Is Wal-Mart Losing the Retail War?

We hear it all the time: the U.S. economy is recovering.

But these signs of recovery – improving housing prices, slowly diminishing jobless claims, and manufacturing growth – aren't immediately felt in the day to day life of most Americans.

There are still the tax hikes every American experienced at the beginning of the year. Retail sales may be growing, but the effects of the sequester also have yet to be felt.

So one would assume that stores like Wal-Mart (NYSE:WMT) would be particularly profitable right now. Wal-Mart has long been the poster child for low prices and a wide product selection – a one-stop shop for all your needs ranging in everything from clothing to technology to home goods to groceries.

But lately complaints have been rolling in about the state of Wal-Mart stores. A recent Bloomberg article indicated that many U.S. Wal-Mart stores are having problems with restocking, leaving messy or even empty aisles.

Naturally, Wal-Mart officials denied these claims. One spokesperson, Brooke Buchanan, told Bloomberg:

“The premise of this story, which is based on the comments of a handful of people, is inaccurate and not representative of what is happening in our stores across the country.”

But if this isn't a widespread problem, I'd like to know where the well-stocked stores are. The several Wal-Mart stores I've been to recently have all gone to prove Bloomberg's point: aisles with large, empty sections, products moved around and messy, and waits at the checkout even when the stores are nearly empty.

Perhaps this resonates for you, too. It certainly did for Tony Martin from Glen Carbon, Illinois, who told Bloomberg, “Sam Walton must be rolling over in his grave to see what has become of his business.”

And as frustrated as you may be during your shopping experience, try to give the employees a break. For the large part, it's not the staff's fault; it's the lack thereof.

Sam's Club and Wal-Mart stores decreased their staff by 120,000 employees between 2008 and January 31 this year, at the same time increasing its number of Wal-Mart stores across the U.S. by 455.

The company is beginning to lose steam as competitor Target (NYSE:TGT) picks up the slack. Though Wal-Mart is a much bigger chain, Target is gaining a premium. On Monday, Target had a 0.2% advantage over Wal-Mart on a price-to-earnings basis. Last year, Wal-Mart led by an average 7.3%.

Wal-Mart has had a superstore group for a while, but recently Target has also moved into that territory, adding grocery sections to its stores.

Could shoppers be ditching Wal-Mart for the more-organized, well-stocked Target? If Wal-Mart doesn't do something soon, a reversal could be coming.