Wal-Mart Beats Other Retailers for a Piece of the Stimulus Pie

Wal-Mart (WMT) got the jump on retailers like Target (TGT) during the holiday season by starting deep discounts in October. Now it has beaten them again for a piece of the upcoming stimulus plan.
Wal-Mart announced Tuesday that it will cut prices between 10 to 30% this week on groceries, electronics and other home-related products in an effort to "help with added savings throughout the year, focusing especially on what people want, when they need it,".

The initial cuts come during the build up to the Super Bowl and will focus on game related items. How big is the Super Bowl pie? Try $9.5 billion. This will be a blow to retailers like Costco (COST) and BJ's (BJ). "We will have more of these during the busier shopping periods of the year like Valentine's Day and Easter," Wal-Mart spokeswoman Melissa O'Brien said.

Here is the genius of the plan. Wal-Mart said "it will offer no interest for 18 months on purchases of $250 or more with a Wal-Mart Credit Card." Now, folks can add and those who are looking at $300 per person can go to Wal-Mart and get a jump spending that money. Wal-Mart will be smart and keep most shoppers' limits below $500 so that the bills can easily be paid when the checks come in.

Not only will Wal-Mart enable folks spend those checks and get a great value for them, they will front them the cash to do so. Brilliant...

Disclosure ("none" means no position): Long Wal-Mart

Comments

[freddiemertz:]

Once again, very little expertise on display here. This is WMT's normal rollback program, branded as "economic stimulus" just as August's was branded "Back to school". In fact, the number of items in this round of rollback is actually LESS than normal. And more importantly, extending no interest financing on groceries and consumables is actually pretty foolish. There is a reason that grocery stores don't issue credit cards and don't give financing. It is asking for trouble with a low-end consumer.

2008 Jan 30 08:53 PM

[MGA:]

Well the sad thing is if all of the other Wal-marts acrross the country have raised the price like they have here where I live then that 10-30% break doen't make any difference. I went to Wal-mart for two weeks in a row Everything has went up 30-60 cents more than the previous week before. This is just another way they get the money back. So in a was basically you are not really getting any money back. But it's not just Wal-mart. It is all of the stores.

2008 Jan 31 01:10 PM

[MGA:]

Enter your comment hereWell the sad thing is if all of the other Wal-marts acrross the country have raised the price like they have here where I live then that 10-30% break doen't make any difference. I went to Wal-mart for two weeks in a row Everything has went up 30-60 cents more than the previous week before. This is just another way they get the money back. So in a was basically you are not really getting any money back. But it's not just Wal-mart. It is all of the stores.

2008 Jan 31 01:11 PM