Wal-Mart's Grinchy Glitch

Recs

6

You've probably heard the news that Christmas didn't quite save retailers, with last-minute spending falling short of hopes. Retailers have high hopes that after-Christmas sales will save the day, partially driven by gift cards, but maybe not for Wal-Mart (NYSE: WMT). Not quite yet, anyway.

The Associated Press reported that Wal-Mart was having problems processing gift cards Wednesday. This was because of a glitch in a third-party verifier's system, which added up to delays in gift-card verifications. The discounter said it's working on the issue and it's sorry about the inconvenience for customers.

It's no secret that in a sluggish holiday season, retailers hope those who received gift cards in their stockings will come to stores now and load up on merchandise (although admittedly, many of these will be lower-margin sales as retailers mark down goods to move them, which Foolish colleague Kristin Graham pointed out last month is a Grinchy subtext to the happy gift card story). And this has been a big year for gift cards; research firm NPD Group said consumers handed out a lot of them -- 61% of consumers gave one, a significant increase from the 48% who gave them out last year.

Meanwhile, a Bloomberg article said that plenty of gift cards are now available for practical purposes like living expenses, a boon when things are tough for some consumers -- think of pre-paid debit cards from Visa and MasterCard (NYSE: MA), gift cards to fill 'er up at ExxonMobil (NYSE: XOM) or Chevron (NYSE: CVX), or Highmark's "Healthcare Visa Gift Card," which lets people apply their gift cards to prescriptions, Lasik surgery, and other health-related expenses. When it comes to practicality for struggling families, a Wal-Mart gift card fits the bill, because it can buy so many necessities, much more so than a gift card for discretionary items at places like Best Buy (NYSE: BBY) or Gap (NYSE: GPS).

The current climate may have represented a golden opportunity for Wal-Mart, and for some of its struggling customers, to enjoy a post-Christmas shopping spree. However, this glitch may have inconvenienced some shoppers -- and deeply disappointed them, too. Looking like a Grinch is no good for a retailer's brand. 

As Foolanthropy enters its second decade, join us in working to bring financial education to the world's youth. Learn more about Foolanthropy's new direction

Closed for 15 months – opening 10 days only! Get notified ahead of time as our expert portfolio manager invests $1 MILLION in the best opportunities from across The Motley Fool’s premium investment services. This is the first open since August 2008, by invitation only. Enter email below.

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

TD AMERITRADE
more info
ShareBuilder
more info
Power E*Trade

more info
Scottrade
more info
Fool Disclosure

DocumentId: 557450, ~/Articles/ArticleHandler.aspx, 11/8/2009 11:21:09 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

The Must-Read Story on Fool.com
Which Companies Can Buy It Like Buffett?

Related Tickers

11/6/2009 4:00 PM
BBY $40.24 Up +0.19 +0.47%
Best Buy Co., Inc. CAPS Rating: ***
CVX $77.53 Up +0.29 +0.38%
Chevron Corp CAPS Rating: ****
GPS $23.03 Up +0.17 +0.74%
The Gap, Inc. CAPS Rating: **
MA $236.90 Up +6.65 +2.89%
MasterCard, Inc. CAPS Rating: **
WMT $51.25 Down -0.03 -0.06%
Wal-Mart Stores, I… CAPS Rating: ***
XOM $72.58 Up +0.08 +0.11%
ExxonMobil Corp CAPS Rating: ****

Community: Investing Wiki

Term Of The Hour

Par value: Par value is the carrying value of stock on the company's books. It usually ranges from a dollar down to a few pennies (or less) and sometimes is listed at zero.

Want to learn more or edit this definition?
Click here to read more!