All the focus on Amazon/Whole Foods while no one talks about the fact Walmart is fighting a 2 front war with Amazon and ALDI LIDL. Leadership is mistakenly focused on Amazon when we should be paying equal attention to relevant up and coming brick and mortar competitors...brick and mortar is still our bread and butter but leadership refuses to recognize....
5 replies (most recent on top)
Forbes writes:
Earlier than originally planned, Lidl will open its first store this summer in Fredericksburg, Virginia, and will have a total of 20 stores operating by the end of the year in that state, North Carolina and South Carolina. By mid-2018 the company plans to have 100 stores up and running. The secretive, privately held, German company (Schwarz Gruppe) has aggressive plans to expand in the Northeast as well as Texas and other states.
I am worried about this new competition, because the invasion of Aldi and Lidl in England proved to be very difficult competition for established leaders like Sainsbury, Tesco and Morrison, whose sales and profits tanked. Moreover Walmart’s Asda division reported lower sales in the last two years because shoppers switched to Lidl and Aldi, attracted by the sharp values of the German discounters.
The German chains are deep in the process of invading the states - they've already invested serious resources and infrastructure. They will not give up easily, Lidl alone is willing to accept significant losses in order to capture market share in the U.S over the long term. nfw you want to tell us how Aldi and Lidl are not even remotely dangerous? Have you read through WMT financial statements, do you know what percentage of total WMT sales come from online?
Totally agree with you zub! My thought, reorganizations are a relatively easy way to get to the bottom line, but people have been stretched thin (understaffed and overworked) at Walmart forever. When I was there our team was understaffed the entire time. At some point people are going to start to snap, if they aren't there already. I recall my doctor asking me once during a physical about Walmart, he said, "what the heck are they doing to people there?" Noting that his patients who worked at HO were very stressed out, and exhibiting physical ailments due to stress, and that was before the layoffs. The atmosphere and morale at HO now must be at an all time low. I got out awhile back, and am happier than ever in my career. I feel though for the people who remain.
Great points. Also Aldi carries the highest volume skus in one size to negotiate the lowest prices, and they locate their stores near WMT Supercenters.
Bottom line is that with the $2.7B wage/training investment, technology investments, and competitive pressures from Amazon/Lidl/Aldi, Walmart will have lower margins. Hence the reorganizations and intense focus on cost productivity.
I'm not the person who posted about the "2 front war." but I agree with them. Here is my take: Aldi in particular is poised to fight Walmart right now; their prices are 21% lower than Walmart, they are mostly private label -it's well known, retailers boost profit margins with private label. With 1,600 stores currently, and opening another 400 stores, it's something to take seriously. It is not like having only a handful of Whole Foods locations. Bottom line, Aldi is chomping at Walmart's customer base - low income shoppers.
Lidl is just getting started, but look for them to give Walmart heartburn too. They are touting prices 50% lower than the competition, and apparently carry high quality goods.
Basically, any shopping option for low income shoppers, with prices more competitive than Walmart, where shoppers go first to spend what limited money they have, will leave less money for them to spend at Walmart. Whether it be traditional grocery like Aldi or Lidl, or dollar channel, which we've already seen take business from Walmart, there are numerous players now putting pressure on Walmart.
I really do not see them even remotely dangerous if compared with AMZN
please help me understand your logic