Wal-Mart Underestimated Against Amazon: Ellwood

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Nov. 26 (Bloomberg) -- Mark Ellwood, author of “Bargain Fever” and Bloomberg Contributing Editor Barry Ritholtz discuss Wal-Mart’s position in the retail industry and the growing trend of price matching this holiday shopping season. They speak on Bloomberg Television’s “Bloomberg Surveillance.”

Ringers.

I say walmart is doing long-term what everyone else is been trying to do.

It calls it endless aisle.

You can shop online pickup in.

It realize those two channels -- it realized those two channels and that all its stores are just way where houses.

On the wake-up or they worried about moving units or price analysis?

That is a really good question.

I think what walmart is worried about is the same thing everyone is worried about which is amazon.

All it is thinking about is how we beat amazon.

This holiday season all the big ox retailers have gotten together to agree on price match.

Other more defensively minded in terms of protecting against amazon?

Look what they're doing in china.

They said in 2016 they're going to open 110 new operations in china.

That is quite aggressive.

You bring up amazon, it is not just having a network of stores around the country, it is also about managing inventory across that.

That is what amazon does so well.

It does had to get products to the people where there is demand.

Can walmart do the same thing?

I don't agree with you.

I don't think amazon does that particularly well.

Why is amazon racing to build these distribution centers around the country?

Is crossing its fingers and saying i hope the stores that have stores everywhere but don't realize we are ahead.

It is just warehouse.

Retail is changing ever so quickly, isn't it?

It has been changing for 20 years.

How do invest in it?

Very carefully.

You have to be aware of the fact that retail has been a low margin business for a long time.

Let's be blunt about amazon.

It is a fantastic company.

I by half the junk i buy from amazon, but they haven't made a dime of profit in god knows how long and still investors love them.

That is really a speculative trade.

Walmart, on the other hand, on the low-end, you look at walmart, target, dollar store, it'll run of stores in the lower end, very challenging to make money.

You have to catch them just right.

We are not a huge fan -- rex this upcoming holiday season, mark, when you look at massive discounting, people don't want to buy anything unless it is 40% off.

There's a game going on with artificial discounting.

You have to think about something like black friday.

Black friday is when the mall becomes an outlet mall.

Outlet malls or 60 to 70% -- items that are sold at outlet malls are made to be discounted.

My mother was a buyer.

This is right after the civil war.

What did you learn after the collapse?

It looked like there had been a crime.

What we learned from filene's was that they were too small to survive.

We learned that tjx has a bigger market cap and xerox.

It is huge.

Pre-k's size matters here.

Obviously you are really optimistic on walmart.

But what could they be doing better?

Answering some of its international operations.

It scaled back in india and we empathize with india because india is a really hard environment to operate in because of all the regulations about needing a local partner.

I think walmart is doing the right thing.

They're bringing in an international expert.

How do you respond to america's projection of retail to china?

That is an amazing question.

When walmart went to south korea, it went in wrongly and it created walmart south korea where you couldn't see over the different aisles.

Korean shoppers like to see over the aisles.

They like to get little samples.

You can't export wholesale, but you want to export cheap prices.

Obviously we have a new ceo.

Does this indicate any new strategy or is it just more the same?

I think it is more of the same.

But i hope so.

Berry, jump in here.

We talk about the phony sales.

What happens when you back away from it.

Look at jcpenney?

Disaster.

U.n. long at 30, right?

We don't like playing in that space.

You really have to get lucky on the low-end.

On the high-end it is different.

We look at tiffany's and neiman marcus going down the list, there is a different headspace.

Look, the maltese falcon prop sulfur $4 million at auction yesterday.

That is one market.

Walmart, tj maxx, target, that is a different market.

Where will walmart the inside of five years?

I think it will be thriving.

I hope everyone copies it.

11 optimism on walmart because everyone has taken shots at it.

Take a look at it, it is up 60% or so from the trading range bottle of a few years ago.

Euro-dollar is not that boring one dollar 35. quickly, barry, do you like the hydrocarbons?

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

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