Customers Pleasantly Surprised with Wal-Mart’s Changes
By George Anderson
Wal-Mart’s research shows that many of the consumers who shop in its stores go there for the basics but take their business elsewhere when it comes to buying other categories, such as apparel, consumer electronics and housewares. That, if Wal-Mart has its way, is about to change.
The retail announced the launch of a new multimedia ad campaign that will show Wal-Mart shoppers who were pleasantly surprised as to what they found when they shopped in other parts of the store.
The campaign, which features the tag line “look beyond the basics,” is simply a reflection of the company listening to its customers, said Stephen Quinn, senior vice president of marketing for Wal-Mart.
“We know that when they shop, they’re looking for more than just the basics. They want value but, at the same time, they want style, excitement, innovation, and fun,” he said. “Our objective with this campaign is to show that shoppers can find not only things they need at Wal-Mart, but also things they want, and all at ‘the Wal-Mart price’, across a broad range of merchandise categories.
“Like the other ad campaigns we have launched recently,” he added, “this one is very much in line with Wal-Mart’s strategy of becoming constantly more relevant to the broad range of customers who shop our stores.”
Wal-Mart’s “beyond the basics” campaign will make use of monthly publications and weekly newspapers to get the word out. The company has also redesigned its web site to bring attention to its offerings in categories such as furniture, consumer electronics, fitness equipment and apparel.
Many see the latest Wal-Mart moves as an attempt to replicate the style and success of Target.
Todd Jones, an analyst at PNC Advisors says don’t count Wal-Mart out. “The signs are there that they can do it,” he told Bloomberg News. “It’s going to take a long time for them to get to that Target level.”
Moderator’s Comment: What are your thoughts on the latest moves by Wal-Mart to broaden its appeal beyond the basics? –
George Anderson – Moderator
Wal-Mart can indeed do this. Selling is buying and no one does it better. They’re going after mid and upper scale consumers who don’t “normally” purchase products at Wal-Mart and they need to attract these inactive buyers’ attention. That is where a new marketing approach will need to come in, but do they have the personnel?… I’m not sure.
Wal-Mart’s entry into a variety of other lines should be fairly easy. Consumers want more than the basic products currently available at Wal-Mart and they want them at lower prices than they may see at other retailer locations.
I just wonder how large the stores will have to get in order to offer a basic affordable line that is currently on the shelves AND a more upscale, but affordable line. Or, what will the consumers be losing to make room for these high style products?
Wal-Mart is attempting to move into other retailer’s market niches and keep there EDLP model.
Wal-Mart is a very good merchant. Good merchants always try to broaden their appeal, increase same-store sales and margins. That’s what Wal-Mart is trying to do. Just because their apparel assortments are low-priced doesn’t mean they aren’t good quality, but their image for the clothing is somewhere between cheap and fashion-rustic.
Wal-Mart’s non-basic assortments are an opportunity area. What Wal-Mart might do to accomplish their objective is to focus on creating a non-Arkansas fashion mystic that rises above price appeal only. I’d suggest they hire one of the “hip” Target executives, upscale their appeal advertising, promote a higher fashion-orientation for their goods. That has done wonders for their fast-rising competitor, Target, for quite some time…so it’s an uphill challenge. Question: Can Wal-Mart make a silk purse out of a penny pocketbook … particularly in metro areas? It’s show time for Wal-Mart to show us its “stuff,” Bentonville.
Anyone who doubts Wal-Mart’s ability to snag upscale customers should visit their second store in Rogers (AR), #5260. Eat-off-the-floor clean, great signage, fresh ideas, upscale products, and tests-of-things-to-come (including a pretty amazing run at Target’s Global Bazaar)…the most exciting part? Crawling with upscale designer-bag-toting customers – their baskets loaded with high-ticket items. Wal-Mart can pull this off.
Although Wal-Mart is very successful, there is always room for improvement. However I think for Wal-Mart to upscale it’s image will be a difficult task. Wal-Mart is probably not willing to make significant changes beyond minor cosmetic appearances. One area that I’m 99% sure Wal-Mart will not change is in its employees. You cannot upgrade your image without upgrading your employees. That would require stronger recruiting and higher wages. I can’t see that happening.
On the one hand, isn’t this how Kmart died? On the other hand, isn’t this part of Target’s formula for success? I think Wal-Mart has to keep itself differentiated from Target, and this may be moving them closer (too close?) to that positioning. They also need to avoid engendering overly high expectations of quality, as Kmart did.
Wal-Mart will be more successful with this campaign in small towns where they are the only major retailer left, and consumers are driving 40+ miles to regional malls or strip centers for more fashionable choices, including Target. Those consumers are virtually dependent on Wal-Mart for basic necessities as it is. I see this in West Virginia where there are only two Macy’s and a handful of Targets in the larger cities but a Wal-Mart in every hamlet.
In larger markets, Wal-Mart’s task will be much harder where fashion and upscale competition is around the corner and, try as they might, they will probably never overcome their perception problems, anytime soon, with the more upscale customer. The general housekeeping and employee grooming problems seem even more noticeable in an urban market.
Wal-Mart, you can love them or leave them. But one thing is certain, they are willing to listen to their customers and they are willing to change. Wal-Mart has been an innovator when it has come to technology, logistics and sourcing. My guess is that, partly, they are angry at themselves for not being more proactive as they watched Target transform themselves and become more successful and at the same time a bigger competitor. The more telling question is what will the apparel, furniture and consumer electronic retailers do to differentiate themselves to prevent losing business to Wal-Mart and Target?
Wal-Mart should not surprise anyone by looking at the concepts of “leakage” and “conversion” of shoppers. They obviously are aware that they get a large share of trips from their consumers/shoppers, but that they do not get as large a share of their spending as they “possibly” could. I applaud them for looking at how they can get a larger share of wallet from each shopper and looking for ways to reduce or eliminate “their” shopper from crossing the street to shop for goods with another retailer that are currently carried by their stores.
Now, in order to do that, they will have to “convince” the shopper that there is “no shame” in wearing Wal-Mart clothing or having other soft-goods with their labels.
I have examined the assortments of Metro 7 lines in various Wal-Marts that I have visited, and I must say that the selection has not been all that great. It is a sad sight when cheaply-made Danskin track jackers occupy more racks than the entire Metro 7 collection. Meanwhile, Target has racks and racks of their highly branded apparel, with in store signage and fixtures that truly enhance the merchandise, drawing the attention of the customer first to the department, then to the assortments, and then to the specific items on the racks. Good examples can be seen in the Luella line that Target is currently carrying. All Targets have display fixtures that draw the customer in, with side signage that emphasizes the “GO International” theme of the Luella line. Competing with Target on apparel and home goods could be challenging for Wal-Mart and could alienate some of their lower end customers. They must be cautious when choosing their square foot allocation, keeping in mind that their lower end consumer still wants that 9.88 Danskin track jacker, but can’t quite afford the 40 dollar George pants.
Retail is great because we can all speculate and then watch to see how successful or unsuccessful this move may be for Wal-Mart.
Last I checked, many of the successful companies in the electronics arena were advertising expertise from employees. Last I visited one of the stores, I found that expertise in line with the price and thus matched my expectation. I wandered through a Wal-Mart just to see if they could save me a dollar on the same things, no-one to talk to and no knowledgeable people when I did find someone.
Walking around a store in the backyard and predicting success based on that experience has led many companies to fail from misconceptions of their own reality.
Wal-Mart may get more of their own target audience’s shopping dollar, but I don’t see them going much past that unless they are ready to change the culture in the stores. Changing that could alienate the current audience.
Besides, someone tell me that competitive computers and delicate electronics or fashionable clothing styles are going to be placed on a sales floor where product is misplaced and/or damaged as a routine and I can’t see a sustainable merchandising plan that could overcome these challenges.
It should serve to tighten the market and, hopefully, produce results for the consumer whether Wal-Mart succeeds or not.
Unless Wal-Mart takes a true category management approach at merchandising, I would be surprised if introducing higher image product will help them. The biggest obstacle I have when shopping their stores is that it’s so cluttered, you can’t freely move around displays, especially in the softlines area.
No surprise here, just sensible marketing. Keeping their name in the public eye in some ostensibly positive way will help counter all the bad publicity and make people wonder whether there really are some hidden agendas. On the other hand, they will have to make good the offer if it’s going to stick.
Assortment planning is editing. The largest Wal-Mart location in the world can’t be all things to all people. When a merchandising executive plans the shelf or floor space, he/she needs to decide what should be dropped and what should be included. It’s awfully hard to drop low-end best-sellers with the hope that better merchandise will replace the volume. The low-end customers need to be replaced or they need to be upsold. Wal-Mart’s comp sales figures are subject to frequent excruciating examination, so extensive careful testing is needed to avoid sales embarrassment.
Wal-Mart is attempting to create emotional connections around fashion apparel and home decor, particularly with those customers choosing a lifestyle connection at other retailers. Using testimonials is a tried and proven way of developing credibility. Credibility is one of the most important aspects in marketing lifestyle association.
WM’s advertising can, and will focus on real people who embody the characteristics seen by their target markets as “leaders.” If that person shopped at WM and liked it, I will as well. None of this is new, it’s all been done before.
At the end of the day, all the advertising in the world won’t convert shoppers. Compelling assortments and product differentiation oriented toward lifestyle identification will. Of course, you have to get them to “sample” first. WM is not yet successful.
BrainTrust Panelists: put your expertise where your thoughts are. Go into these stores and analyze the assortments. Do the different brands make easily understood lifestyle statements? Are the price points between similar styles laddered properly? Is there a managed overlap? Are the lifestyle attributes of the brands translated effectively into product attributes?
My initial take on these questions is “a long way to go.” This is NOT going to work until WM has a cohesive brand management approach to product development, taking the look, feel and interpretation out of the buyers hands and into the hands of a brand champion. Can someone please differentiate George and Metro 7? And now, can you please go into a store and find even 50% compliance with this differentiation or brand strategy.
The advertising is a good technique. Are we surprised? The concept store in Rogers looks incredible. Big deal. Carson, CA just opened and it doesn’t look like Rogers.
I’m not a WM basher. They do certain things well, and others not so well. Brand management at the PL level, assortment planning and local market assorting are not current competencies I would rate as excellent.
Will be a tough sell. Only an influx of new customers who drive foreign cars could be the driving force. And, research shows these foreign car owners go to Costco and Sam’s Club.
So is Wal-Mart counting on its current shopping base to receive higher pay checks, or a relief in health care insurance costs? Hmmmmmmmm
If I read the article right, this is an announcement about an advertising campaign, not a corporate commitment to better service the customer. Throughout retail, promises are made all the time on the TV and in print, but too seldom given legs on the retail floor where it really make a difference to the customer. And what about a commitment to do something to turn around the attitude and knowledge of the employees who are serving these customers? I’m not taking a swipe at this retailer for becoming focused on more of their store; I have a problem with advertising and marketing execs who are only looking for a new angle, rather than making STORE experiences better for the CUSTOMER.