The end of the Wal-Mart era - MSN Money

The end of the Wal-Mart era - MSN Money

The end of the Wal-Mart era

Its influence on the economy is profound and lasting. But for the first time, the world's biggest retailer is having a tough time providing what consumers want.

By The Wall Street Journal

The Wal-Mart era, the retailer's time of overwhelming business and social influence in America, is drawing to a close.

Using a combination of low prices and relentless expansion, Wal-Mart Stores (WMT, news, msgs) emerged from rural Arkansas in the 1970s to reshape the world's largest economy. Its co-founder, Sam Walton, taught Americans to demand ever-lower prices and instructed businesses on running a lean company. His company helped boost America's overall productivity, lowered the inflation rate and strengthened the buying power for millions of people.

Over time, it also accelerated the drive to manufacture products in Asia, drove countless small shops out of business and sped the decline of Main Street. Those changes are permanent.

• Talk back: Is Wal-Mart past its prime?

Today, though, Wal-Mart's influence over the retail universe is slipping. In fact, the industry's titan is scrambling to keep up with swifter rivals that are redefining the business all around it. It can still disrupt prices, as it did last year by cutting some generic prescriptions in the United States to $4. But success is no longer guaranteed.

Convenience, selection and quality

Rival retailers lured Americans away from Wal-Mart's low-price promise by offering greater convenience, more selection, higher quality or better service. Amid the country's growing affluence, Wal-Mart has struggled to overhaul its down-market, politically incorrect image while other discounters pitched themselves as more upscale and more palatable alternatives.

The Internet has changed shoppers' preferences and eroded the commanding influence Wal-Mart had over its suppliers. As a result, American shoppers are increasingly looking for qualities that Wal-Mart has trouble providing.

"For the first time in a long time, quality has a chance to gain on price," says Lee Peterson, a vice president at WD Partners, an Ohio brand-consulting firm