Wal-Mart memo notes drop in shoppers

A worker stocked shelves at a Wal-Mart store in Chicago. Wal-Mart is restoring several items in a bid to lure shoppers. A worker stocked shelves at a Wal-Mart store in Chicago. Wal-Mart is restoring several items in a bid to lure shoppers. (John Gress/Reuters)
By Matthew Boyle
Bloomberg News / August 4, 2011

E-mail this article

Invalid E-mail address
Invalid E-mail address

Sending your article

Your article has been sent.

Text size +

NEW YORK - Visits to Wal-Mart’s US locations open at least a year dropped 2.6 percent from February through June, according to an internal memo, while rivals are attracting customers.

Those Wal-Mart stores had 82.8 million fewer visits through the first five months of the company’s fiscal year than a year earlier, says the memo, which was obtained by Bloomberg News. Wal-Mart doesn’t disclose those traffic numbers, and David Tovar, a spokesman, declined to comment on the memo.

Wal-Mart’s plan to recapture customers by returning thousands of products to US store shelves has failed to reverse a decline in foot traffic at the world’s largest retailer, said Jeff Stinson, an analyst at Cleveland Research Co. That’s primarily because Wal-Mart’s core low-income customers are shopping less and going to other retailers more often, according to two recent shopper surveys.

“The biggest issue remains weak store traffic,’’ Stinson wrote in a July 14 report. The Cleveland-based analyst rates the shares “neutral.’’

Wal-Mart, led by chief executive Mike Duke, is restoring an average of 8,500 products to its stores to lure back shoppers still pinched by persistent unemployment and gas prices that have risen 36 percent in the past year. Sales in US Wal-Mart stores open at least 12 months have declined for eight straight quarters.

Wal-Mart’s traffic decline comes as some of its direct competitors are getting more visits.

Kroger Co., the largest US supermarket chain, boosted traffic in each of the previous three quarters. Dollar General Corp., the biggest dollar discount chain in the country, has increased traffic for 13 straight quarters, the company said June 1. At Target Corp., traffic rose for six consecutive quarters before falling in the first quarter of 2011.

Wal-Mart’s decline is close to the 2.5 percent drop in shopper traffic at all retailers from February through June, according to retail industry data provider ShopperTrak in Chicago.

The two shopper surveys, from Morgan Stanley and retail consultancy WSL Strategic Retail, found that the removal of items from stores in 2009 to reduce clutter wasn’t among the top reasons why shoppers are visiting Wal-Mart less frequently.

Many shoppers don’t believe Wal-Mart’s prices are the lowest anymore, the surveys found. These consumers are shifting more of their spending to dollar stores, Target, and supermarkets such as Kroger’s, WSL said.

Wal-Mart, based in Bentonville, Ark., has responded by pledging to match local rivals’ prices, a move that Wendy Liebmann, chief executive of New York-based WSL, said was “defensive.’’

In a May study from Deloitte Research, almost three out of four respondents said they are making fewer trips to the grocery store to save money, and two-fifths said they are purchasing fewer items overall.

“Wal-Mart shoppers believe they are still living in a recession,’’ Liebmann said. “They simply have, and will continue to have, less to spend.’’