Look out, retailers: Wal-Mart is hungry for growth, and on the menu is more of your lunch.
On a call with investors after its big first-quarter beat Thursday, the world's largest retailer said it would forge ahead more quickly on its "investments in price" that began late in the fiscal period. Wal-Mart said it lowered prices on "key items in select geographies," which helped drive its performance during the latest period.
The company's update comes as retailers across the space are already grappling with too much inventory, a consumer addiction to discounts and blockbuster growth among other low-price players, all of which are contributing to price deflation. And with competitors that tend to follow its lead (remember the list of retailers who raised their wages in Wal-Mart's wake?) further price cuts across the space seem inevitable.
Making things even tougher for its peers are improving operations within Wal-Mart's stores, as management — now two years under CEO Doug McMillon — has said it's no longer enough to compete on just price.
"We're going to see margin compression for retailers," Moody's analyst Charlie O'Shea said. "The question is ... how low can you go?"