‘Low prices’

Photo by: Anonymous

ASSOCIATED PRESS

Photo

In this file photo taken Dec. 15, 2010, an employee directs a customer inside a Wal-Mart store in Alexandria, Va. Wal-Mart Stores Inc. is launching a national TV ad campaign Monday, April 11, 2011, highlighting its renewed focus on low prices and its price match policy in a bid to bring back customers who no longer trust it has the lowest prices.

Walmart campaign tries to lure back customers

Associated Press

NEW YORK

Walmart is hammering home its low-price message with a new ad campaign in a bid to bring back customers who no longer trust it to save them money.

The campaign started Monday and bears the slogan “Low Prices. Every Day. On Everything” and features five 30-second commercials, including ads featuring an Easter-egg hunt and a customer asking for a price match.

“We have lost our customer confidence ... in having the lowest price,” said Duncan MacNaughton, chief merchandising officer at Walmart in an interview with The Associated Press.

The new commercials come as Walmart tries to reverse a nearly two-year slide in an important revenue measure at its U.S. business.

Sales at those stores are hurting because of mistakes the retailer made on price and selection. Walmart also faces increasing price competition from dollar chains and Amazon.com.

In fact, its slogan “Save Money. Live Better,” in use for several years, now appears in smaller type in the ads, underscoring Walmart’s shift in strategy to hammer hard that it has everything shoppers need at rock-bottom prices.

Walmart is restoring thousands of items it had stopped carrying in an overzealous bid to clean up its stores, from fishing supplies in Dallas to snowblowers in Minneapolis, and has returned to its “Everyday Low Prices” roots.

To change perceptions, the company also said it is directing store employees to comb through competitors’ advertisements so price matches at the register are easier.

“Our company is determined to create the best one-stop shopping experience and low prices on the right products backed by a clear, consistent ad-match policy,” MacNaughton said.

Last year, Walmart had strayed from its “everyday low prices,” the bedrock philosophy of founder and namesake Sam Walton. Late last year, it switched back to emphasizing low prices across the whole store, instead of heavily promoting selected items.

It could take a while to reverse the sales declines. The company predicted in February that revenue at stores open at least a year for its U.S. Walmart stores should be anywhere from down 2 percent to unchanged for the current quarter compared with the same quarter last year.

The campaign is an acknowledgement that Walmart traffic is still weak, Wall Street Strategies analyst Brian Sozzi said.

“I am concerned that Walmart is taking to the airwaves at the same time it acknowledges it’s not where it needs to be with product restoration, therefore risking customer disappointment yet again,” he said.

Moreover, he said stores are looking disheveled because new merchandise is coming in faster than Walmart can display and sell it.

“Has customer traffic been so soft in the first quarter that Walmart is willing to go out on a limb and market aggressively despite the store appearance reflecting a sense of disarray?” Sozzi said.

Walmart said it is adding 8,500 items to its inventory, 11 percent more in an average store. In some categories, the selection will be more than before the inventory slashing, McNaughton said.

In its ad campaign, the commercial featuring the Easter egg highlights Walmart’s variety, from Glidden black and green paint to Starburst jelly beans.

The changes are bringing back local food favorites and national brands in household basics and general merchandise such as consumer electronics. Some changes are tailored to local markets. In Phoenix, for example, shoppers will find pool supplies and lawn and garden items year-round.

Walmart said it will take a few more months to finish bringing back the grocery items and will take the rest of the year for departments such as clothing and electronics.

Late last year, Walmart had said it aimed to have all the groceries restored by the end of 2010 and would add back the general-merchandise items by spring.

Walmart’s price-match policy has been around for several years, but in recent months, the company has been using it as a weapon to compete with rivals.