Why Wal-Mart Isn't Smiling

The fortunes of Wal-Mart are supposed to be a bellwether for the rest of the US economy. So when the retail giant turned in a lame November sales increase forecast of only 0.7%, observers grew concerned. However, other retailers are reporting post-Thanksgiving sales in line with the more optimistic 3 to 4% growth numbers.

So what's up with Wal-Mart?

An article in Slate suggests that Wal-Mart may have reached the limit of its ability to cut costs and undersell the competition. Minus that, it must compete on quality, customer service and the overall shopping experience -- factors that level the playing field a bit.

Some have suggested that a Wal-Mart backlash might be in the works. But I see an even more fundamental problem, as does the Slate article.

When I compare my local Wal-Mart with my local Target, I see two "big box" discounters that couldn't be more different.

I truly enjoy shopping at Target. The store is bright, clean and organized. The goods are every bit as attractive and stylish as what one would find in a more upscale store. Yet the prices are right, and I can find everything from toothpaste to printer paper to lawn fertilizer. Rarely is anything out of stock. Even their store-brand items are packaged with panache.

Contrast this with the Wal-Mart not a half-mile away. The store is filthy. Half the time, even common items are out of stock (despite the chain's much-touted inventory control system). Boxes and other junk block the aisles, so much so that some are completely impassable. Much of the merchandise is shoddy; I've bought clothes there that have fallen apart on the first wash. The store is crowded, noisy and chaotic, and checking out takes forever.

But Wal-Mart's low prices make the hassle worth it, right? Often, the prices I pay at Wal-Mart are no better than -- and are in some cases higher than -- other stores. At any rate, who needs more hassles, especially this time of year?

Granted, my Wal-Mart is in the process of expanding, and perhaps they'll correct some of these shortcomings in the process. But it stands to reason that I'm not the only one who notices this contrast. This holiday season, where would you rather shop?