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Retailers, consumers and prices

June 5th, 2009

The greening of Wal-Mart

Posted by: Lisa Baertlein

walmartsustainable Wal-Mart, which helped promote the adoption of those funny-looking “green” lightbulbs, is making more room in its Sam’s Club warehouse stores for environmentally friendly products — including a water-saving toilet that has one button for flushing liquids and another for flushing solids.

Employees at a Sam’s Club in the discounter’s home town in Bentonville, Arkansas, have emptied shelves of things like power tools to make way for a variety of green products. Similar efforts have taken place in Sam’s Clubs across the United States.

“Our members need and are looking for things that will help them mitigate their energy bills,” said Joel Heiligenthal, buyer of home efficiency products at the club store chain.

 Wal-Mart launched its own private-label compact fluorescent lightbulbs (CFLs) in 2007 and has been selling them in thousands of stores.  

As part of an environmental push started under former CEO Lee Scott, Wal-Mart also has outlined plans to one day be supplied by 100 percent renewable energy.

Check out this video of new CEO Mike Duke telling reporters about the company’s ongoing sustainability efforts in a press conference on June 5.

(Photos: Reuters/Jessica Rinaldi; Video/Lisa Baertlein)

June 4th, 2009

Welcome to Wal-Mart country

Posted by: Lisa Baertlein

bentonvillewmtoneReuters is attending Wal-Mart’s annual meeting this week and will be sending news, tweets and images from the event via Shop Talk.

Our tour will include visits to the company’s distribution center, a Sam’s Club warehouse store and a Walmart supercenter.

We’ll also get updates on the discounter’s plans for its international business, U.S. store remodels and, of course, send news from the annual meeting.

bentonvillebankowned2Walmart’s Store #1, pictured above, is featured on local tourist maps.

One thing that struck us on the drive from the airport to world biggest retailer’s headquarters of Bentonville, Arkansas, was the sheer number of “For Sale” signs on properties ranging from homes to commercial land.

Wal-Mart is often held up as the success story of these hard economic times, but when it comes to foreclosures its home town is no different from many others around the nation. 

“For Sale” signs litter the landscape and housing communities are idled. Here’s a snippet from a recent story in The Morning News: Bentonville has 11 unfinished subdivisions in various states of completion, according to city records. Nine are not under active construction, and four of those are virtually abandoned, said Brian Bahr, the city’s current planning manager.

(Photos: Lisa Baertlein)

October 16th, 2008

Sam’s Club tries luring new members with $10 deal

Posted by: Nicole Maestri

sams.jpgWal-Mart is betting $10 and 10 weeks will draw new members to its Sam’s Club warehouses.

Sam’s Club and Costco work as membership clubs. Shoppers pay an annual fee that allows them to shop in the warehouses and get discounts on everything from diamond rings and big screen TVs, to bulk-sized packages of toilet paper or bottled water.

In the past year, the clubs have become popular with consumers and small businesses looking for ways to stretch their budgets as prices rise and paychecks shrink. But in this environment, cash-strapped customers may find the upfront fee a deterrent to joining the clubs if they are not already members.

Sam’s offers a variety of memberships, including a $40 one for individuals and a $35 membership for business customers that allows them to shop during special “business only” hours.

Sam’s Club has talked about wanting to improve its membership base, and in its latest push, it is now offering a $10 membership good for 10 weeks to families and businesses that are not currently members.

“With a temporary 10 week membership we’ll be able to give those who sign up a good chance to see what we can do for them everyday, and through the holidays,” said Mike Turner, vice president of membership at Sam’s Club, in a statement.

In July, Sam’s Club offered a special deal to attract college students. With a valid college identification card and college email address, students were able to buy a year-long membership for $40 and receive a $15 gift card.

(Photo: Reuters)

August 20th, 2008

BJ’s: Prices are going up and competition may be “brutal”

Posted by: Nicole Maestri

costco1.jpgLate last month, Costco warned its quarterly profit would miss Wall Street estimates as soaring costs and inflationary pressures ate into its margins.

While the cost of the goods it sells was going up, the No 1 U.S. warehouse club operator said it was delaying passing along price increases to shoppers in order to boost its sales and appeal to cash-strapped consumers.

“It is times like this, painful as it may be, that holding off on price-increasing certain key items, by even a few weeks, we believe helps and strengthens our business for the longer term,” Costco Chief Financial Officer Richard Galanti said at the time.

BJ’s Wholesale, the No 3 U.S. warehouse club operator, said on Wednesday that it is  keeping an eye on what its competitors are doing when it comes to marking up their prices.

“Inflation is a huge challenge for all retailers as we try to manage pricing in such a way that we recoup our costs while continuing to deliver value,” said BJ’s CEO Herb Zarkin on a call with analysts. “Our overall goal is to maintain our margin rate but it is quite a balancing act.”

costco2.jpgBut one thing is clear — BJ’s does not intend to undermine its profits by selling goods below cost.

“No rational retailer can accept these kind of increases and expect to make a profit. It’s just not going to work,” he said.

Prices for flour, rice, cooking oils, paper towels, household cleaners, and health care items have soared this year, driven higher the cost increases in energy, raw materials, transportation and labor, BJ’s said.

But general merchandise — which includes jewelry, electronics, tires, books, furniture and toys —  is getting in on the act as well.

“Overall, we are experiencing inflation in most of the general merchandise categories that come from overseas and those items are just hitting the floor,” said President Laura Sen.

What might that mean heading into the holidays for retailers that sell general merchandise, which tends to be more discretionary in nature and the type of purchases that consumers are overlooking these days?

“The promotional environment is going to be brutal,” Sen said.

(Photos: Reuters)

April 24th, 2008

Who knew a grain of rice would cause a global ruckus?

Posted by: Nicole Maestri

thrice2408.gifFood costs have been soaring worldwide, spurred by increased demand in emerging markets like China and India; competition with biofuels; high oil prices and market speculation. 

That situation has sparked food riots in several African countries, Indonesia, and Haiti. United Nations Secretary-General Ban Ki-moon has warned that higher food prices could hurt global growth and security.

But the effect of rising prices took a surprising turn this week– at least a surprising turn by U.S. standards — when it comes to sales of rice.

Rice prices in particular have surged this year as exporters curb supplies. Trade bans on rice have been put in place by India, the world’s second largest exporter in 2007, and Vietnam, the third biggest, in hopes of cooling domestic prices.

Worried that rice prices may soar beyond affordable levels and worried that shortages abroad would be replicated at home, U.S. shoppers began buying up large quantities of rice.rice.jpg

The move caused warehouse club operators Costco and Sam’s Club, which sell large bags of the staple item and have lots of small restaurant owners as their customers, to limits sales of rice.

Wal-Mart’s Sam’s Club warehouse chain said it was limiting sales of 20-pound (9 kg), bulk bags of Jasmine, Basmati, and long grain white rice to four bags per customer per visit, at all of its locations. It cited “recent supply and demand trends.”

Costco’s CEO Jim Sinegal said he thought the sudden surge in buying was being triggered by constant media reports highlighting food shortages and rising prices. He said the warehouse club was trying not to limits sales of the items.

“If it’s a Chinese restaurant who buys from us all the time we can’t tell them, ‘Why don’t you try french fries this week?” he said, “They need rice.”

If it does run out of supply, Sinegal said Costco is usually back in stock by the next day.

“We don’t want to create a panic situation,” he said.

Tell us … Have you been stocking up on certain items amid rising prices?

(Reuters photo and graphic)