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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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Jun.09
12:46 PM ET
Monday, 9 Jun 2008
Wal-Mart A Year Later: High Prices Now Bring In Customers

Steven Senne / AP

A year ago Wal-Mart management said that high gas prices were hurting their customers and store sales.

Now, a year later, gas prices are even higher and Wal-Mart [WMT  Loading...      ()   ] management says those expensive costs are bringing customers into its stores.

So I asked CEO Lee Scott where the tipping point in terms of changing consumer behavior.

His answer was an interesting one. Scott said it was undeniable that Wal-Mart's core customers were the first ones impacted by the spike in gasoline prices and they bought less. What changed? Scott said two things: (1) Wal-Mart improved its store experience (cleaned up aisles, added brands to its merchandise and refocused on retail) and (2) the economic stress spread from the bottom up and brought in new customers at "the right" time (i.e. After Wal-Mart improved stores.)

Scott said that this trend doesn't mean that business will fall off when the economy improves. Wal-Mart executives also made it clear that they're interested in expanding health care and green initiatives. In other words, they're trying to anticipate where product trends are headed and carve out a low cost niche to feed developing needs.

Wal-Mart management still thinks that it can tap into the middle income customer base that Target [TGT  Loading...      ()   ] has dominated for the past few years.

While Wal-Mart's past attempts to draw in those customers via merchandising like clothing (remember Mark Eisen?) have failed, this time around the economy may bring those customers in-store. At least, that's what management is betting on.

Questions? Comments?

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