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Wal-Mart Quietly Raises Prices
 Jonathan Berr - DailyFinance
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August 19, 2010
Wal-Mart Stores, which for years has touted its prowess at lowering prices, has been doing the opposite as it tries to bolster its bottom line amid stagnating sales.
A JPMorgan Chase study of a Walmart Supercenter in Virginia found that the world's largest retailer has raised prices by nearly 6% on average over the past six weeks, according to the New York Post. Reuters says it was the biggest sequential increase since JPMorgan started the study in January 2009.
Some Prices Hiked Over 60%
Some of the price hikes were considerably larger. For instance, the price of a 32-ounce bottle of Windex household cleaner jumped 50%, a 12-ounce box of Quaker Oats instant grits climbed 65% and a 50-ounce container of Tide detergent rose by more than 50%. A spokesperson for the Bentonville, Ark., company could not immediately be reached for comment.
The results of the price-hike study aren't entirely surprising. Shares of Wal-Mart, which rose at the height of the recent recession, are down more than 2% this year amid lackluster performance at its U.S. stores, where same-store sales fell 1.1% during the 13 weeks ended April 30. When Wal-Mart announced a revamping of the management team overseeing these stores, including the departures of CEO and President of Wal-Mart U.S. Eduardo Castro-Wright and Chief Merchandising Officer John Fleming, current Wal-Mart U.S. CEO Bill Simon bluntly said, "our mandate is clear: increase customer traffic, make sure our products are relevant to our customer and never give an inch on price leadership."
Unfortunately for Wal-Mart, keeping prices low is tough with less store traffic. To make matters worse, rivals appear to be doing better. Target (TGT) reported a 2% gain in July same-store sales, which are a key metric for retail investors. Kohl's (KSS) reported a 4.1% gain. Wal-Mart stopped releasing monthly same-store sales figures for its units last year, so making an apples-to-apples comparison is difficult.
Narrowing Its Lead in the Low-Price Wars
Wal-Mart is also under assault in the grocery aisle - one of the areas it has aggressively expanded over the last few years. As the Post notes, "Although Walmart still has lower prices on key groceries and staples compared to mainstream supermarkets, its lead is narrowing - to 10.4% last month from 16% in June." The grocery business is noted for its low margins and fierce competition. Even niche players like Whole Foods Market cut prices by 0.7% in July, the paper says.
Theoretically, this should be Wal-Mart's moment to shine. U.S. consumer confidence in July was at its lowest point since February. People still want low prices. Unfortunately for Wal-Mart, they just would rather shop at other stores.
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