Walmart's decision to enter the lottery business reflects two significant business realities: the first is that they may have maxed out the growth of their mega-stores. Opposition has risen to the location of their big box stores, especially in urban neighborhoods which offer the most attractive as-yet-untapped markets remaining for the company.
So Walmart is starting to compete with smaller format neighborhood stores in order to capture more of the consumer's attention and money. That, in itself, is fraught with potential conflict given the often-ethic ownership of such enterprises. But it also signals the company's struggle to reinvigorate growth.
Which leads to the other truth, about which the company has been refreshingly frank: that their core lower-income customer is suffering economically. Walmart never needed to compete on the basis of gimmicks before; it just provided products their customer might need or want at a slightly more affordable price. Entering the lottery business means doing business with local governments, which are also anxious to figure out new sources of revenue since they can not raise taxes due to political opposition.
Lotteries have a whiff of desperation about them, for the purchaser and in this case, for the seller. Getting into this business may be cloaked in the usual rhetoric about giving the customer what they want, but it may well be signalling that the 'everyday low price' strategy has been taken as far as it can go. Walmart's customers are tapped out - in part because those everyday low prices required low wages that do not provide a sustainable base for the company's own customers. JL
Mark Miller reports in Brand Channel:
Walmart has long said that has no interest in the business of selling lottery tickets. But the company is interested in keeping its customers satisfied. So a pilot program is about to get underway this week in Florida, where 27 Walmart stores will test selling tickets in a limited market trial.
"We want to offer products our customers want," commented Tara Raddohl, a company spokeswoman, to the Miami Herald. "We did some initial research and we determined it would be a good market to pilot in."
The growth of Walmart’s smaller neighborhood-market stores is what brought about the change in thinking from the Arkansas-based company.
Florida Lottery Secretary Cynthia O'Connell “said she reached out to Wal-Mart officials during the summer, stressing to them that their neighborhood market stores are reaching out to the same customers who shop at other grocery chains,” the Herald notes. "I think Wal-Mart felt comfortable with our approach," O'Connell said. "It's a much better model for them to pilot. I am just grateful for the opportunity."
Initial sale of the tickets will begin Oct. 5 in Orlando, and then spread to the other locations by month’s end.
0 comments:
Post a Comment