Monday, March 05, 2007

wal-mart gets a strategy

As if by magic, soon after I posted my "in praise of wal-mart" article (the next day in fact), an article appeared on the business page of the New York Times about Wal-Mart's new merchandising strategy.

Wal-Mart has identified three target "customers" who shop at their stores. To no one's surprise, there are many upper-middle class people coming into to shop for deals, and so Wal-Mart, seeing an opportunity to serve a slightly larger base than those at the very bottom of the economic spectrum, is in the process of trying to find ways to make their store appeal to a broader base of consumers.

Here's an excerpt:
In their first interviews since a management shuffle last month, John Fleming, the new chief merchandising officer, and Stephen Quinn, the new chief marketing officer, said that after a year of intense research, the discount giant is seeing its 200 million customers as belonging to three groups.

There are “brand aspirationals” (people with low incomes who are obsessed with names like KitchenAid), “price-sensitive affluents” (wealthier shoppers who love deals), and “value-price shoppers” (who like low prices and cannot afford much more).

The new categories are significant because for the first time, Wal-Mart thinks it finally understands not just how people shop at its stores, but why they shop the way they do.
This strategy of identifying three target groups of customers is nothing new in retail, as a matter of fact Wal-Mart is a late adapter, as Best Buy, Sears and others have been employing this type of strategy for years.

But having a strategy, and executing a strategy are two different things. It will be interesting to see if Wal-Mart can drive up comparable same store sales with their target groups now clearly in focus. But at least they've remembered their original target shopper: those with little money to spend.

<>< TM

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