Wal-Mart Goes Upscale, Sorta
By George Anderson
Wal-Mart is looking to improve its image and, happily, this time it has nothing to do with “setting the record straight” on its employment practices, its impact on local economies, etc.
No, Wal-Mart’s image makeover is in the area of product quality, where the retailer is making strides to offer the types of products consumers normally go elsewhere to buy, reports The New York Times.
“We found that 54 percent of the people who shopped in Wal-Mart didn’t even visit our home furnishings department,” said Shawnda Schnurbusch, the vice president for home furnishings. “They headed off to places like Bed, Bath & Beyond.”
Getting its current customers to buy from more departments than they are currently is where Wal-Mart is focusing its attention with the strategy.
Says Claire Watts, Wal-Mart’s executive vice president for merchandising, “We will never abandon our core customer, but we do have 100 million-plus people in our doors weekly and we are trying to reach out. For example, we want to reach the women who come in to buy food, but don’t go near our fashion areas.”
To attract more women to its fashion areas, the retailer has focused on design and, according to Ms.Watts, “We’ve upgraded some of our fabrics, our linens, our cottons, our silk blends in our sweaters – we’re using a lot of spandex – and we’ve concentrated more on details.”
One thing that hasn’t changed in this makeover is Wal-Mart’s focus on low prices. According to Ms. Watts, 400-thread queen-size cotton sheets on the shelf in Wal-Mart sell for $48.77. Comparable sheets at Target cost $69.99, she said.
Bob Buchanan, a retail analyst with A. G. Edwards & Sons, thinks Wal-Mart is on the right track with its product upgrades but questions the retailer’s ability to follow through.
“They’re trying a lot of things but today, spring 2005, their overall assortment lacks creativity and originality. They have missed on key products many times,” he said.
In terms of misses, Mr. Buchanan cited problems in consumer electronics. During the 2004 holiday season, Wal-Mart “didn’t have iPods because they got in some kind of snit with Apple, which amounted to a good way to shoot yourself in the foot.” he said.
Another example, he said, is Wal-Mart sells big-screen TVs but no service warranties. “The customer wants service warranties,” said Mr. Buchanan.
Moderator’s Comment: How would you assess Wal-Mart’s progress in its product upgrade strategy? Where do you see this headed in the future?
We have to admit that when we first thought of this, our reaction was that it made little sense to try and pull this off in Wal-Mart stores. It doesn’t
really fit with the retailer’s core customer base. It seemed more logical to us that Wal-Mart would create a new banner/format to offer upscale merchandise at the low prices the
chain is known for.
Our question was answered in part by Claire Watts in The New York Times piece.
“We’re looking to take advantage of who’s coming in now,” she said. “There’s so many people we can serve today. That’s our first initiative. Then we can
figure out how to get the other half of the country.” –
George Anderson – Moderator