they can afford. During the recession, more upscale customers who were laid off or otherwise in financial straits went slumming at Walmart. Apparently firsthand experience didn't change their perception that Walmart isn't really their store -- and they've beat a path back to Target (TGT) (the more upscale Tar-jay, don't you know) the minute they could financially swing it.