Wal-Mart is planning to reduce the price of 10,000 grocery items in an effort to win customers back to its namesake US stores, a US analyst has suggested.
According to Morgan Stanley analyst Mark Wiltamuth, the company will use aggressive pricing to increase store traffic.
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The company, which had attracted consumers in increasing numbers at the onset of the economic downturn last year, has seen customer numbers dwindle during its fourth quarter.
In the three months to the end of January, Wal-Mart revealed that the group’s same-store sales in the US fell 1.6%, excluding fuel, as customer numbers dropped.
According to Wiltamuth, the cuts will come into effect at the beginning of next month and will be accompanied by a step-up in advertising.
Wal-Mart was not available to comment at time of press.
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By GlobalDataWhile the campaign is likely to prove positive for Wal-Mart’s top line, Wiltamuth warned that increased promotions could prove troublesome for the grocery retail sector as a whole.
Wal-Mart and its peers have already seen their grocery margins squeezed by pressure from food deflation and the already high degree of competition on price.
“While this helps address Walmart’s traffic woes, we view this as a major setback for the grocery stocks, which have been rallying on hopes of a return to more rational pricing,” Wiltamuth wrote.
