How Walmart Can Get the Well-Off Customers It Needs to Grow
TheStreet's Laurie Kulikowski sums up analyst feelings on the move as "mixed." Walmart stock, trading around $76, is down nearly 4% for the year to date.
Foran faces a problem of empty shelves, grumpy customers and sales that have flat-lined. The company's strategy against that until now has been to build smaller stores, but they are not delivering the pop to revenue Walmart needs. They are also not drawing in the high-end customers who will shop beyond the grocery aisles and add some pop to sales.
Brian Sozzi says Walmart needs more "Target
In short, Walmart has lost the upper-middle class.
This is obvious when you compare the company with Costco
Walmart grew by bringing big city pricing to the exurbs and beyond, but now it's left with customers who are lower middle-class or worse. These people are not buying as much groceries and are not going other departments such as home goods. Walmart's earnings report for the quarter ending in January blamed "reductions in government benefits" for some of its problems. In other words, it's depending on customers who get government benefits for sales. That's not a growth strategy.
As a result investors will only pay 15 times Walmart's earnings for the stock. When even its Sam's Club warehouses, which compete directly with those of Costco, aren't growing, you know the company is still misfiring demographically.
What upper-income consumers want is a clean store, a quick trip, well-stocked shelves and friendly people. They also want better merchandise. They don't want to feel a sense of shame walking into the store.