US: Wal-Mart to invest $6bn in retail pricing

By Michelle Russell | 15 October 2012

The plans follow a pledge by the retailer a year earlier to invest $2bn in pricing through to 2014

The plans follow a pledge by the retailer a year earlier to invest $2bn in pricing through to 2014

US retail giant Wal-Mart Stores has announced plans to invest US$6bn in retail by 2017.

The investment was revealed by Duncan McNaughton, Wal-Mart's chief merchandising officer at the group's investor conference last week.

The plans follow a pledge by the retailer last year to invest $2bn in pricing through to 2014.

McNaughton said the investment will be delivered through productivity initiatives, logistic initiatives, and cost of goods savings.

"Our investment, as always, will be broad-based to drive basket savings across the box for our customer," he told attendees.

"It will primarily be in food and consumables. We'll continue to utilise our ad match programme to give our customer the confidence that when they shop in Walmart, they're getting the absolute best price. And if a competitor has an ad, we're going to match it at the register. It re-enforces one-stop-shop and our price leadership."

McNaughton added that its price comparison adverts "are working so far", noting that comparable sales and traffic is up 1% compared with a control group of stores, "which means those efforts are resonating with customers."

With the campaign running in 31 US markets, covering around 40% of the company's food sales, the average price gap has been 17% against food competitors and 20% against health and wellness competitors, McNaughton said. This includes a gap of 23% against Safeway Inc, 22% against Albertsons, 15% against Publix Super Markets and 12% against Kroger.

"Price is one of our strongest equities at Walmart and it matters to our customer. It's a big deal," McNaughton said.

Also during the conference, Wal-Mart last week announced plans to spend $12-13bn on expansion in its next financial year. The amount equates to a cut in capex spending and the US retail giant has said it plans "to do more with less".

In the US, it plans to add around 125 supercentres and continue to accelerate the rollout of its smaller Neighborhood Markets, with a goal of 95 - 115 small formats next year.

Internationally, Wal-Mart will add 20-22m sq feet, down slightly on the 21-23m set for this year.

Sectors: Retail

Companies: Wal-Mart Stores, Safeway Inc, Publix, Kroger

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