Is Walmart Too Cheap For Its Own Good?

According to a confidential report leaked to the New York Times by WakeUpWalmart.com, Walmart’s low prices may be working against it when it comes to selling plasma TVs and more expensive clothes. From the NYT:

A confidential report prepared for senior executives at Wal-Mart Stores concludes, in stark terms, that the chain’s traditional strengths — its reputation for discounts, its all-in-one shopping format and its enormous selection — “work against us” as it tries to move upscale.

As a result, the report says, the chain “is not seen as a smart choice” for clothing, home d

cor, electronics, prescriptions and groceries, categories the retailer has identified as priorities as it tries to turn around its slipping store sales, a decline likely to be emphasized Friday during Wal-Mart’s shareholder meeting.

“The Wal-Mart brand,” the report says, “was not built to inspire people while they shop, hold their hand while they make a high-risk decision or show them how to pull things together.”

While we don’t disagree with the substance of the report, we do have to question the mind that thinks Walmart should be moving “upscale.” Let’s face it. Some of us are downscale, and that’s OK. Walmart is about as downscale as it gets without the addition of “99 cents” in the name of the store.

Anyhow, the report concludes that “our low prices actually suggest low quality” and that Target feels “like the ‘new and improved,’ whereas Walmart is ‘old and outdated.’ Hey, that’s true. —MEGHANN MARCO

Is Wal-Mart Too Cheap for Its Own Good? [NYT]
(Photo: J.D. Pooley/Getty)

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  1. iron_chef says:

    it’s true. The shopping experience at walmart is dreadful.

    And their stock reflects their low price mantra.

  2. robotprom says:

    Wal-Mart succeeded by finding a niche that needed cheap commodity goods. Target succeeded by finding the niche that could afford to pay for slightly higher quality goods. Neither will succeed in the other’s market.

  3. Wormfather says:

    Actually no, an informed consumer will still give a Walmart a look when buying, say a large screen TV (as I did last year). But at the end of the day they have to have the goods and at a competitive price.

  4. rmz says:

    I’ve felt this way for a long time. If I’m just looking to get some shampoo or a light blub, okay, Wal-Mart’s fine. I’m not going to go there if I’m looking for a new HDTV or something, though, and it’s always seemed a little out of place whenever they try to sell big-ticket items across the aisle from where they’re selling “mostly-paper” toilet paper for 12 cents a roll.

  5. Wormfather says:

    @robotprom: I tend to dissagree, ever been to a Targhetto?

  6. Grrrrrrr, now with two buns made of bacon. says:

    Just the idea of using the word “upscale” and “Wal-Mart” in the same sentence is laughable.

    Wal-Mart. Upscale. Hahahahahahahahahaha! I can’t help it.

    Just because you dress a pig in a leotard doesn’t mean he can dance ballet.

    People go to Wal-Mart because it’s cheap, or it’s the only place in town. If they really want to have an “upscale” store, they’re going to have to build an entirely separate store and name it something else.

    (And sure, I shop at Wal-Mart…it’s on my way home from work and it’s convenient..but I don’t want to be in there any longer than I have to be).

    I like Target, but pssst..Target marketing people..your tool, automotive and hardware departments suck rocks.

  7. foghat81 says:

    They have nobody to blame but themselves. having low prices is one thing, but low prices and being dirty/ghetto is another.

    In my local area, the Wal Marts *are* older than the Targets and certainly feel old and outdated. Combined with a crummy appearance and awful customer service and I stick with Target. The funny thing is, when I do cross shop some of my basic items, Target is often cheaper!

    If Wal Mart wants to go upscale, start by cleaning the g**d*** store!

  8. bambino says:

    @Wormfather: I know I won’t. When I was in the market for an HDTV, I didn’t even look at walmart. I wouldn’t buy there if they even had what I wanted for $100 less, for fear I’d get one of their ‘opened-but-new’ products.

  9. Wormfather says:

    …oh and for the record, I ended up getting my TV at Best Buy. So far, so good.

  10. robotprom says:

    @Wormfather: It’s been a long time since I’ve seen a real life Targhetto, like 6 years or so. All of them I’ve seen have either closed, reopened as a SuperTarget down the road, or had been renovated into nice shiny Targets. Based on that, I assumed that Target had fixed all of their Targhetto problem stores.

    I’m beginning to think contemporary Targhettos are not a southeast US phenomenon. Trashed out Wal-Marts are, however.

  11. mopar_man says:

    @bambino:
    I agree. I don’t even shop for there for minor things like shampoo and light bulbs. I’ll go somewhere else and pay the extra $0.50 for a smiling face behind the cash register and to shop in a place that doesn’t feel like a jail cell. I buy electronics and furniture at their dedicated stores where somebody actually knows something about what I’m buying.

  12. etinterrapax says:

    One thing that amused me about the article is that Wal-Mart is apparently under the impression that shopping there saves “money, time, and stress.” Money, perhaps, if customers don’t attach a monetary value to the replacement demands of cheap durable goods, but time and stress? Please. The place is so enormous and the registers so understaffed that if I have less than a day to shop, it’s completely unmanageable. Apparently, in their conception of the retail experience, people aren’t supposed to be stressed out by crowds, either. I am. I don’t shop there. To be fair, I also don’t shop any of their competitors at the usual busy times either, but their competitors are generally smaller and less crowded.

    As far as the high-end goods are concerned, there isn’t much beyond intuition to support the idea that cheap luxury goods are inherently inferior to those bought in a less-cheap environment, but I wouldn’t count on Wal-Mart for support, and high-end electronics require a great deal of support. They can’t provide adequate customer service to sell toilet paper; why would they be able to provide skilled, reliable, responsible service for computers and flat-screen TVs? Best Buy is cited as a better environment for those purchases, and their reputation for service has taken a severe beating on this site alone. If Wal-Mart ain’t no Best Buy, I’m certainly not choosing them for that kind of purchase.

  13. nweaver says:

    The other problem: Wal*Mart’s secret, a heavy push on suppliers, results in suppliers HAVING to cut corners.

    EG, I bot a 2 GB memory card for my camera there (I was getting my oil changed at the IffyLube next door and had nothing better to do but wander through WallyWorld). It proved to be defective, corrupting at least one photo before I decided to just not use it.

    I’d bet real money that the name-brand memory card in question was NOT tested throughly because it was going to Wal*Mart, and that is how the memory vendor was able to meet Wal*Mart’s price target.

    You CAN’T go upscale when your whole business model is centered around Race to the Bottom.

  14. Put this in the tin-foil beanie category if you want, but I am convinced (at least in the home electronics arena) that suppliers have a mainstream QA/QC standard and a “Wal-Mart” supply standard.

    Although I’ve never looked that close, it seems like I’ve had more name brand electronics fail from Wal-Mart purchases than say Circuit City, Comp USA, Amazon, or NewEgg.

  15. enm4r says:

    @mopar_man: I’ll go somewhere else and pay the extra $0.50 for a smiling face behind the cash register and to shop in a place that doesn’t feel like a jail cell.

    And that doesn’t even factor in the fact that you might be more comfortable giving your company to a company you perceive to be a little less immoral/unethical, and maybe treats their employees a little better.

    I have no sympathy for Walmart, and I doubt I ever will. I don’t shop there, and I wouldn’t even if I thought I’d get a deal. Yeah, Walmart has a ton of cheap shit, but of the stuff I buy, I doubt they’re lower. As it was mentioned, of the usable items, if you cross shop, they’re not cheaper, at best the same. So no thanks to Walmart, and fortunately in Chicago they’re not so abundant because they’d actually be forced to treat their employees just a little better than an exploited sweat shop worker.

  16. @nweaver
    Looks like we both might fall into the shiny hat category (basically the same post at the same time).

  17. ganzhimself says:

    I’m not a huge fan of Wal*Mart, but I do shop there because it leaves me more money for other things in life. I don’t expect good customer service from them, but every time I’ve needed help I get good service. I bought my HDTV from Wal*Mart because it was the exact same TV as at Best Buy and Circuit City, but it was also $250 less. No, it wasn’t refurb or open-box either. The best thing about their electronics section? No sales people pushing a bunch of overpriced crap at you, like Monster Cables and whatnot.

  18. JKinNYC says:

    @Naughty Consumer:

    No tinfoil hat necessary. It’s true. It is part of their business model.

  19. banned says:

    Looks like Wal-Mart needs to downscale their workforce back to illegals and child labor to make up for those losses.

  20. The Bigger Unit says:

    @mopar man: And Wal-Mart feels like a “jail cell”…how? Because it is mainly lower class people and african-americans that shop there?

  21. @The Nature Boy: No, because it’s dark, dirty, and crowded.

  22. FatLynn says:

    I am wearing shoes today from Target, and when someone notices them, I like saying I got them from Target, because it makes me feel like I got a good deal. I would never buy shoes from Wal*Mart, let alone ADMIT to it if I did.

  23. jgkelley says:

    @The Nature Boy: Walmart feels like a jail cell because they have “shadowless light”, as a poem I read once put it, along with a gritty-, cementy-, warehouse look.

    Also, it makes me feel like I am constantly being watched — generally, it’s by other customers, but still…anyone who hates walmart because of its customer base is a-ok with me. I completely understand the demographic, and I’m not comfortable being surrounded by it, frankly. Screaming children, the stench of stale cigarette smoke, and mullets are fine with some people, but they make me nervous and nauseous. The workers aren’t much better–they are the customers, for the most part, and I should know because my mom just recently stopped working there. The cashier at a local walmart was named “Timberly,” for christ’s sake. I can only assume her parents desperately wanted a boy.

    No racism or classism really need be involved–some places just reek of ignorance and failure. Defending the walmart customer is a lost cause, nature boy.

  24. ljbad4life says:

    @The Nature Boy: Walmart is dank, smelly, dilapidated and crammed full of people (somewhat disgruntled)… that sounds like jail to me.

    I’ve shopped at walmart once and I NEVER went back and I Never will. It was just a plain mess with product all over the aisles and either rude employees or there were no employees at all except at the registers, Why in GOD’s name would I want to plunk down 1000 plus bucks to support a place like that?

    Take my advice if you’re looking for a deal go online because you’ll be getting the exact same experience as in Walmart… you know minus dank, smelly & disgruntled atmosphere..

  25. suburbancowboy says:

    I will never ever buy a single product from Wal-Mart.
    When you buy at Wal-Mart, the sticker price may be low, but there are other costs. The main one being American Jobs. If you have a product you want to sell at Wal-Mart, they tell you to cut costs whether it be by making an inferior product, or mainly moving your factories to China. That is the main suggestion in a book they give out to companies called “How to do business with Wal-Mart”.

    People save money by shopping at Wal-Mart, and by doing so they are cutting their own throats, and lowering American wages and raising unemployment.
    The reason so many people can only afford to shop at Wal-Mart is because they shop at Wal-Mart.

  26. mwdavis says:

    jgkelly writes: “No racism or classism really need be involved . . . ” particularly since any need for it has been obviated by my stereotyping, chauvinism, and smugly self-involvement and satisfaction.

  27. mwdavis says:

    Sorry about the grammar failure above. Was hitting return key to freely.
    should have been “smug”, not smugly.

  28. Youthier says:

    @etinterrapax: Definately! When I have to go to Walmart (usually to the photo department because no other local store has 1-hour photo), I bitch about it the whole day. I feel like a rat in a maze.

  29. hypnotik_jello says:

    @ganzhimself:

    How do you know it wasn’t an open box/refurb? To wit:

    http://consumerist.com/consumer/leaks/walmart-sells-refurb

  30. cde says:

    You guys hear that? It’s the sound of Walmart imploding…

  31. pinkbunnyslippers says:

    I bet this is exactly how K-mart felt about 10 yrs ago at the beginning of their numerous attempts at revamping their image. And guess where it got them? Last time I checked, it was nowhere fast.

  32. jgkelley says:

    @mwdavis: Why would you devolve into attacking a fellow poster? And so poorly! I am stereotyping walmart customers, of course, because they routinely fit into those stereotypes. Please, no one here could honestly say the average trip to walmart does not involve a mullet, a screaming child, or someone smelling of stale cigarettes. Yes, I’m chauvinistic in my opinion that walmart is full of people I’d rather not encounter. Didn’t I just say that my mom worked there? :D Smug self-involvement and satisfaction? Now you’re just being vague. I’m satisfied that I don’t go to walmart? Of course! Does that make me self involved? It makes me a consumer who makes choices based on past experience and intelligent opinion. I didn’t think there were any other types of consumers who read this site.

  33. foghat81 says:

    @jgkelley: I’mn with you, chief. Call me whatever name you’d like, but I don’t want to be surrounded and sometimes touched by dirty, smelly, mullet-haired people and their screaming kids. Same reason I avoid going to coffee houses. Those damn hippies bother me. Same reason I don’t go to Brooks Brothers to buy suits. The people.

    People bother me. I try to avoid them if possible.

    I’m sure I bother plenty of other people too. So by me *not* going to many places, I’m helping them, right?

  34. ganzhimself says:

    @hypnotik_jello

    The box was sealed, no signs of being opened, abused, etc. All the plastic bags inside were sealed, stickers were in place, nothing was out of place. I registered the product with the manufacturer and it did not come back as refurb. I’ll admit that Wal*Mart is far from the best place to shop, but living on a college student’s shoestring budget, deals are deals.

  35. zolielo says:

    I almost never shop at Walmart as I am more of a Costco type fellow but I have shopped at Target (I guess their ads have worked on me).

  36. hoosier45678 says:

    @nweaver: I have the same lack of trust in the quality of durable goods at walmart, ever since reading about the pressure they put on Snapper mowers to make a walmart exclusive line of mowers far below their usual standards. (From FastCompany)

  37. spanky says:

    I can’t believe they would even question why people don’t buy higher-end goods at WalMart. WalMart sells cheap, poorly made garbage, and everyone knows it.

    Their whole business model seems to rely on short-sighted consumers who prefer to buy high cost-per-use junk that they can afford right away over higher quality, more durable goods that may cost more upfront.

    They’ve made their fortune selling garbage, and they’ve established a strong and loyal customer base that prefers instant gratification over quality. Even among their loyal customer base, I’ll bet you wouldn’t find many that would trust WalMart for higher end purchases.

  38. drezdn says:

    Sure, you can buy things cheaper at Walmart, but in most cases the cost to replace their inferior items will eat up any savings in the long term.

  39. I’m waiting for my Dollar General to start selling HDTVs.

  40. TWinter says:

    I agree with the poster who said the only way they can move upscale is to open a different type of store under a different name. They already did it with Sam’s Club, so it shouldn’t be that hard to do.

    In fact, they could call it Walton’s – sounds reasonably classy and keeps the strong association with the parent. They could try to create something similar to a Kohl’s. In fact! They could even silence some of their critics with this if they remodeled old style Wal*Marts into the new stores when they closed them to build the super stores.

    PS – If anyone from Wal*Mart reads this and Walton’s stores start popping up in the next few years – I would like to see a check sent my way! :-)

  41. Piro says:

    Lookee here, college comes in handy.

    One of my favorite theories from the College of Communications was Cognitive Dissonance. Long story short, it means that if the brain detects two conflicting messages it’s unlikely to believe either of them. The conflicting messages simply amount to “noise” that the brain can’t digest and, as a result, simply discards.

    “We’re the cheapest, and the best.” would be such a statement. Since a lifetime of experience tells us that “the cheapest” isn’t often “the best” and “the best” is almost never “the cheapest,” Wal Mart doesn’t really fly as a retailer of high-end products.

    Other ideas destined to fail:

    Crest Onion, for the world’s freshest breath.
    Shaq: The place to buy petite women’s clothing.
    The softer side of Sears.

  42. ericstoltz says:

    “its slipping store sales, a decline likely to be emphasized Friday during Wal-Mart’s shareholder meeting.”

    What, are there no more impoverished nations to enslave? Isn’t that the usual Wal-Mart MO for increasing sales and profits?

  43. imaheadcase says:

    Why do people think buying electronics at walmart is a bad thing, you are buying the SAME THING as you buy at other retailers.

    You buy a sony,panasonic, etc you don’t buy the store name. Find a cheaper price, better sales, customer support, warranty thats a reasonable complaint, but just because its sold at walmart does not mean it’s MADE by walmart (don’t expect to see a “great value” logo on A HDTV anytime soon).

    I know this might be a shock to some of you, but walmart does not make everything they sell :P

  44. etinterrapax says:

    @imaheadcase: Actually, you do, in a sense, buy the store. You buy its return policies, its customer service, and the way it treats its customers and vendors. And if you buy from Wal-Mart, you’re buying a company that will sacrifice anything to increase profits, including all of what you’re buying. Moreover, because of the way that the company treats its vendors, you may be buying something that was made especially for Wal-Mart and its low-price priorities, that does not in fact match the quality of goods sold elsewhere, regardless of brand name. This is an established practice. It’s been in a few papers. Look it up.

  45. CumaeanSibyl says:

    What I’ve always noticed about Wal-Mart is the peculiar quality of their overhead lighting. I get a headache within five minutes of entering a Wal-Mart — it never ever fails. Since I don’t think the trashed shelves and dirty floors are quite enough to trigger that response, I have to think it’s the lighting. Maybe the flicker rate isn’t high enough?

    Yeah, so I don’t go to Wal-Marts. If they got better fluorescents, organized the shelves, mopped the floor, and put the greeters to work doing something useful, they’d be getting somewhere. Otherwise: headaches.

  46. spanky says:

    @imaheadcase:

    WalMart absolutely does exert control over other companies’ products that are sold in their stores. Look at “Levi’s Signature.” Look at what they tried to do to Snapper.

    WalMart sells cheap, low-quality products. If a manufacturer doesn’t already make garbage, WalMart will pressure them to make a special crappy line just for them. So no. Brand Name X as sold at WalMart is not necessarily the same thing as Brand Name X sold somewhere else.

  47. IRSistherootofallevil says:

    If I want cheap, I’ll go to Costco where the unit price of a QUALITY good is cheaper than probably Walmart. And besides, if I want a computer, I go directly to the manufacturer. If I want a TV, I’d go to Costco or an electronics store. By the way, the benefits of being a costco member included a $1500 automatic discount on a new car for my mom….

    And I’m one of those savvy shoppers that actually CARE about the quality of the stuff I buy…anyway I don’t feel bad for walmart at all. I don’t shop there, and the stuff they sell are absolute crap, as well as most of their employees, including the CEO.

  48. hoo_foot says:

    I choose Target over Wal-Mart every time I need to go to a department store. Target has always provided me with a far more positive shopping experience, and it worth adding a few extra cents to my bill for this alone. Large aisles, stocked shelves, a reasonable number of open cash registers, and just a cleaner store in general. Wal-Mart fails in every one of these aspects, and until they fix these issues, no amount of price cutting or gimmick brands will get me to switch.

  49. erica.blog says:

    The *only* product I buy from my local Wal-Mart is a brand of ice cream from Cincinnati that I wasn’t able to get after moving to south-west Indiana. It saves me making a three hour drive east to indulge.

    Beyond that, I would far rather pay more for good quality items and avoid Wally World like the plague. I’ve been in both clean and not-so-clean stores, had good and bad service experiences, depending on where I am (and the same goes for Targets, K-Marts, really any other national chain); I simply find their business model and poor quality products to be abhorrent, and therefore I will not give them my business. Ever. Even if I can get a plasma TV for thousands less.

  50. satoru says:

    Personally, as a ‘slightly’ upper middle class individual, I prefer to shop at Target than Wal-Mart. While I do have problems with the store itself being usually very cluttered and dirty, since EVERYTHING is made in China, the quality of the products is pretty much the same. My main reason for not going to Walmart is I find that the people who shop there to be more offensive.

    The reason the place looks like garbage is because the customers are basically barbarian monkeys. They pickup an item then just throw it on the ground. They rarely show common courtesy when you want to get by them in the narrow aisle. They’re generally just more rude.

    I think Walmart needs to change their greeting from “Welcome to Walmart” to “Stop being a dick in our store”.

  51. nardo218 says:

    I don’t buy electronics from Walmart not because of the poor look of the place, but because every time I have, they’ve broken. OTOH, I don’t buy clothes from Target because they last about two washings because the knit stretches out and the edges fray.

    Walmart looks cheap because it is cheap, but that’s the only thing it has going for it. They’re deeply in denial if they think going “upscale” will draw the lower middle class rural moms who shop at Walmart because they don’t care about Walmart’s abominable corporate practices.

  52. nardo218 says:

    @Piro:

    That’s not what that means. Cognitive dissonance refers to when one’s actions are contrary to one’s behavior, such as when Nazi officers did heinous things because they were following orders. Generally, a person will change their thought, not the behavior.