Challenges That Walmart Encounters

Challenges that Walmart encounters:

1) PRICE PRESSURE

Since the economic recovery, more stores has been offering low prices, which has always been a centerpiece of Wal-Mart's success. As a result, Wal-Mart has had to focus more on cutting its prices. According to a Kantar Retail pricing survey which was conducted last October in the southern New Hampshire and northern Massachusetts area, Dollar General's basket of 21 categories across staples was 12 cents cheaper at $28.70 than at Wal-Mart. In the previous year, Dollar General was 18 percent cheaper. The Wal-Mart's Savings Catcher, an online tool that allows customers to compare Wal-Mart's prices on thousands of products with those of some competitors, if a lower price is found elsewhere, Wal-Mart refunds the difference in the forms of a store credit. Wal-Mart plans to expand the tool nationwide after having tested it in seven markets since March. Still, low prices hurt sales and margins.

2)CASH-STRAPPED SHOPPERS

In an interview with The Associated Press, Bill Simon, CEO and president of Wal-Mart's U.S. stores division, says the top concerns among its shoppers are lack of jobs and gas prices. Customers of Walmart  still are struggling with a 2% point increase in the Social Security payroll tax since Jan. 1, 2013. Moreover, they're facing reductions in government food stamp benefits which resulted in customers changing their shopping habits. They're choosing lower-price brands or store labels on staples like detergent. To battle against this, Wal-Mart stocks up on small packages at the end of the month when money is tight for customers and also counting on a new money transfer service it says will cut fees for its low-income customers by up to 50% as compared with similar services elsewhere. But America's Research Group's C. Britt Beemer asks: "How do you get more money from shoppers whose disposable income is less?"