Walmart Is Dying Because Its Business Model Is Strangling Itself

Make sure you read this in a spooky voice in your head: Wal-Mart is dooooomed! At least, the business model it relied on to reach such astronomical growth is now probably putting a choke hold on the company’s ability to grow and compete.

AdAge says the plan developed by founder Sam Walton way back when in the 1960s, low low prices, worked because it attracted more shoppers, and more prices could be lowered, known as the “productivity loop.”

Now, however, where there seems to be a Wal-Mart every four feet, leaving no more room for more stores. The expansion of stores has declined, and so have their sales. It’s had to raise prices to compete and appease shareholders, but customers don’t go to Wal-Mart for rising prices. They go for low ones, and so, declining sales.

Once they don’t have the lowest prices around, what do they have? There are no cheap meatballs like at IKEA, there isn’t any other attraction to bring in shoppers, and consumers come in less and buy less.

AdAge notes that research by Morgan Stanley last month reported that 60% of Walmart shoppers don’t believe the retailer actually has the lowest prices anymore. Another by WSL Strategic Retail found a whopping 86% felt that way.

Do you still shop at Wal-Mart? If somewhere else had something cheaper, would you go there instead?

How Walmart’s Vaunted Loop Turned Into a Vicious Circle [Ad Age]