ARTICLE:

Wal-Mart Joins Amazon in Squeezing Retail Rivals; Wal-Mart's strong quarter may represent less of a bellwether for other retailers than a tolling bell

Wal-Mart Joins Amazon in Squeezing Retail Rivals; Wal-Mart's strong quarter may representless of a bellwether for other retailers than atolling bell Lahart, Justin . Wall Street Journal (Online) ; New York, N.Y. [New York, N.Y]19 May 2016: n/a.ProQuest document link

ABSTRACT: Rather it could signal a renewed willingness on Wal-Mart's part to take back market share, even if it comes at the expense of slimmer profit margins.

FULL TEXT: To all the recent problems besetting retailers, add an old one: Wal-Mart Stores. The retailing giant on Thursday said that its overall sales in its fiscal first quarter ended April rose 0.9% from a year ago to $115.9 billion--well above the $113.2 billion analysts anticipated. Earnings per share, at 98 cents, were adime better than estimates. After a string of disappointing results from retailers including Target, J.C. Penney and Macy's, the Wal-Mart numbers were a shot in the arm. Its stock climbed, with other retailers' shares showing sympathy gains. But Wal-Mart's first-quarter success may not reflect a better retailing environment than investors have lately been reckoning on. Rather it could signal a renewed willingness on Wal-Mart's part to take back market share, even if it comes at the expense of slimmer profit margins. The company has been paying workers more , raising its minimum hourly wage to $10 in February. It has also been investing in e-commerce and sprucing up its stores. Those moves led to a hefty 6.3% increase in selling, general and administrative expenses in the first quarter from a year earlier. As result, earnings before interest and taxes as a share of sales fell to 4.6% from 4.9%. That is the slimmest operating margin the company has registered in over a decade. The payoff from those investments are better experiences for customers, a more robust online presence and--as the first-quarter results show evidence of--better sales. For anybody looking for a way to handle the challenges ofe-commerce share gains and shifting consumer attitudes, Wal-Mart may have put together a convincing playbook. But it isn't necessarily a playbook that other retailers can follow. Wal-Mart doesn't carry as heavy a debt load as domany other retailers, giving it more leeway to invest in sales growth. It is also majority-owned by founder Sam Walton's family members, who presumably are in the stock for the long haul. PDF GENERATED BY PROQUEST.COMPage 1 of 3

Instead, many other retailers are caught up in a spiral that will be difficult to escape. They have been losing salesas customers have migrated online and shifted spending toward things like going out to eat rather than shopping. Retailers have cut costs as a result, but that is often damaged the shopping experience--driving customers away. If Wal-Mart is now giving people a more compelling reason to shop at its stores, it is also giving them a reason not toshop elsewhere. Retailers who had gone from looking over their shoulders for Wal-Mart, to looking over their shoulders for Amazon.com may have a reason to worry about the Bentonville, Ark., behemoth all over again.

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1. Strategically, why isWalmartplanning to compete [withAmazon] in online shopping?
2. If you consider Walmart to be a cost leader in online sales, why might this move into online sales cause others to make strategic moves to enhance their cost leadership? Or their benefit leadership?
3. If you consider Walmart to be a benefit leader in online sales, why might this move into online sales cause others to make strategic moves to enhance their cost leadership? Or their benefit leadership?
4. How would you argue that this strategic move by Walmart is a focus strategy?