Can Wal-Mart survive the Amazon generation?

walmart supercenterIf you like to go to Wal-Mart raise your hand…of course I can’t see you but I am guessing everyone but that weirdo in the back kept their hand down (no offense weirdo, to each their own). A few weeks ago I made my dreaded monthly trip to Wal-Mart for cleaning supplies, toiletries, and a few other things. As I was picking up a package of washing machine cleaner I thought, “I wonder if Amazon has this cheaper?” I whipped out my smartphone, opened my Amazon app, and scanned the barcode. Sure enough, not only did they have that product cheaper, but they had a selection of cheaper products. I’m an Amazon Prime member so I could get it with free 2 day shipping. I decided saving money was worth a two day wait.

When I think of Wal-Mart this is what comes to mind:

  • Limited choices
  • Rude crowds
  • Long lines

Way back in June of 2009 the investment website Seeking Alpha asked the question: Can Wal-Mart Survive Generation Y? They suggested that no, Wal-Mart can not survive the new generation for multiple reasons:

  • Wal-Mart’s model focuses on Baby Boomers, a shrinking demographic.
  • Gen Y prefers choice over price, and Wal-Mart’s model is simply price over choice.
  • Gen Y doesn’t know what they want 6 months from now.

In November of 2009 Wal-Mart took it’s first big swing at Amazon. What kind of amazing marketing tactic did Wal-Mart use? They priced best selling books at $10. That’s right, they attacked Amazon in the printed book industry as Amazon was growing it’s Kindle book sales (the original Kindle was introduced in 2007). At the time Wal-Mart made the statement, “If they react and match our prices, we’re going to continue to lower our prices,” said CEO Raul Vazquez.

Really Wal-Mart? You decided to fight the largest online retailer by choosing to beat them online, in a book market shrinking to digital sales, that appeals to an older demographic which prefers to shop offline? And how exactly can a company that has billions of dollars in brick and mortar to maintain compete in prices with a company that has warehouses and a website? As if Wal-Mart wasn’t doing enough to beat themselves up chasing a shrinking demographic and ignoring a growing one, they made another move to distance themselves even further from the online community. In August of 2011 Wal-Mart announced they would no longer sell MP3s.

To Wal-Mart’s credit they are taking another stab at digital movies (Vudu), after two failed attempts that is. The biggest hurdle I see here is price. Rentals start at $3.99 while Netflix and Amazon both offer streaming subscriptions for much less. Wal-Mart’s selection is slightly better, and by slightly I mean a fraction of slightly. It consists of movies I like to dub “what to get when Redbox is out of the 3 good movies in the machine.” According the Wall Street Journal steaming movies have been a rare digital success for Wal-Mart. However, the WSJ also says, “analysts have questioned whether Vudu has the legs to reach Wal-Mart’s core customers.”

So there you have it. Wal-Mart is stuck in limbo between their traditional customer base and the emerging demographic groups. Every move they make seems to hurt their business on one side or the other. Do you think Wal-Mart has what it takes to lure away people that have discovered the ease, options, and price of Amazon? Does Vudu have what it takes to pull in customers that will translate to more retail sales?