Designer Wal-Mart?
Wal-Mart opened it’s first upscale branch on March 23rd in Plano Texas. The new Wal-Mart carries upscale merchandise, such as 550-thread-count Egyptian cotton sheets, 42-inch plasma high-definition televisions and cashmere cardigan sweaters. In addition to extended product ranges, including a wine section with 1,200 different selections, some priced at up to $400 per bottle, the new Dallas Parkway supercenter will house a fresh sushi bar and a spacious WiFi-enabled coffee shop.
“With the opening of this store, Wal-Mart is adopting an active approach to understanding and meeting customer needs, particularly those of the selective female shopper,” said John Fleming, executive vice president and chief marketing officer. The new store environment has been developed in direct response to shopping habits of female customers. These include a store layout that positions pet food and health and beauty adjacent to grocery; new signage and graphics that give each of the store’s eight principal merchandise areas its own character.
Fake hardwood floors are being installed in the apparel departments of new stores to evoke the inside of a boutique. In place of a hodgepodge of seemingly random product colors, a handful of carefully chosen shades — baby blue and lime for the spring season — will now dominate clothing and housewares to send a clear message about what’s trendy. Staff uniforms will depart from the traditional blue smock with “How May I Help You?” emblazoned on the back, instead shop assistants will wear khaki trousers and navy blue polo shirts. The new store will also have fewer PA announcements, no in-store radio, Wal-Mart TV confined to distinct areas of the store and quieter cash registers. The apparel area will have its own cash registers, more space around displays and racks, a fitting area that offers more privacy and convenience, and customers will be able to carry most of their apparel purchases out of the store on hangers. Produce will include expanded organic and natural offerings with nearly 500 items added to the produce, deli, bakery, meat, seafood, dairy and frozen departments. The store will also offer made-to-order sandwiches, hot panini sandwiches and hot pizza.
Despite the high-end nature of much of the store’s produce, Wal-Mart has emphasized that the new supercenter is not a deliberate move upscale and will not be rolled out across all of its stores. Instead it is an attempt “to be more relevant to a broader customer base” by understanding the buying habits of its more affluent shoppers, Wal-Mart said. The Supercenter is located in the Dallas-Fort Worth area, which is reported to have an average household income of $140,000, three times that of the retailer’s typical market., and is next to the city’s most upmarket shopping area.
Until now, Wal-Mart “may not have focused enough on the customer willing to pay a little more for higher quality,” said Executive Vice President Mike Duke, who runs the chain’s discount store division. The goal now is to “meet the needs of every American,” he said.
Wal-Mart’s market dominance is hardly threatened. A recent study found that nearly half of American families shop at Wal-Mart at least once a week. It is by far the No. 1 retailer in the country, with $10 billion in profit last year, and plans to open an average of a store a day. But by one key measure, performance is slipping: Same-store sales grew only 2.9 percent last year, compared with more than 5 percent in 2001.
Duke said the company is concerned about “inconsistencies” in customer service — long checkout lines, sold-out products and dirty store restrooms — that can drive consumers away.
Though executives did not name any competitors, it is clear whom they are worried about. Minneapolis-based Target operates half as many stores as Wal-Mart in the United States. But its mix of trendy domestic goods and clothes has attracted far more affluent consumers. While Wal-Mart’s stock price is in a slide, Target’s jumped 19 percent over the past 12 months.
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