After Walmart’s CEO announced that revenue in 2016 would be flat due to the currency impact as well as an increase in operating expenses, WMS shares plunged by more than 9 percent–their worst day in 15 years. Over 30 million shares were sold by 12pm ET today as investors panicked over the predicted earnings slump of 6 to 12 percent. Though the retail giant is focusing on “long-term growth” by spending more on workforce and e-commerce business, this strategy clearly wasn’t enough to appease Wall Street.
Here’s a look at 3 problems hindering the retail giant’s growth.
Walmart’s introduction of fresh food gave shoppers a one-stop shopping experience with deep discounts on groceries, which represented 55 percent of the bargain store’s business. However, grocery stores have fought back by slashing prices, minimizing the value gap. As a result, consumers have found it less desirable to deal with the size or inconvenience of driving to a Walmart for a low 5 percent savings when their neighborhood store offer similar deals.
In an attempt to squeeze profits, Walmart underinvested in staff which led to a growing customer dissatisfaction. Though today’s budget-conscious consumers are driven by bargains, they still value the overall shopping experience, customer service and seek quicker check out.
Walmart is playing catch up to meet the growing demand of online shopping. Competing against monster rivals like Amazon who dominate e-sales with low prices, fast delivery and customer satisfaction, Walmart faces a slow and hard fight to the top.
You can read more on the stock tumble here.
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