Some Prefer to Keep Trips to Wal-Mart a Secret
Times
have been tough and many consumers that wouldn’t have stepped foot in a
Wal-Mart a few years ago are doing it today. The problem is, some of these
same well-heeled yet frugal shoppers admit to being somewhat embarrassed
by their trips to the retailer’s stores.
A
real estate broker from Scotch Plains, NJ, who asked not to be identified,
told RetailWire,
"I really hate shopping in the store because the lines are always too
long at the checkout but the prices are so low on groceries. In the past
we would normally shop at Wegmans or King’s for
just about everything but it’s hard to justify spending twice as much on
ice cream at one of those stores when we can come here."
The
broker added, "Of course, when the market picks up again, we’re probably
not going to be so concerned with saving $10 or $20 by shopping here when
there are so many more choices at Wegmans."
Wal-Mart
has done a great job of attracting more affluent consumers as the economy
turned downward. According the Eduardo Castro-Wight, vice chairman of Wal-Mart
Stores, Inc., 17 percent of the company’s store traffic comes from new
households. These new shoppers are spending 40 percent more
than the average Wal-Mart customer. Fifty-five percent have annual incomes
over $55,000.
"Wal-Mart
has proven itself a winner in this tough economy. Shoppers have really
resonated with the retailer’s ‘Save money, live better’ brand promise," Jennifer Halterman,
senior consultant at Retail Forward, told The Dallas Morning News. "Wal-Mart
also is positioning itself to retain shoppers post-economic turnaround
with its newly remodeled stores, enhanced portfolio of brands and overall
improved shopping experience."
Some
long-time shoppers are not altogether happy with the changes Wal-Mart has
made.
"It looks nice,
but they don’t have as much stuff," Gail Thompson of Plano told the Morning
News.
Discussion Questions:
Will Wal-Mart Stores be able to hold on to its new, more affluent shoppers
when the economy rebounds? Does the company risk losing its core customer
by making changes that attract shoppers with higher incomes?
The more affluent shoppers that recently discovered Walmart will keep shopping Walmart even when the economy improves, as long as Walmart carries the right assortment of brands, including niche, specialty, certain premium brands, etc. In terms of “feeling embarrassed” to be seen at Walmart, I believe this will be much less of a factor.
Chances are good that Walmart can hang onto many cross-shoppers after the recession. Many of these consumers have discovered for the first time that Walmart can save significant amounts of money on food, commodities and consumables. The psychology of even middle- and upper-income shoppers is likely to be more focused on saving money and living with a budget than in the recent past.
However, Walmart needs to focus on the quality of its assortments, its national brand positioning and (most important) its in-store experience once its new customers have more discretionary income in their pockets. Customers who might otherwise be Target loyalists will ditch Walmart unless they continue to address problems with checkout lines and ease of navigation. Target is also likely to rebound with consumers who want to spend discretionary dollars on apparel or housewares with a more upscale brand position.
These anecdotal stories about consumers not wanting to be recognized shopping at Wal-Mart lead me to ask: “Is this a large story or lazy reporters trying to create one?”
Costco is the number one seller of fine jewelry in America. That just illustrates that when major money is involved, the affluent like a bargain, too. There seems to be a lot of concern that Walmart is chasing a demographic out of their league. Not likely. In spite of the current economic situation, the majority of the population is doing just fine. Actually, the long term trend is up, up, up, and will resume at some point.
What this means is that Walmart is not moving out of their demographic, but that their demographic–like the rest of the world–is moving up. It isn’t just that the rich are moving into Walmart, but that Walmart shoppers are getting rich-er. But then, whose purpose is served by recognizing this fact?
Right now, it is cool to save money. No shame for anyone to shop at Walmart. To keep the customers, Walmart must remain passionate about value and customer service.
Well, that’s the million dollar question (or in Walmart’s case, maybe it’s worth more like a billion dollars). Will the shoppers who have traded down be willing to stick with it, or will they go back to places like Target? It may be hard to justify spending more for the same stuff, but it’s not so hard, when budgets aren’t as tight, to justify spending only an hour to get shopping done vs. an hour and a half (with the last half hour spent in line, or spent wandering the store looking for what you need).
So I don’t think Walmart’s ability to keep shoppers will depend as much on their assortment as it will their in-store experience. If they can’t make the shopping process quick and easy, as well as cheap, people who have the money to spare may very well spend it on a nicer store environment, higher quality employees at checkout, and a speedier, more efficient shopping experience. That’s what Target was able to exploit in the first place.
I agree that Walmart will retain some of its new-found shopper base if it makes the adjustments that Mr. Seesel lists. It may not keep them for all the categories that buy now, but it is likely to keep them for some of them. Many shoppers today do pantry fills at one store for selected items and then do their “regular” shopping somewhere else.
Wal-Mart should be able to hold on to its core customer because they are still the lowest-price alternative for most items. Dollar stores don’t have the variety and not everyone has access to an Aldi for food. Let’s get real, Wal-Mart can slap on new coats of paint but it will never be upscale. Embarrassed to be seen at Wal-Mart? I’d be embarrassed not to be seen at Wal-Mart. I replaced a laptop recently and bought it at a local computer store. Then I find Wal-Mart had the near identical product with a few more features for $100 less. I’m embarrassed for not going to Wal-Mart.
Shopping experience is critical to many consumers and this is perhaps even more true for affluent shoppers. Consumers interviewed for this report by RetailWire cited King’s, Wegmans, Trader Joe’s and Whole Foods as their primary grocery shopping destinations. Target was the preferred choice among mass merchandisers carrying groceries and just under half also said they shopped occasionally or often at Wal-Mart. Almost to a person, these individuals said they couldn’t wait until they no longer “had” to shop at Wal-Mart anymore. None expressed the same reservation about Target. While certainly not a quantitative sample, the conviction of the responses by those interviewed lead us to believe there’s a story there. We’ll leave it to Wal-Mart and others to decide how big a story it is.
OK, some of the recent increase in HH penetration for Walmart is driven by the economy. But most of the current (and all of the future) impact will be driven by the improved in-store experience now offered by the Walmart Superstore format. That is what is converting the former “never set foot in Walmart” shopper. At least, that’s what happened to the one I’m married to. She still won’t set foot in the old mass store two miles from out house–but she makes extra time to drive an extra five miles when she visits her parents each weekend so she can shop at the superstore near them.
Walmart WILL be successful at keeping their ‘new’ customers. I do agree with Nikki above though in that it’s going to be overall retail experience (360 perspective) that’s going to keep them coming back. But, after clearly proving they’re the retailer of the new century, I have no doubt in their ability to execute that mandate. They’ve proven there’s really not much they’re NOT capable of.
The issue that has been skirted around so far here is the unspoken class divisions we have in this country. The people who can’t wait to get to the point where they don’t have to shop at Walmart anymore are not likely to continue shopping there, even for basic commodities. Why? It’s partly the check-out experience to be sure, but it’s also discomfort with being around their fellow shoppers. I have yet to visit a Walmart that doesn’t have poor or working class shoppers as its primary economic base.
Retail in the decades since the Second World War has evolved so that each class has “their” store. Walmart will never be “their” store for the people who are currently embarrassed to shop there, because they don’t want to be associated with people of lower socioeconomic status. Sure, there will always be those of higher income who aren’t embarrassed–like Mr. Livingston, who just wants to save money and doesn’t buy into the myth–but for the majority of affluent shoppers, Walmart is a temporary necessity. And Walmart should not remake itself to try to please these fickle folk–it should continue to be Walmart, so that ordinary people can have a place that meets their needs.
There is an old (VERY old) story about a young man who was telling a friend that the young man had asked his father’s advice about attending the local burlesque show. “What did your father say?” asked the friend. “He advised me not to ever go there because of what I’d see,” replied the young man. “Did you take your father’s advice?” asked the friend. “No. Instead I went directly to the burlesque show.” “Ah, and what did you see?” “My father.”
I could easily agree with Bob Phibbs’s comment here that the Dallas Morning News story is making much of little. Given our economic situation, upscale shoppers who see each other shopping at Wal-Mart might experience relief and admiration, not negative judgment. Some consumer psychology research published last year found that people not only judged discount coupon users negatively, but also judged negatively the people standing in the same checkout line with the coupon redeemers. But more recent survey findings, available here as the IRI “Dissecting the Downturn Generation” report says that, “a whopping 63 percent [of the shoppers surveyed] bring coupons to the store with them…..”
As the economy recovers, Wal-Mart shoppers with upscale inclinations might very well drift back or plunge back to other retailers, but I believe it will not be because of shame from shopping at Wal-Mart.
I think many consumers are afraid to admit that they may change their shopping patterns to include Wal-Mart in the future. They may say that when the economy turns around they will revert to prior retail channels.
However, there is no evidence to suggest that consumers will pay more at other retail channels for identical products.
The social stigma they articulate with respect to shopping at Wal-Mart will rapidly dissipate over time. Just look at the Wal-Mart parking lot. Don’t we all see more Lexus, BMW, Audi, Mercedes, etc???
Consumers by and large will include the Big Box retailers and Dollar Stores in the future.
I read a Tweet (from Twitter) last night about someone that took 1 minute in Walmart to grab a bottle of shampoo and 11 minutes standing in the “express” line. Needless to say they weren’t too happy.
Now the opposite. Driving by a Trader Joe’s, I decided to run in and grab two things. Although the lines at the register were relatively short, an associate opened another up another just for me. That’s worth a lot to me.
I think it will be a very simple equation going forward. When the pain of shopping is higher than the pleasure of saving money the more affluent customer is gone.
In this economy, with millions of lost jobs, home foreclosures, and dwindling savings, there is no shame in shopping at Walmart, Family Dollar or Aldi. I give these retailers a lot of credit for making smart moves today to retain their newest customers when the economy improves. Yes, the checkout experience needs to improve at Walmart, but they have proven that they are prepared to invest and evolve. Walmart has been pressing its advantage aggressively for the last two years while other retailers scramble to keep up. They will succeed in retaining a portion of those new customers long term, to the detriment of Target and others. Those pretentious consumers who might feel embarrassed to shop at Walmart aren’t their core customers anyway.
The Wal-Mart stigma has nothing to do with it being a discount retailer, it is more about resentment for driving mom and pops out of business.
If a consumer who previously has not shopped at Wal-Mart is now walking the isles and is still afraid of being seen, they will abandon their treks to Wal-Mart as quickly as they possibly can.
I’d like to think that ALL of the more affluent households that have switched to Walmart have seen the light and will remain loyal customers. Will it be that way? Well, I think some will stay. But some won’t.
We’re all human, and we all seem to forget history and repeat it. The affluent converts who try Walmart’s products and love them won’t leave them. The ones who do it simply for saving a few bucks–especially if they’re embarrassed to admit it–might stick for a little while after the economy rebounds, but when the paychecks come rolling in again, they’ll likely switch.
It’s still going to be about quality when the economy improves, especially when it comes to private label products.
Walmart has been consistently demonized in the national media for years. Much of that may be due to reporters who readily receive, rewrite, and re-publish PR issuances from various groups who have causes to promote or have axes to grind with Walmart. But, this image of Walmart as a place for serious people to avoid has been set in many people’s minds without their ever having set foot in one personally. The recession has caused some consumers who previously eschewed Walmart–but are now stretched for cash–to give Walmart a furtive try. Many are finding the experience to be both refreshingly cost saving, and way less “gruesome” than they had been led to believe.
With adult clothing as the one likely exception, Walmart will keep the majority of its new recession converts regardless of their socio-economic strata.
The one thing that all “new” shoppers at Wal-Mart will quickly discover is how much they have been paying for the privilege of shopping elsewhere. As they return to their former stores and are again reminded of how large the price disparity really is, many will be angry over the feeling of being taken advantage of by these other retailers.
Another possibility is that many will also discover that Wal-Mart isn’t nearly as cheap as Aldi. Aldi is a real cultural shock from the mainstream supermarket and not for everyone, but you definitely save money versus just about anyone else, including Wal-Mart.
I too am amused at the variety of cars in Aldi and Wal-Mart’s parking lots. Luxury cars are not in the majority but are clearly well represented these days. Saving money doesn’t have to be exclusively for the poor.
If you track the daily ups and downs of retail stocks, and the S&P Retail Index, you’ll see that on days when the Index is up, Walmart stock is down, and on days when the Index is down, Walmart stock is up. Clearly, investors see Walmart as a counter-cyclical play.
I think they’re right. I think as the economy improves Walmart will have a tough time holding onto many of their new customers. Those customers have known all along what Walmart is all about, and weren’t responsive when things were better. They are shopping in Walmart today because they think it’s prudent, but it’s not what they’d prefer.
There’s 1,700 Target stores. How far would you have to have fallen to walk into a Wal-Mart store if that is an embarrassment to you to do so? My family saves sometimes as much as 25% to 100% on items normally found in your typical Albertsons, Safeway, or Kroeger. The affluent people in my area shop at Whole Foods, Wild Oats, and Sunflower. I’m guessing these individuals who are ashamed of having to shop in a Wal-Mart were living on credit cards, Helocs, and leased cars. They never had money to begin with so this is just the reality of their true lifestyle coming home to roost.
No.
In addition to all the other reasons people find for not shopping there, the refugees from the current economic storm will now associate a visit there with hard times: doubleplusungood.
In a tough economy, the lowest price supplier of relatively generic products will tend to win out, at least in the short term. However, the lack of a relevant customer experience will drive many consumers away over time.
Consumers state that they will patronize an establishment if the prices are deemed “fair”–that is, not excessively high relative to alternatives, and if the customer experience is superior. That is the formula that drives customer loyalty.
As overall prices come more in line, you will find customer loyalty still remaining outside of Wal-Mart–the experience tradeoffs are simply too great for many consumers.
Wal-Mart Tip of the day:
Choose the entrance furthest left, go there before 8 am or after 8 pm when it’s slower, dash in quickly and grab your toiletries, retrace your steps back to the register inside the entrance furthest to the left, pray there is no one in line and that the cashier has not wandered off, answer yes to the question on the pin pad quickly (“was the store clean today”), pay via debit because they don’t take your MasterCard, then bolt out the door to your car and you’re off!
Haven’t been caught yet in 5 years by my snobby neighbors, but I suspect they use the entrance furthest to the right!
A few thoughts: First, if someone fears being seen shopping at Walmart, who is it that will be seeing them? Their friends and acquaintances who, because they’re there, are also shopping at Walmart? What an illogical premise. Bob Phibbs, I’m with you.
Second, if Walmart’s core customers are “lost,” where will they go? If they are already willing to endure the indignities of shopping there, they’ll put up with anything–even continuing to shop in a store that is trying to attract upscale customers. What a catastrophe! Another illogical premise. David Livingston, I’m with you.
Third and finally, the supposed current influx of upscale shoppers showing up at Walmart simply amounts to trial, and should not be mistaken as adoption or even re-trial. They’re just reviewing their options. One visit does not a loyal customer make. The idea that Walmart could “hold on” to customers who visit once is yet another illogical premise. How can Walmart hold on to something it never had?
The Walmart closest to me in suburban Chicago is a nightmare: Dirty, smelly, always crowded, and it is impossible to find a parking spot. The Target down the street is full of vapid yuppies chatting away on their cell phones, letting their young children run wild around the store.
Having said that, my little secret consists of shopping at the nearby Kmart. Unlike its huge competitors, the Kmart is clean, the parking generous, and rarely too crowded. Which probably mean that it won’t be around too much longer. The pricing in general is somewhat higher than Walmart, but I’ve found amazing deals there over the years. As someone who enjoys fashion at good prices, Kmart’s Attention line of women’s clothing, accessories and shoes is well-made and incredibly reasonable. I’ve run into affluent friends while shopping there. Initially they seem a bit embarrassed to see someone they know, but we almost always concur that it’s not a bad place to shop.
Not sure why Walmart gets such a bad rep for checkout lines. They don’t seem any worse than any other grocery store or mass merch I go to. And if you want the longest and most painful lines, go to Costco.
If people are embarrassed to be at Wal-mart, that’s their loss. I make good money and have a great job, but shop there frequently though there are tons of other stores nearby. No shame. I save money buying the same stuff down the block. And the number of times I’ve bumped into someone I know anywhere in any store is almost zero anyway. Who wins? Me. More money in my pocket.
As long as the customer’s last shopping trip was a good one for them, it does not matter how much money they make, they will return.