Wal-Mart Builds to Suit
Attention African-Americans, Hispanics, empty-nesters, the affluent, those living in the suburbs and others living in rural areas: Wal-Mart has a store just for you.
The world’s largest retailer is throwing away its cookie cutter to make stores more responsive to the needs of consumers in local areas.
In a store in Evergreen Park, Ill. that serves a large African-American customer base (many come from Chicago, which has no Wal-Marts), the retailer expanded its men’s apparel section by 30 percent and moved it to the front corner of the store. The section is stocked with baggy jeans and sports jackets popular among African-American men in the community.
Eduardo Castro-Wright, chief executive officer of Wal-Mart’s stores in the U.S., told The Wall Street Journal, because so many Americans (85 percent) shop in the company’s stores, it had attempted to become “all things to all people.” As a result, said Mr. Castro-Wright, “you end up under-serving everyone because you don’t have an offering that is specific to that customer segment.
“I think we can address specific customer segments with a precision that better meets their needs and wants,” he said.
To be certain, the task facing Mr. Castro-Wright and Wal-Mart is huge. The company plans to switch most of its 3,400 U.S. stores to the localized approach over the next year. While others, such as Best Buy, have converted to so-called customer-centric stores, none has had the sheer quantity of stores to deal with.
To help move the transition along smoothly, Wal-Mart has moved its 27 regional general managers from headquarters in Bentonville, Ark. to markets around the country so they’re closer to stores and consumers.
Todd Libbra, who manages 132 stores in Illinois for Wal-Mart, moved to a suburb of Chicago in July. “By reading the newspapers, watching the TV stations and being part of the community, I have a better flavor for what’s going on,” he said.
Wal-Mart is also looking to better focus its marketing on local needs. The company has increased the size of local marketing teams and given them increased authority to determine products to promote.
Chad Donath, marketing manager for the Evergreen Park store and seven others, found during a hospital visit that the area had a high number of babies born prematurely. Based on this knowledge, he recommended the Evergreen Park store increase items designed for premature infants. The result is that items such as baby-bottle nipples geared for preemies have been strong sellers.
Mr. Donath has also been allowed to take calculated risks he would not previously been allowed to pursue. For example, he recommended the Evergreen Park store increase its selection of gospel, rhythm and blues, and hip-hop music. The store’s music section is now 92 feet, almost four times the size of the typical Wal-Mart music section.
The results, said Mr. Donath, have proven worth the risk. “It’s unbelievable; sales are off the charts — no pun intended,” he said.
Discussion Questions: Moving the conversation beyond simply talking about Wal-Mart’s initiative, what are the keys to developing stores that truly meet
the needs of local consumers? Name retailers (regardless of box size or retail channel) that you believe do the best job of localized marketing?
One of the most interesting facts about the Wal-Mart store in Evergreen Park highlighted in the WSJ piece was that it is made up of a largely white
population. Wal-Mart chose to focus on African-Americans, however, when it determined these consumers, many traveling from Chicago, would be the store’s primary shoppers.