Wal-Mart may face tough questions
Managers and suppliers will be meeting as many observers are saying the retailer has lost its way.
For years, the annual meeting of Wal-Mart store managers and suppliers has been mostly an occasion to celebrate the company's successes and discuss its growth. This year, things are different.
The world's largest retailer is struggling, and the thousands attending next week's meeting will want to know what it plans to do about the problems.
The annual conference in Kansas City, Mo., will gather about 7,000 store managers Monday and Tuesday and then, for the next two days, draw hundreds of companies that supply the merchandise that Wal-Mart Stores Inc. of Bentonville, Ark., sells in its nearly 4,000 U.S. stores.
Wal-Mart keeps the meetings closed to outsiders, including the media, investors and analysts.
The analysts say they will be watching for signs that chief executive officer Lee Scott has a plan for recovering from a disappointing 2006. The top question now is whether the company will continue a year-and-a-half-old strategy of prying more money from affluent shoppers with trendier products or go back to low-price basics.
Efforts to improve its image with trendier fashion brands and home fashion accessories have fallen flat, although its push for higher-price electronics has done well.
Wal-Mart reported its worst holiday season ever even as it started to reemphasize its low prices after months of playing down its discount strategy. That has left customers and observers confused about what Wal-Mart is trying to be.
"Wal-Mart urgently needs to regain its price initiative," said Robert Buchanan of A.G. Edwards & Sons. "They have sent a mixed message. They have to be crystal clear that they are a low-price leader."
The retailer also is starting a two-year effort to tailor its stores to communities, offering different merchandise to six target demographic groups such as Hispanics, African Americans, and what it calls "empty-nesters/boomers."
"They're going through a big shake-up. This [meeting] gives them a chance to get everybody on the same page as to the direction the company needs to be going," said Don Gher of Coldstream Capital Management in Bellevue, Wash.
That shake-up includes a reorganization announced this week in how Wal-Mart selects its merchandise. Wal-Mart also promoted John Fleming, its top marketing executive, to head the effort in the new post of chief merchandising officer.
Fleming, a veteran of faster-growing rival Target Corp., will oversee the categories the company considers key for growth: grocery, entertainment, apparel and home furnishings.
Wal-Mart will have a lot of explaining to do at meetings.
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