Wal-Mart’s New Format
By George Anderson
Wal-Mart is opening a new, temporary concept store to help residents of the Gulf Coast struggling to put their lives back together following Hurricane Katrina.
The new 57,000-square-foot Wal-Mart Express will open up within a Wal-Mart Supercenter in Waveland, Miss. The store is focusing on stocking products of immediate need to local residents, such as cleaning products, paint, appliances and clothing.
“We are rebuilding our store as this community rebuilds,” store manager Ray Cox told the Biloxi Sun Herald. “We will be able to change our product assortment as the needs of Waveland change.”
Wal-Mart intends to convert the Express store back to a Wal-Mart Supercenter in the future.
The Express store will operate 7 a.m. to 7 p.m. daily. As part of its grand opening celebration, Wal-Mart will donate $10,000 to local schools.
Moderator’s Comment: What are your thoughts on Wal-Mart’s Express concept and its response to the hurricanes? What can others learn from Wal-Mart’s response?
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George Anderson – Moderator
Several of the previous comments here share my thoughts on this topic. My post-script is Wal-Mart is to be applauded for implementing a strategy that again demonstrates its management team has chosen to be proactive when in past times management decisions may have been more reactive. But the business side withstanding, the management team also demonstrates firm support of the pro-social initiative side of their business under the umbrella “Good Works.” All of this is clearly a win-win for the retailer and consumer alike.
This is a good move by Wal-Mart. I’ve studied the market and before the hurricane there were 5 supermarkets in the Waveland trade area. After the hurricane there were only 2. Wal-Mart and A&P Sav-A-Center suffered hurricane damage and Winn Dixie in Pass Christian pulled the plug and gave up a few weeks prior to the storm.
With all those sales being funneled to two smaller stores and travel access restricted, this is simply a smart business move. Wal-Mart is not in business for humanitarian purposes, they are in business to make money. It just makes sense to get up and running, even with a reduced facility. It also gets their employees back in the store working before they find jobs elsewhere.
This is no different that what other grocers have done throughout this area. All of them have tried to reopen and operate with what they have, even if they can’t operate at 100%.
Most have reported sales of 50% to 200% above normal because of reduced competition, population shifts, and spending sprees of free government handouts. It only makes sense that Wal-Mart would want to tap into this windfall as quickly as possible.
Well-run retailers react quickly and intelligently to change. In its responses to Katrina, Wal-Mart proved it can react instantly and appropriately. They ran numerous trailers of supplies into the area, well before any government response. They promptly announced that their employees would be paid and accepted at other work locations. Their temporary store format will be much appreciated. People reward their friends and punish their enemies. I am sure that Katrina-hurt people will long remember Wal-Mart as their friend.
Creating the “store within a store” by itself will not create long term loyalty. If customers easily find what they need, if the price is appropriate, if they see Wal-Mart actually doing something for them rather than just making it easier to profit from their misfortune, consumers may respond with loyalty. As in most things, execution will determine the response from consumers.
Wal-Mart’s quick post-hurricane response is Practical and Profitable. There is a Big Need down there for the things they are offering. Wal-Mart is ahead of the curve in trying to accommodate those needs. A smart move not requiring rocket-science.
Wal-Mart has responded to this in a timely manner and has strategically entered into a symbiotic relationship with the community. While the people in this community are taking part in the massive rebuilding effort, their priority purchases will be on some of the basic necessities. The “luxury” purchases will be put on hold. Wal-Mart realizes this and, to their credit, has responded quickly designing a store concept with a business plan incorporating these needs. An expanded hardware section, stocking large household appliances, and selling basic clothing and food items is an essential merchandise mix. It is certainly not difficult to figure out that people who have lost virtually everything will be starting over with buying basics. It’s a win-win situation from a community and business standpoint.
Like Warren, I have a few friends who were in New Orleans and Texas during the immediate aftermath of the hurricanes and have heard some very desperate tales of survival and government failings. My friends, reporters — not aid workers, told of how most business took it upon themselves to improve the living situation in their communities. One friend, who covers Wal-Mart, said the retailer was clearly the most prepared organization in the devastated area, and without them (and Home Depot) the catastrophe would have taken a much higher toll.
This retail concept has stickiness and will help Wal-Mart retain customers and attract new ones.
David, your windfall pun is heartless.
Apologies in advance for pulling out the cliche stops this evening but it is Friday, after all. The Fickle Finger of Fate giveth and then it taketh away. Wal-Mart has, by all accounts, rushed to the aid of its countrymen but unless historically short memories start lengthening, they will have to continue pleasing consumers in order to keep them. Just like the old joke, “what have you done for me today?”, they need to have a longer term strategy and not decide to rest on the laurels of what they have done in the immediate aftermath of the hurricane.
Two close friends of mine went down to New Orleans, and then Texas, to work for FEMA over the past few months. I’ve heard their stories in detail, and they’d curl your hair. Wal-Mart definitely should just take over FEMA. If they run these stores right, and I expect they will, they’ll be rewarded with at least some loyalty. Maybe not a lot, but their response is a good thing regardless.