Wal-Mart Stumbling?

Really?  Wal-Mart stumbling?

This is exactly what was reported in the May 16, 2014 Wall Street Journal.  The lead story in the Marketplace section was:

Wal-Mart Takes Another Hit on Sales
Fifth Quarterly Decline in a Row Comes With Forecast of Further Weakness

It is hard to believe that the retailing juggernaut of the 1990s and early 2000s has had five straight quarters in comparable store sales.  Mirriam-Webster online defines a juggernaut as “something (such as a force, campaign, or movement) that is extremely large and powerful and cannot be stopped.”  That is exactly what Wal-Mart is or was.  They were extremely powerful and seemingly could not be stopped.

Wow.

Here are some of the main points in the WSJ article:

• Profits from Q1 2014 were 5% lower than the previous year

• In the US, customer traffic in stores has been declining and “the company said there is more weakness to come.”

• The decline in foot traffic is a general trend in retail as consumers shop online more and more and “cherry pick discounted items” in brick and mortar options.

One thing is clear, Wal-Mart is not a major online force.  Want proof?  Just answer the following question.  Have you or anyone else you know ever bought anything online from Wal-Mart.

We could attribute the above to Wal-Mart not having the right strategy.  But the issues with the world’s largest retailer are also tactical.  There was another article Bloomberg.com, March 28, 2014:  “Wal-Mart Sees $3 Billion Opportunity Refilling Empty Shelves.”  On top of market and consumer shopping trends, Wal-Mart has had trouble keeping their shelves fully stocked.  Of all the inventory issues a company could have, lost sales due to out of stocks is the most painful.  It is a direct hit to revenues.  In Wal-Mart’s case, that hit is estimated to be $3 billion.  

This kind of tactical problem is even more distressing than the strategic issue.  

Why?

Strategic shifts in the marketplace are easily missed by organizations that are market leaders in what is to become the old outmoded system.  A company like Wal-Mart has been on top of the retailing world for two decades.  Their executive and middle management team got to where they are by embracing the Wal-Mart way and system.  They want to keep embracing it and have a hard time facing that it might not be enough to compete in the future.

Wal-Mart had built their reputation on execution.  They had the best retail computer systems and business processes at one point.  Clearly, from the Bloomberg article, this may no longer be the case.

Is it possible that Wal-Mart has just gotten too big or too complacent in their leadership role?  That may well be the case.  It is easily argued that is exactly what happened in the 1970s and 80s to the company Wal-Mart replaced as the largest retailer in the US:  Sears.

This is simply a reminder that there can be no complacency for market leaders.  The juggernauts of yesterday are not necessarily the juggernauts of today.