What is bad news for Walmart investors may be good news for Walmart shoppers this Christmas. The giant retailer’s disappointing sales outlook may actually contribute to deeper holiday discounts.
Walmart announced on Wednesday that its sales outlook for 2017 is lower than expected, causing shares to tumble in a brutal selloff. That caused a domino effect across Wall Street, taking many other major retailers with it. In the company’s worst day of trading in 27 years, Walmart’s value fell by $21 billion in a matter of hours.
Walmart and other brick-and-mortar retailers have been struggling to increase sales in the face of heightened competition, both from each other and from online retail giant Amazon, which has a reputation for undercutting its competitors’ pricing.
So, in an effort to remain competitive and lure in customers, retailers such as Walmart will likely be slashing prices, quite possibly earlier in the season than before.
“I think we’re going to see pretty aggressive discounts — 30 to 40 percent off is going to be standard fare,” said Joe Feldman, senior managing director of Telsey Advisory Group. “As we get closer to the holiday and certainly after Christmas, there will be 40 to 50 percent off.”
Walmart is already offering everything from layaway to price-matching, and friends and family discounts.
Walmart’s struggles on Wall Street come one week after news emerged that the retailer was cutting 450 jobs at its headquarters in Arkansas.
As the holiday shopping season approaches, Walmart and other retailers are seeking a spending spike. But according to projections from the National Retail Federation, this year’s holiday shopping season should be less profitable than last year’s — a spending increase of 3.7 percent from 2014, compared to 4.1 percent from the previous year.
“While economic indicators have improved in several areas, Americans remain somewhat torn between their desire and their ability to spend,” NRF President and CEO Matthew Shay said.
With the “weight of the economy” on their minds, Shay expects families to spend “prudently and deliberately.”
“Price, value and even timing will all play a role in how, when, where and why people shop over the holiday season,” Shay said. “Retailers will be competitive not only on price, but on digital initiatives, store hours, product offerings and much more.”