Can Walmart's holiday plans get shoppers back?
When Walmart (WMT) gets ready for the holidays, it's serious business.
The world's largest retailer said it's planning to cut prices on 20,000 products this holiday season, aiming to lure consumers back into its stores and to its website with the massive number of reductions starting on Nov. 1. At any other time, the company normally offers about 10,000 price cuts, or "rollbacks," executives said on a conference call with reporters.
Walmart is entering the holiday season, typically the most lucrative part of the year for retailers, after six straight quarters of declining or flat growth in same-store sales (sales at stores open a year or more). With rivals from Amazon (AMZN) to dollar stores homing in on its customers, Walmart is kicking off its holiday sales immediately after Halloween, as well as offering free shipping on its list of top 100 gifts.
"We are expecting to see a highly competitive environment throughout the season," said Steve Bratspies, executive vice president of general merchandise for Walmart U.S., on the conference call. "We are going to win the holiday season."
Stores will transform from their Halloween promotions and decorations on Oct. 31 to a holiday-focused theme and promotions on Saturday. Some of the rollback prices include Microsoft's (MSFT) Xbox One on sale for $349, or $50 less than its regular price, and a Dell Inspiron Touch computer on sale for $479, or $70 less than normal, Bratspies said.
The company declined to disclose its plans for Black Friday, the day after Thanksgiving. Details on that shopping day, which is when retailers often go into the "black" for the year, will be released later, executives said.
While Walmart didn't provide the number of rollbacks it offered during the last holiday season, it said the number of price cuts is significantly more than what it typically offers.
With tough competition from Amazon, Walmart is adding free shipping for its top 100 holiday gifts, which include tech items such as the Apple (AAPL) iPad Air with 16 GB of memory and toys such as the Disney (DIS) Frozen Snow Glow Elsa Doll. Consumers who buy online but don't order from the 100 top gift list can get free shipping with any purchase of at least $50.
Walmart is also considering an online price match this holiday season, which would allow consumers to get the same prices from Walmart online as they'd get from rivals such as Amazon. Walmart declined to add details about the service, which would potentially bring more shoppers to its e-commerce business but cut into profits.
Still, Walmart's online shipping policies may not satisfy some consumers, given Target's (TGT) plan to offer free shipping on all Target.com orders through Dec. 20th. Amazon's Prime members, who pay a $99 annual fee to join the service, receive free two-day shipping on many products.
With American shoppers increasingly feeling strapped, price cuts might just convince them to return to Walmart. Retail sales are forecast to rise 4.1 percent this year, boosted by higher employment, according to the National Retail Federation. Yet consumer confidence has been "erratic and difficult to interpret" this year, NRF chief economist Jack Kleinhenz noted in a report.
Added to Walmart's challenges is that it tends to attract customers in lower income brackets, with about 20 percent of its shoppers relying on food stamps, according to analysts. That means many customers may have tight budgets this year and will likely be seeking out the best deals, including shipping, wherever they can.
Walmart, though, isn't leaving everything up to pricing. It also plans to boost in-store service, pledging to add checkout staff on weekends between Nov. 22 to Christmas. Between the hours of noon to 6 p.m. on those weekends, every checkout line will be open, the executives said. That effort comes after customers criticized the stores for long checkout lines.
Once shoppers hit the checkout line, Bratspies said, "we are focused in getting customers out of the store as quickly as possible."