Wal-Mart Holds Line on Prices
Jennifer Marks -- Home Textiles Today, June 9, 2008
Shoppers from higher-income households are stepping up their purchasing at Wal-Mart, a sign of the spreading impact of higher gasoline and food prices, Wal-Mart execs suggested last week.
"Traffic from this group [households with income of $65,000 or higher] in the last six months has grown faster than the chain," said Eduardo Castro-Wright, president and ceo of Wal-Mart U.S.
Speaking at a question and answer session with analysts following Wal-Mart's annual shareholder meeting last week, Castro-Wright also addressed how Wal-Mart is dealing with inflationary pressures on the products it buys.
"We're seeing very different levels of inflation across the categories," he said, noting that food inflation is running at mid-single digit levels, while general merchandise inflation averages 2%.
However, he noted, within that 2% average "you actually have some deflation — such as flat panel TVs — and other categories that are higher than that."
Wal-Mart is working to counter inflation by its time-honored policy, taking more cost out of the supply chain. Where that is impossible, the company is passing costs on — although it remains focused on lowering its prices.
"You won't see us lead on price increases," Castro-Wright emphasized.
In terms of its international business, Wal-Mart is expecting big things from its joint venture in India. "It's a big, big market with a big opportunity," said Mike Duke, vice chairman, Wal-Mart International.
Wal-Mart is actively investigating "the best way to address the Russia market," he added, saying, "Even in the markets we're currently in, we want to grow where we have the greatest return. Canada and Mexico still have a lot of upside."
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