Walmart Q3 earnings: Online sales improve, groceries struggle, and holidays look tough.

Walmart Will Match Amazon’s Prices This Holiday Season

Walmart Will Match Amazon’s Prices This Holiday Season

Moneybox
A blog about business and economics.
Nov. 13 2014 11:44 AM

Walmart Steps Up Competition With Amazon as Holiday Season Approaches

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Why buy it on Amazon when you can buy it at Walmart?

Photo by Paul J.Richards/AFP/Getty Images

With the holiday shopping craze just weeks away, Walmart had some good news to report on Thursday. For the first time in seven quarters, Walmart said sales at stores open at least a year ticked up in the U.S. The retailer also beat expectations on profit and revenue in the latest quarter and said e-commerce sales—a main strategic focus—increased by 21 percent during that period.

The online sales metric is particularly important because Walmart, for so long America's brick-and-mortar everything store, is now waging a war against Amazon, its counterpart on the Web. Walmart has already made major investments in e-commerce and, just last month, said it would speed up the pace of those initiatives. On a call with investors this morning, Walmart U.S. CEO Greg Foran also authorized store managers to match the prices of Amazon and other online retailers. While Foran said about half of Walmart's 4,344 stores in the U.S. were already matching prices, formalizing the practice might help the company sway holiday shoppers from ordering a gift later on Amazon.*

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While e-commerce was a bright spot, Walmart still hasn't ironed out its chronic Walmart problems: understaffed stores and understocked shelves. Sales in Walmart's grocery segment were "relatively flat," in part because of lasting effects from cuts to the food stamps program. Two days earlier, the New York Times reported on an "urgent agenda" memo that Walmart had sent to managers calling for improvement in the dairy, meat, and produce departments. The "highly sensitive" memo urged managers to mark down old meat and baked goods and replace expired eggs and dairy products. Employees of Walmart, meanwhile, told the Times that their hours are already so thin they can no longer keep up with their workloads.

Despite these issues, Walmart has joined its peers in expressing cautious optimism about the upcoming holiday season. Walmart is kicking off its sales online at 12:01 a.m. on Thanksgiving this year and stretching them through Dec. 1.** Family Dollar, another low-cost retailer, said in mid-October that its stores were "well-positioned" for the holidays. At the same time, no one denies that this year's Thanksgiving-through-New Year's crush will be cutthroat. "We expect this holiday season to be highly competitive," Foran warned investors. After the polar vortex and a weak economy handed retailers their worst holiday season since 2009 last year, everyone is eager to prove they can turn things around.

*Correction, Nov. 13, 2014: This post originally misstated that Walmart has 5,000-odd stores in the U.S. As of Oct. 31, it had 4,344.

**Update, Nov. 13, 2014: This post has been updated to clarify that the Walmart sales beginning at 12:01 a.m. on Thanksgiving exist only online. In-store sales start at 6 p.m.

Alison Griswold is a Slate staff writer covering business and economics.