Walmart Shifts Emphasis From Chic to Cheap

Watch out, prices may again be falling at Walmart. Tired of being nibbled by dollar stores on the one hand and the likes of Target and Amazon on the other, the discount retailer is returning to its roots – under-cutting the competition.

Grocery trade publications say Walmart has been contacting its suppliers and telling them they'd better produce "opening price point" products – the cheapest items in a category, in other words – if they expect to remain on Walmart shelves.

Supermarkets shuddered, and some shuttered, when Walmart waded into the grocery business a decade or so ago. But now Walmart is getting the shivers as dollar stores and gas stations expand their stocks of milk, eggs, produce and other grocery products.

It was just a few days ago that Walmart said it would be working to provide healthier and more affordable food choices. Most of the media attention went to the healthier part of that equation, as the retailer pinned its plan to First Lady Michelle Obama's "Let's Move" campaign to reduce excess poundage among the citizenry.

But affordability promises to be an even bigger issue, as food costs are expected to climb steeply in 2011. The Agriculture Department predicts the Consumer Price Index (CPI) will climb two to three percent in 2011, thanks in large part of higher energy prices.

Beyond the grocery section, Walmart's ill-fated attempt of a few years back to move upmarket is still being blamed for sluggish sales of everything from cosmetics to appliances. Instead of emulating Target's stylish approach to value, Walmart is moving back to its time-tested formula of having the lowest possible prices on just about everything.

The low-price approach is also seen as key to Walmart's plans to muscle its way into urban areas with smaller stores – the Walmart equivalent of the corner bodega.