Manufacturers found reason to breathe a sigh of relief last week as Wal-Mart announced it would be reversing a number of the range rationalisation initiatives it undertook as part of its ‘Project Impact’ scheme.
The decision comes as the retailer booked its fifth straight quarter of declines in comparable store sales in its key US market.
The CEO of the retailer’s US division Bill Simon said the company planned to refocus on its EDLP model, return products to action alley and that it is “engaging to suppliers to review its assortment to ensure it offers the breadth of “inventory that Wal-Mart customers have come to expect”.
“In the coming weeks and months, our assortment will be more relevant to our customers, with the right mix of new and innovative products,” he said. “We are restoring thousands of products to our assortment and adding new items. We plan to win in every category and let customers decide through their purchase decisions what to include in our assortment.”
Despite the weakened US sales, it raised its full-year earnings forecast as Simon said he believes the changes it is making will “improve top line sales by the fourth quarter”.
In other Wal-Mart related news, Dansk Supermarked announced last week that it is planning to rapidly expand its Netto banner throughout Germany, Poland and Sweden using the proceeds of the sale of its UK unit to Wal-Mart’s Asda.
The rationale behind the sale became even clearer later in the week as Dansk Supermarked posted strong first half results, with the only division to show declines being its soon to be divested UK Netto operations. Growth was driven through its Føtex banner in its Danish home market as well as through its Netto discount banner in Sweden and Poland.
Wal-Mart rival Target booked increased profits for the second quarter as traffic grew and the company maintained “thoughtful expense control”. Target Chairman, president and CEO Gregg Steinhafel said the company is now well positioned to continue gaining market share, which we can only presume will be to Wal-Mart’s detriment.
Asia has been the subject of renewed focus, with Pepsico announcing that it plans to invest US$400m in the snack market over the next five years. The food and drinks giant plans to increase its manufacturing capacity, introduce new products and “strengthen its existing brands.
Speculation about Carrefour‘s Asian operations came back into the spotlight with Thailand’s biggest energy company PTT expressing interest in bidding on the retailer’s Thai assets.
Russian grocer Lenta’s troubles continue with the board meeting that was set for Monday failing to go ahead. Eyes remain fixed on the retailer as continued infighting means that a number of shareholders are refusing to recognise its recent CEO appointment, preventing the retailer taking advantage of the country’s limited building season.
Dean Best is currently on holiday.