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Analysts: Wal-Mart Era Ending

Drab big boxes don't mesh with growing affluence, online convenience

By Truman Lewis
ConsumerAffairs.com

October 3, 2007

The ever-expanding chain of drab big-box stores emerged from its dusty down-home beginnings in Arkansas in the 1970s, teaching Americans to demand ever-lower prices and instructing companies to shave their margins to the bone.

But today, the Journal reports, Wal-Mart's influence is slipping as the Internet and smaller, hipper rivals take ever bigger bites out of its market share.

A big part of the giant retailer's problem, as the Journal sees it, is that it has become politically incorrect -- paying rock-bottom wages and offering its workers the slimmest of benefits while offering down-market products at prices that no longer seem very attractive.

As in every market sector, the Internet has played a major role in eroding Wal-Mart's dominance. Consumers can now find a wider selection of products at competitive prices online, and they can do so without driving miles out of their way and fighting the crowds and check-out lines at Wal-Mart.

Customer service

The lack of satisfactory customer service is the theme that runs through most complaints filed with ConsumerAffairs.com by Wal-Mart customers.

When Amber of Lewisburg, Ky., and her husband went to Wal-Mart to buy a futon for their daughter, they found the item they wanted, marked at $99.96 but the box was so heavy they could hardly lift it.

"When we asked one of the store employees for assitance in lifting the extremely heavy box, we were greeted with blank faces," she said. "I was told to go to the lay-a-way deptartment and ask someone there."

It took 45 minutes for someone to help them move the box to the check-out counter, but then: "We got it to the counter and (SURPRISE) the item was priced incorrectly. The actual price was $199.96! When I complained, the cashier became very aggravated and said she wasn't going to sell me the futon for $99.96 just because I told her that was the price!"

"I even went back to the housewares dept., got the tag, and brought it back to her. Her response was 'Sorry, I don't price things. I have to charge you what it rings up as,'" Amber complained.

Amber, who said she is a long-time Wal-Mart customer, saw the incident as typical of the change in Wal-Mart's "customer first" policy.

"If I remember correctly, Wal-Mart used to have a rule where if a customer was charged more than $3.00 than the marked price of an item, they got the item for the lower price. Apparently, Wal-Mart tends to forget their own policies and only enforces the ones which make them money!" she said.

Forgetting its roots?

While Wal-Mart's attempts to penetrate urban areas have had medicore results, many of its traditional customers say it has also forgotten its roots. The company's plan to eliminate layaway purchases is often cited as an example.

"I am throughly disgusted at their lack of care and concern for the people that made them rich. It is the ultimate betrayal!" said LaDonna of Garland, Texas.

"Wal-Mart is a terrible place, and I spend thousands -- like about 8 of them -- a year there, but no longer! All of my Christmas will be done online this year!" she vowed.

Hit the wall

Wal-Mart's supercenter recipe no longer produces the growth it needs to sustain itself and its attempts to attract and retain more affluent consumers have fallen flat, Love Goel, chairman of a private equityu firm that invests in retail businesses, told the Journal.

"They have hit the wall," Goel said.

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