Is Wal-Mart Too Cheap for Its Own Good?

by ryan | May 30, 2007 at 09:01 am

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The societal trend toward luxury goods, or at least items
perceived to be of luxury status, is pushing even the greatest bargain thumper
of all time to question its identity. Wal-Mart’s attempt to up its image in
the eyes of shoppers will probably come hand in hand with higher prices.

Low prices, it turns out, can be bad for business.

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 décor, 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 question remains, do higher prices create the illusion of luxury in the mind of consumers or will higher prices mean better quality products? It seems to come down to perception, as the report states:

The bulk of the report, however, examines the challenges facing
Wal-Mart as it tries to transform itself from a chain focused on basic
household items sold at low prices into one known for style.

Style seems to be synonymous with superficial change not a move toward quality. Welcome to the world of consumerism.