Wal-Mart trying to woo back shoppers

Wal-Mart is in a race to give people what they want before they get comfortable shopping elsewhere.

Shoppers who switched to other stores when Wal-Mart ditched best-selling toothbrush brands, craft supplies and bolts of fabric may be hard to win back.

The company has taken nine months to restore thousands of grocery items, including some best-selling brands, it dumped from its shelves two years ago. The idea was to tidy up stores for wealthier customers it had won during the recession.

Grocery sales have improved, rising in the low single digits in the first quarter. But overall traffic at its U.S stores has been down, and revenue at stores open at least a year has posted eight quarters of declines on a year-over-year basis.

Wal-Mart says it will take until the end of the year to restock the rest of the store with items that were culled, from craft supplies to home furnishings. That will go a long way toward restoring Wal-Mart's ability to provide one-stop shopping, which could be a plus as shoppers make fewer trips to save on gasoline.

"The customer, for the most part, is still in the store shopping, but they started doing some more shopping elsewhere, and we want to bring them back. We know that it's easy to lose them," said Charles Holley, Wal-Mart Stores Inc.'s chief financial officer, at a Citi Global Consumer Conference last week.

Dollar stores, which benefited from shoppers trying to stretch dollars in the recession, are continuing to gain customers and post higher revenue. The trend has risen as gasoline prices closed in on $4 a gallon.

Dollar stores have maneuvered the post-recession economy adroitly, expanding inventory, particularly brand names; becoming more competitive on price; and opening new locations. Also, wealthier shoppers are trading back up to the mall or higher-end grocery stores such as Whole Foods.

Wal-Mart is increasingly "caught in the middle" between dollar stores and more expensive stores, according to Wall Street strategies analyst Brian Sozzi. "Now, it's trying to return to its roots, but it's facing old competitors — the dollar stores — that are getting much better."

Richard Hastings, a consumer strategist with Global Hunter Securities, gives Wal-Mart two years to woo back U.S. customers before their new shopping habits are imprinted.

But restocking has taken longer than predicted. In November, Wal-Mart said merchandise it cut would be restored by spring. But Wal-Mart has had trouble getting the items onto shelves, said Cameron Smith, who recruits executives for Wal-Mart suppliers.