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ABOUT THIS BLOG

It's a make-it or break it time for retailers. The holiday selling season is always a critical time for retailers, but this year this may be even more true. With several retailers already falling victim to a drop in consumer spending, and filing for bankruptcy, retailers will be navigating through some tricky waters. Consumers are strapped for cash due to high energy and food prices, and unemployment is rising. The recent credit crunch has made it more challenging for retailers and consumers to borrow.

This blog will look at the winners and losers in the retail space. Who has the right strategy to capture consumer dollars? It also will look for trends in consumer spending and how that will impact the economy.

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Wal-Mart "Stimulus" Pkg: Will Doritos Rescue The Economy?

Published: Tuesday, 29 Jan 2008 | 2:30 PM ET

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By: Margaret Brennan
CNBC Reporter

CNBC.com
What can Doritos do to save the economy? Cheesy nachos, 600 LCD TVs and $99 workout systems are all part of Wal-Mart's [WMT Loading... () ] economic "stimulus plan" unveiled today to coincide with President Bush's push of his own tax rebate and economic stimulus package.

Make no mistake: Wal-Mart's "stimulus" package clearly has a profit motive (as all shareholders of public companies would hope.) Wal-Mart's price cuts of 10-30 percent on thousands of items is a marketing message straight out of the retailers' value playbook. The promotions are being rolled out in time to capture a piece of the $9.5 billion that consumers are expected to spend this Super Bowl Sunday.

That said, you can't dismiss the role of price cuts by a retailer who sales make up 10 percent + of national retail sales results. This is a blow to Target, BJs, Costco, Best Buy and Circuit City. Wal-Mart's marketshare in the discount and electronics market was helped significantly by price cuts this fall--and now the retail wants to repeat that sales magic.

TGT

BBY

COST

Coupling the Superbowl sales binge with the economic plan is also marketing magic. Wal-Mart's slogan 'saving people money so that they can live better' plays right into the strength of the discounter.

Value pricing is the thing that Wal-Mart does best. Managing internal costs is also its strength--so staying on the price message has always been key. Reminding the low and mid income customers who shop there (incidentally the same ones who will benefit from the tax rebates) is synergy at its best.

Expect more price cuts to come. Here's the itemized press release:

WAL-MART ANNOUNCES ECONOMIC STIMULUS PLAN FOR U.S. SHOPPERS
Retailer Rolls Back Prices 10 to 30 Percent This Week on Thousands of Items for the Game, Health and Home
BENTONVILLE, Ark. – Jan. 29, 2008 – As the U.S. government finalizes its economic stimulus plan, Wal-Mart, which already saves American families $2,500 a year*, is adding some economic cheer of its own. Full details are in its latest home circular where customers will find Wal-Mart has rolled back prices on thousands of items - giving them 10 to 30-percent savings right now.
"We all know economic times are tough so our plan is to help with added savings throughout the year, focusing especially on what people want, when they need it," said John Fleming, chief merchandising officer, Wal-Mart. "Shoppers are depending on us to deliver the best price so they can stick to their plans, no matter what the economy throws at us. We won't let them down."
Against a backdrop of continued talk of a credit squeeze, Wal-Mart is concentrating on savings on the items customers need to buy at this time of year - unbeatable prices for the big game, fitness needs and home products. The retailer also is helping out with those higher-price items, offering no interest for 18 months on purchases of $250 or more with a Wal-Mart Credit Card.
Game fans preparing for the weekend will have savings in store to feed a party of 10 for under $50!**
ITEM QTY PRICE TOTAL
Pepsi 12-packs 4 4 for $10 $10.00
Tostitos Scoops 12-oz. bags 2 2 for $5 $5.00
with Tostitos 15.5-oz. dip 2 2 for $5 $5.00
DiGiorno 12" pizza 2 2 for $9 $9.00
5-lbs. bag of Tyson frozen chicken wings 1 $8.88 $8.88
Pringles chips 5 5 for $5 $5
Hillshire Farms Cocktail Smokies or Ropes 2 2 for $5 $5
with KC Masterpiece BBQ sauce 1 $2 $2
TOTAL $49.88
Stock up, for $6 or less …
*Doritos, Lays, Fritos, 12-24 oz. bags, 2 for $6 *Athletic T-shirts, $5 each
*6 rolls of Viva paper towels, $4.86
*2 boxes (6 oz.) Colgate Whitening toothpaste, $4
*$4 prescriptions on more than 360 generic drugs
For $10 or Less …
*Sterilite and Rubbermaid storage bins (29-35 gallon) for under $10, and 12 gallon for $5 each
*4 bags (3.5 – 4 lb.) of Iams dog food or 20 13 oz. Iams cans
*4 Pepsi 12- packs, 4 for $10
For Under $40 …
*5 gallon Shop Vac, only $29.96 (save 25%) *Software Quicken $25 and TurboTax Deluxe, $39.88
*45 count OTC Zyrtec available for less than $29
For Under $100 …
*RCA Home Theatre System for $98.96
*Flat Panel TV Stand at $98.88 or Motion LDC Wall Mount for $99.86
*The Ab Rocket at $99 and the Gold’s Gym Inversion System at $94.76 via www.walmart.com using Site to Store with free shipping
Even spend big and save, under $800
*Vizio 32 inch LCD TV at $597
*RCA or Polaroid 32 inch LCD TV/DVD combo at $683
*$498 Acer Aspire laptop or HP desktop bundle at $698
In addition, to efforts to spread the cost of a high ticket items over 12-18 months, Wal-Mart is adding other incentives for game fans who want that hi-definition experience now, including a $100 gift card for the $1,296 Phillips 42 inch LCD HDTV to save on accessories and more.
*Wal-Mart saves the average U.S. household $2,500 according to independent research conducted by Global Insight in 2006.
** Prices may vary slightly in some markets depending on state laws and competitive pricing.
About Wal-Mart Stores, Inc. (NYSE: WMT)
Wal-Mart Stores, Inc. operates Wal-Mart discount stores, Supercenters, Neighborhood Markets and Sam’s Club locations in the United States. The Company operates in Argentina, Brazil, Canada, China, Costa Rica, El Salvador, Guatemala, Honduras, Japan, Mexico, Nicaragua, Puerto Rico and the United Kingdom. Wal-Mart serves more than 176 million customers weekly in 14 markets. The Company’s securities are listed on the New York Stock Exchange under the symbol WMT. For more information: www.walmartfacts.com.