Walmart Changes its Tune!
I have said this often, “When a company changes its tune, it’s time to question their stated competitive advantage”.
You may have seen the new Walmart commercial with a tall, skinny, poor rapper guy reassuring you that Walmart will price match. The first time I saw the commercial I thought, “What?” Walmart has changed its tune from “We’re Rolling Back the Prices…” to: “We will Price Match”... Price Match?
Think about it, over time your competitors can learn your business and as they grow they will inevitably erode that which was your competitive advantage (Cost Leadership). For example, HP slowly learned of Dell’s strategy (Differentiate) and was able to copy it; a few short years later, Dell is hardly in focus, hardly different.
For this holiday season Walmart’s tune has changed to “We will price match… guaranteed!” And with that I wonder: “Who has the lowest price now?” Walmart’s strategy was to be a “Cost Leader” and they were untouchable for the last decade but like Dell, has another retailer amassed the buying power to rival Walmart, say, Target? When your margins are in the low single-digits you must have the top-line growth – the dominant number that said, when the top-line growth is being threatened I then turn to their single-digit earnings ratio and can only predict that it is looking ugly for an investor going forward.
Merry Christmas... I will be shopping somewhere else!
