In Wal-Mart we trust
Stop cringing. In a market with rising unemployment, the world's largest retailer is getting even bigger and it's going to need help.
Wal-Mart plans to add 22,000 employees in the next year to staff new domestic stores. This is a lower number than 2008, when the retailer hired 33,000 people, but it's still expanding while so many companies are contracting or closing up shop.
Sure, most of these are hourly jobs. And of course, Wal-Mart is famously non-union. But, and I'm going to get flamed here, show me another successful U.S. company that still adheres to those higher standards and I'll bet it's a company struggling to stay alive in today's marketplace. This is the nature of retail work today, and it's only going to become more so, as companies increasingly try to be like Wal-Mart.
Wal-Mart is actually making money in this market, gaining market share as thrifty shoppers seek out low prices. Target actually just announced a decline in sales by 2.3% in May. Same store sales, sales at stores open at least a year, dove 6.1%, and that's on top of a similar decline for the same time last year.
But maybe that's not a fair comparison, since Wal-Mart just stopped reporting monthly sales. Let's look at last month, when Target had year-to-date sales increase of 0.4% compared to Wal-Mart's 5.8%. Not even close. Because when times get tough, shoppers look to Wal-Mart for more everyday items at everyday low prices, such as items like food, which Wal-Mart carries much more of than Target.
It's a scenario that gets repeated every time there's a dip in the economy. Wal-Mart does comparatively well and its competitors start adding more food and other low margin items hoping to win back customers. Target, Sears, dollar stores, drugstores -- all want to capture every disposable dollar.
Adding more household basics helps, it's just not very profitable. Target makes a much bigger profit off throw pillows and candle holders than a gallon of milk, which is why that brand of cheap chic plays so well when we're all bit more flush with cash.
It's also why Wal-Mart has been adding new home goods, expanding electronics departments and in general making a strong effort to keep stores clean, bright and appealing. When people can choose a store based on more than price, Wal-Mart wants to be that store too.
Wall Street is wondering if Wal-Mart can keep those shoppers looking for rolled back pricing when the good times start rolling again.