Is falling revenue problem just consumer’s cutting back on spending?
Fact is for many years WMT have a wide competitive advantage to most competitors, including on groceries which account for about half of all WMT sales. Although I am going to focus grocery side of WMT, I most of WMT sales are impacted similarly. In the 1980s regional and local supermarket chains dominated the food retail landscape. By the 1990s, grocery store chains merged and bought out regional retailers, while large warehouse clubs and largediscount general merchandise stores expanded into grocery products.
Over the last decade, grocery store chains have focused on consolidation, mergers and takeovers in an effort to compete with the giant food warehouses, such as Wal-Mart and Costco. Between 1996 and 1999, there were 385 grocery mergers. Meanwhile, new national supercenters and discounters have emerged as grocery powerhouses like WMT, and now are able to compete head to head with them.
The fact is, WMT own success in retail grocery sales has driven a decades long consolidation of grocery retailers, and attracted large discount warehouse clubs and general discount merchandise stores into grocery sales. Now instead of facing a hodgepodge of local and regional grocery stores, WMT faces lean competitors with the same abilities to seek rock bottom prices from suppliers, and pass them off to consumers. Whis is what I think is the real reason for slipping revinues and profits at WMT.
I don't hold any position in WMT although I rate it a hold at this time. If I was in it I would not be ready to run just yet, but I wouln't be willing to take a position either at this time. I just don't think there is much on an upside, but don't see WMT stock crashing anytime soon.