Diminishing grocery sales is bad news: Wal-Mart

By @pathakmishra on
Metro Police Officers Are Shown Outside Walmart
Metro Police officers are shown outside a Walmart after a shooting in Las Vegas June 8, 2014. Las Vegas police said on Sunday that a shooting incident involving officers resulted in injuries and urged people to stay away from the scene. The Las Vegas Metropolitan Police Department said in a tweet that the incident occurred near north Las Vegas, at an address close to a Wal-Mart store. Reuters/Las Vegas Sun//Steve M

U.S. retail giant Wal-Mart is planning strategic and transformational changes for quite a few months now, seeing its competitors are leaving it far behind in the market race. Analysts have reported that the part of business which earns most of the profit for Wal-Mart is no match for its rivals.

One of its most sustainable profit-earning areas is grocery sales, which constitute 56 percent of the total Wal-Mart sales. But poor ratings in customer satisfaction and deteriorating comparable growth of store sales have contributed to the hampering of Wal-Mart’s plans, thereby giving competitors a chance to take advantage.

“Meanwhile, as competitors like Kroger, Publix, H-E-B, Jewel-Osco and others have invested in evolving customer lifestyle trends – by broadening organic and fresh offerings – and in improving customer service, the gap between both comp-store sales growth and customer satisfaction at Wal-Mart U.S. grocery and supermarket competitors continues to widen,” Wayne Hood at BMO Capital Markets stated in a note to clients on Monday, as quoted by Business Insider.

If this continues, Wal-Mart will soon lose its share in the U.S grocery market that generates around US$161 billion (AU$226 billion) per year, according to Hood. Hood believes shopping experience to be a vital reason behind deteriorating customer service. Hence, Wal-Mart is planning for huge “transformational change.”

“Importantly, we believe customer service scores may need to excel peers to drive meaningful growth and this may require a transformational change in the company’s culture away from focusing on store level tasking and merchandise-driven lowest landed cost strategies to one of increasing customer service through knowledgeable engaged associates,” Hood said, adding that it’s quite difficult to find out a store associate who could ask every customer whether they need help.

Diminishing grocery sales is not good news for Walmart businesses, and hence it should soon be worked upon, Hood indicated. The management has acknowledged the matter and is working on formulation of strategies that could help Wal-Mart come out of the dark.

Meanwhile, a text-messaging service has been introduced by TechCrunch Disrupt hackathon that helps improve customer service through chat representatives who answer customer queries and provide immediate help from Wal-Mart.

Contact the writer at feedback@ibtimes.com.au, or let us know what you think below.

Join the Discussion