What Does Wal-Mart Need to Do to Turn It Around?

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Aug. 14 (Bloomberg) –- Wolfe Research Managing Director and Senior Retail Analyst Scott Mushkin discusses Wal-Mart’s stagnant same-store sales, troubles with the company’s supercenters and online strategy. He speaks on “Market Makers.” (Source: Bloomberg)

That you do not see a turnaround anytime soon.

What should they be doing?

Or is a doing everything it should and it is just going to take time?

It is diagnosing the problem.

What is walmart's main problem?

It is a huge retailer.

If the economy is not growing that fast, it is going to be hard to grow.

Walmart led with price.

It was the price leader.

That advantage in the u.s. is diminished quite a bit.

It is hard to get people into your stores if you're not better on price.

Until the company we think addresses that issue and reestablishes the price cap, it is going to be hard to drive the traffic #are.

-- higher.

Where is the traffic going instead?

Kroger is a great example.

We have an outperform rating for them.

They compete against walmart more than anybody in the u.s. there was a perfect example of where it is going.

Other walmarts prices compare with amazon?

-- how do walmart prices compare with amazon?

That is a great question.

Amazon is a lot more rational when it comes to consumer pricing.

Walmart tends to price very low on consumable and if you are going to order one box of cheerios.

Walmart's pricing tends to below, but trying to get one box of cereal to the consumers is expensive.

Amazon is more expensive, but more rational.

What would be the long-term solution?

Do you literally need to close all of the huge doors and have a do over?

I think you have to get back to what made you a great company to begin with.

People drove by other retailers to get up to the supercenter.

The income is a 0% as it is.

They made some money and it is not growing.

They made their business by being a low-cost guy in the united states.

That is the got people into the stores.

They have to reestablish that and it is going to cost them a lot of money.

The supercenters are still quite profitable, most of them.

They talk about the bottom 10% is being be underperforming stores.

They have been asked, why don't you shut down the stores?

They do close some stores every year, but they don't tell us why they don't shut them all.

The very important point you are bringing up is that the company is questioning the supercenters.

Doug macmillan talks about the biggest stores being too big.

Unfortunately, their entire asset base is supercenters.

They got themselves in a little bit of a box.

I remember when doug macmillan was named the ceo.

Nobody understands e-commerce at walmart better than doug macmillan and he is as good as anybody in retail globally.

I've been left wondering why hasn't walmarts online strategy been more of a success?

Is it because the growth they're getting online is just the cannibalization of sales that they would have had in their physical stores?

Cannibalization is part of it.

You have to think about your e-commerce business in relation to the other assets you have.

Consumer a bull e-commerce is still an -- consumerable e-commerce is still a unproven business.

It has not scared off amazon.

Yes and no.

Amazon has started to get more rational.

We are concerned that the chase of revenue dollars at walmart, the 25% revenue growth at walmart, is going to hurt the prophet and cannibalize the supercenters.

It does not necessarily her to follow the e-commerce businesses, see -- hurt to follow the e-commerce businesses, see what is working.

Google express is another one.

What about the pink elephant in the room.

Inventory.

How do they manage inventory?

Not very well right now.

They're coming in below expectations.

Had to do that better?

In some ways, it is good inventory up.

They took so much labor out of their stores.

The way walmart distributes, you need the labor in the stores to get the stuff from the back room to the shelves.

We want to watch that.

It may be a little bit of a good thing as the stores are under stock.

I have been wondering with all of the technology acquisitions they are making why they are making -- why they have not gotten better inventory through technology.

Data, right?

For walmart in particular which have been relatively aggressive in making acquisitions, why not buy some of these data companies, inventory management companies.

It is a great point.

The other concern with e-commerce is siphoning off investment from where they should be putting it.

They are going to open their third for foam and center for e-commerce.

We feel it there behind in their logistics -- fulfillment center for e-commerce.

We feel like there behind in their logistics.

We think it is sucking off some of the investment they should be making into their logistics.

Right now, they are old school the way they distribute.

They rely a lot on the labor industry percentage to get from the back room to the shelves.

It is amazing the range of challenges that walmart faces

This text has been automatically generated. It may not be 100% accurate.

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