The American Spectator

AmSpecBlog

Re: Wal-Mart Losing Focus

By Philip Klein on 11.30.06 @ 10:37AM

The problem Wal-Mart is facing isn't a result of pressure from Wal-Mart opponents (although that may be a small factor), but as a result of competitors using effective strategies to counter Wal-Mart. Many consumers, for instance, would be more comfortable buying their electronics at Best Buy. K-Mart went bankrupt because it tried to compete with Wal-Mart on price. Target, realizing that it couldn't compete with Wal-Mart on price, has done a good job marketing itself as a trendier, higher quality alternative to Wal-Mart. The gaffe that you point to, Paul, of Wal-Mart entering designer women's clothing, could be attributed to Wal-Mart trying to close the "trendiness gap" with Target. Another issue for Wal-Mart is saturation--they now have nearly 4,000 stores in the U.S., so, urban areas are one of the few areas left to grow. To the extent that they try to appeal to urban consumers, they risk alienating their suburban and rural "base" by introducing things like designer jeans.