Has Wal-Mart lost its edge?

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NEW YORK - Wal-Mart Stores Inc. is facing a new reality: Its customers want more than just the lowest price.

The world's largest retailer, which only a few years ago could do no wrong, is experiencing the kind of problems that have beset weaker rivals like Kmart: cluttered stores, merchandise that puts off shoppers and poor service.

Meanwhile, Target Corp., while about six times smaller than Wal-Mart, is setting a new standard for discount retailing.

Wal-Mart's sales growth has sagged, partly because the Bentonville, Ark., retailer, while still a low-price leader, doesn't have products that attract today's shoppers -- particularly in apparel, home furnishings and consumer electronics. It also has a problem with slow checkout service, and its stores look uninspiring.

Target, however, keeps sharpening its appeal to a higher-income customer with affordable fashions and home merchandise from designers including Cynthia Rowley and Isaac Mizrahi.

Its stores boast a colorful assortment of merchandise that focus on the must-haves of the season -- this spring, consumers will find such items as turquoise moccasins, slim lace tunics and metallic sandals. Its service at the checkout is speedy, according to analysts.

Howard Davidowitz, chairman of Davidowitz & Associates, a retail consulting and investment banking firm, joined other analysts in saying that rising gasoline prices and job uncertainty have hurt Wal-Mart, prompting lower-income shoppers to spend less at stores.

But, he said, "for the past six months they have dropped the ball. The fact is that Wal-Mart has failed to execute as well as they have always done."

Said Bob Buchanan, a retail analyst with St. Louis-based A.G. Edwards: "Wal-Mart is not as crisp in their execution as they have been. Target continues to do a lot better in merchandising."

He also said "morale is not as high as it has been" at Wal-Mart, which has had to defend its business practices from criticism by unions and community activist groups; they contend the retailer takes advantage of workers and hampers competition.