Wal-Mart's Most Wanted
Attention, affluent shoppers. The retail giant is bent on capturing your dollars
At the Fair Lakes store, Wal-Mart has a display showcasing its designer line of apparel, George, named after British fashion guru George Davies. Wal-Mart acquired the line as part of its purchase of the United Kingdom's ASDA supermarket chain in 1999. But Wal-Mart has done little to trumpet the brand it clearly hopes will appeal to higher-income consumers. In the center of the George display, for example, stands a well-picked-over rack of clearance items, including sleepwear, maternity blouses, and house-brand casual wear, with quite a few of the items strewn on the floor.
Sticking a "pile-it-high, let-it-fly" rack amid the stylish coordinates is a "Merchandising 101" error that is all too common at Wal-Mart, says Putnam. She contrasts Wal-Mart's approach with that of Target, which heavily advertised its partnership with designer Isaac Mizrahi. In contrast, Wal-Mart did nothing to introduce its designer line. "I'll literally stand in a Wal-Mart and hear people ask, 'Who the heck is George?'" says Putnam. Scott has admitted that crowding stores with cheap items has turned off customers. "The more congested the store, the junkier the store looked," said Scott, and "it became less relevant" to shoppers with more disposable income.
Wal-Mart brass have laid out an aggressive merchandising campaign. The company is hiring fashion experts to help train store managers to, say, feature items that will catch the consumer's eye and draw it toward more expensive goods. Wal-Mart plans to make some of its stores showcases for new tech goodies, including wall-length displays of high-end TV s. Wal-Mart also hopes to widen its appeal by offering more organic and natural foods--at lower cost than groceries or specialty stores, of course. "We don't think you should have to have a lot of money to feed your family organic foods," said Scott at the annual meeting. "Let's face it, affluent customers appreciate saving money, too."
At the same time Wal-Mart is making its pitch to the well heeled, it is forging ahead with its better-known strategy: expanding its so-called Supercenters. Providing groceries along with apparel, sporting goods, tires, and eyeglasses has proved enormously successful. Groceries are a lower-margin business than designer clothing or electronic gadgetry. But the volume Wal-Mart generates at Supercenters is so high--more than $100 million in annual sales at some locations--that the company says the return on investment outstrips that of its traditional discount stores. (Wal-Mart does not disclose sales figures for individual stores.) An example of the impact on the market: Earlier this year, venerable supermarket chain Winn-Dixie, which operates 920 stores in the Southeast, was driven to seek bankruptcy protection, largely, in analysts' view, because it could not beat Wal-Mart prices.
Wal-Mart currently has 1,713 Supercenters, and it plans to open 2,700 more and convert 1,200 current stores to the format. But as the nonunion company has steamrolled traditional grocers, Wal-Mart has made a slew of enemies, many of whom are now uniting to battle the retailer. Both the United Food and Commercial Workers union and the Service Employees International Union have mounted anti-Wal-Mart campaigns, arguing the retailer does not pay a fair wage and burdens state governments by failing to provide adequate healthcare benefits. The UFCW has hired Paul Blank, former political director for Howard Dean, to organize the opposition.
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