September 18, 2006
BrainTrust Query: Is Wal-Mart’s new housewares line a case of ‘me too’ merchandising?
By Don Delzell, Partner, Retail Advantage
Wal-Mart Stores announced on Thursday that it had signed an exclusive deal with celebrity “lifestyle and design expert” Colin Cowie for a holiday home collection. It’s part of Wal-Mart’s effort to attract more affluent and urban shoppers by offering more stylish merchandise. The holiday housewares line will be available October through late December.
Apparently, Wal-Mart has decided that the best form of competition is to adopt highly successful tactics from its most admired competitor. Yes, imitation is the most sincere form of flattery, but when has it really worked in retail merchandising? Is this a case of “if you can’t out think them, copy them”? Or is this an adaptive and intelligent merchandising strategy?
Celebrity merchandising has always been a part of retail and, until recently, one of the most difficult for Wal-Mart to participate in. Wal-Mart’s overall discount image has turned off iconic or lifestyle celebrities from the idea of being associated with the retail brand. Why is this different now? Is it that Wal-Mart has been successful in re-imaging itself in the fashion and lifestyle arena? Or is it because of the explosion of celebrity lifestyle pitch-people brought on by cable channels and the internet?
The adoption of Target-style marketing may not serve Wal-Mart particularly well in the long run. The issue for Wal-Mart and for lifestyle celebrities is that you cannot, cannot, cannot move up in the consumer association hierarchy. Starting out in specialty stores and upscale boutiques has always allowed for a gradual down-market movement, trading mystique for volume. No one has been able to move up-market.
Discussion Question: Is following in Target’s lifestyle footsteps the right direction for Wal-Mart?
I don’t think so. Differentiation is exactly what it implies: being different. Celebrity lifestyle branding is Target’s strategy. If Wal-Mart is to be successful
in its campaign to persuade existing customers to take a detour into softlines aisles, it will have to do so in a unique and powerful way that does not remind the customer of
Target.
Comparing itself to Coke worked to bring Pepsi to a strong #2 market position. But Wal-Mart is the #1 market player. It seems to me that Wal-Mart has thrown
in the towel, anointed Target as the market leader, and decided that, “If you can’t beat ’em, join ’em.”
BrainTrust
Recent Discussions
Discussion Questions
Poll
Wal-Mart has tried this approach in the past numerous times, attempting to get upscale products at Wal-Mart prices. It just doesn’t work. They tried it in domestics, in women’s apparel, in countless categories. It just flies in the face of the way they do business. They might sell a few widgets; Wal-Mart shelf space guarantees a certain level of sales, but that’s about all that can be expected.
Not even the most loyal Wal-Mart shoppers look to the retailer for true fashion. They want rock bottom prices on merchandise of reasonable quality.
What’s behind this is an attempt to attract more affluent shoppers. This might work with things like big-screen TVs, because in many WM markets, there’s no one selling products like that at a discount. They’ve also done well with relatively upscale computer products, but again, they more or less followed their customer as they got into computing and were intimidated by computer specialty stores or had none that were easily accessible.
I don’t think a purported designer teapot is going to have the stores overrun with soccer moms and their offspring. Target has that niche pretty well cornered.
It all depends on the celebrity. Could a NASCAR driver like Jeff Gordon help Wal-Mart? Probably. Should Wal-Mart try to be more like Target? The answer is philosophically, “No,” but pragmatically, “What choice do they have?” Let’s face facts. Wal-Mart has to keep the analysts happy and the only way to do that is to increase sales. And, the only way for the world’s largest retailer to increase sales is to expand its customer base, i.e., in this case move up the income ladder. It isn’t good retailing, but since when did analysts think like good retailers?
In Wal-Mart’s quest to grow sales, they’re trying to push themselves to be everything to everybody and this move is another indication of how they will try anything. Yes, the line will be successful in terms of total sales but I doubt it will do much in terms of bringing in new traffic. The risk is, the more they attempt to reach upscale consumers, the more the possibility of turning off the consumer base that made them what they are. In the end it’s difficult to see how this move is going to help them in the long-run.
Personally, I don’t think you have to invent every new trend to hop aboard; being second or third or 178th can work just fine, too, if you give it your own spin or merely do it right. Wal-Mart has in fact been moving slowly more upscale. Not upscale, mind you, but definitely toward higher-income shoppers. ACNielsen recently had some great data on how the profile of the Wal-Mart shopper has changed significantly in the past eight years. I would hope that Todd Hale, who occasionally writes in this spot, will chime in with the data. Suffice it to say that partly because of its new store locations, and partly by will, Wal-Mart is moving away from rural, lower income blue collar workers and more toward more affluent families. It’s not sudden or dramatic, but it’s definitely there. I see their new efforts fitting neatly into plan; nothing seismic, but all moving forward.
Wal-Mart is late to the party signing up a celebrity designer (as opposed to a TV celebrity like Kathie Lee Gifford). Target has been a pioneer but let’s not forget that Kmart enlisted Martha Stewart years ago, and that product provided one of their few bright spots over the years.
Lots of stores have taken a page from Target, including the Kohl’s initiative announced recently with Vera Wang. Wal-Mart doesn’t need to worry about how this move is perceived by “the experts” but rather how the consumer responds to it. It’s a move consistent with the other upgrades going on at Wal-Mart today, such as store redesign initiatives.
The Cowie experiment is so limited in terms of timeframe and product development that the risk is minimal. The reward comes from what Wal-Mart learns — good or bad — and how it can affect their overall Home Store positioning with consumers.
I continue to find the “spin” on Wal-Mart’s designer alliances and up-market moves comical. By spicing up its national and private brands, Wal-Mart is aping Target, right? Hmmm, or perhaps they are mimicking Kohl’s with their going-up-market Ralph Lauren exclusive, Chaps (a readily-available example of a middle-tier retailer going up-market rather than down – ditto with Kohl’s Estee Lauder launch, Beauty Bank)…no, wait, they are definitely copying J.C. Penney…it’s obvious, what with the Miss Bisou line and Nick Graham…wait a minute…They are so totally copying H&M! First Karl Lagerfeld, then Stella McCartney, and Viktor and Rolf on the way! Why, they are “copying” everyone! And, it looks like Nine West, with their tie-ins with Vivienne Westwood and frumpy, budget shoe house Easy Spirit giving Tara Subkoff (designer of Imitation of Christ) a crack at the line…are they imitating Wal-Mart? Gosh, depends on when the lines launched. I’m so confused!
This is an INDUSTRY TREND and as the song goes “Everyone’s doin’ it!” Final point, Target is the best example out there of a retailer that started “down-market” and went steadily “up.” How soon we forget!
Mark Hunter has it exactly right. Wal-Mart is really rolling the dice here. You can’t be all things to all people. I think I’ve said this before about their current initiatives – the dustbin of history is littered with retailers who decided it would be great to get a few more gross margin dollars per sale by moving uptown.
Even if the prices are relatively low, they will have a perception problem with their core constituency. It’s a dangerous road, and I do not think they will succeed. There’s only one Target, and it’s not Wal-Mart.
On another note, I am troubled by the number of “critical initiatives” W-M is running at the same time. They’re still bullish on RFID in the supply chain, are driving their vendors to reduce inventories without affecting out of stocks, are trying to move up-market and are also trying to change their merchandise mix. Boy…if they can pull it all off, I’ll tip my hat to them.
If there is one thing I have learned in my many years as a retail hack, it’s that change and seeking areas in which to change are vital components to the health of a business. It’s not a matter of whether Wal-Mart is jumping on an already crowded bandwagon, it’s the willingness to try an approach that is new to you, and to see what your expertise and experience can bring to the project. The challenge for Wal-Mart is to bring a fresh approach to its marketing of housewares and not to fear following retail trends.
It’s interesting. If the topic was that Wal-Mart carries high-end wide screen TV’s – is that a “me too” approach to electronics? Or, for that matter, almost anything else in the store? Most everything they carry is sold elsewhere in a fairly similar fashion. It’s really not about the kitchen utensils themselves.
Recently, we discussed innovation. Webster’s defines it this way: “something new or different introduced; or introduction of new things or methods.” I think that this is the most important part of this story.
This really isn’t about being a “me too.” It’s more about the fact that WM continues to try — and try again — if not daily, then close to it. Whether it be used cars, new cars, banking, or simply kitchen utensils, they continue nearly daily to attempt to look for something new or something different to introduce to their stores to expand both their offering and market appeal.
Like them or not, they are not at rest. Interpret it however you may, their goal is dominance, plain and simple. No offering is left out, no offering is beyond their bounds. If you think otherwise, you’ll be shown differently nearly every day. They care not whether they fail. What they know is that the more you try, the more chances there are one of these offerings will stick and they will have won. Some might interpret this as passion. If so, they are likely correct. You can not dominate the world of retailing without it.
It’s funny that when you have a group of people together and they see the new commercials, inevitably someone makes the comment “Oh, that’s just Wal-Mart trying to be like Target.” So the question becomes, is this a good or bad thing? On one hand, it does gives the impression that WM is trying to be a little more hip and stylish, on the other hand does it give the impression of a wanna-be and actually help Target? I think it’s too early to tell, but we should know soon once the Holiday shopping season is analyzed for this year.
For all the fine opinions and discussions above, nothing matters but the consumer response to a merchandising effort that converts into sales.
When Wal-Mart sees something that works in the marketplace they go back to one of Sam’s core philosophies of studying the competition, taking great merchandising ideas and modifying to make it their own.
If there is a Target and a Wal-Mart in the same market area, consumers shop both.
If the Wal-Mart customer is responding at Target to something they couldn’t find at Wal-Mart, as a smart merchant, what would YOU do?…’nuf said.
Today’s question about Wal-Mart’s latest “move” reminds of a conversation I had with the late Democrat Sen. Hubert Humphrey after a ribbon-cutting ceremony. We then had a one-on-one chat in a private corner about free enterprise and how he had run his family business in Waverly, Minnesota. As I listened I heard him stay things he had never said publicly. I began to wonder if what I was hearing him say were his real beliefs. So I said to him, “Senator, based on what you just said, if I didn’t know better, I would guess you were a Republican.”
He looked around to see if anyone was listening and replied,
“Gene, you do what you got to do.” And that’s what Wal-Mart is doing.
The use of Colin Cowie’s name at Wal-Mart doesn’t mean Wal-Mart will dramatically change its price points or quality or customer appeal or identity. Kmart’s use of the Martha Stewart name didn’t change Kmart’s basic identity. Furthermore, Colin Cowie consumer franchise (his “star power”) is only a fraction of Martha Stewart. Wal-Mart hasn’t announced the financial terms of the Colin Cowie deal, either. Is it possible that Wal-Mart simply wanted some brand name other than their own, who’d take a reasonable fee, to make today’s Wal-Mart shoppers feel better about buying home goods?
The biggest and most difficult problem for Wal-Mart is changing its image, perceived or real. This is a major hurdle and neutralizes any upscaling efforts WM tries. When price is ingrained in consumers’ minds for all these years, and the core shopper is middle and below in household income, the feat to bring in a new target audience is very complicated, if not down right overwhelming.
A parallel to Wal-Mart’s desire to change its image (and become more upscale) is like any baseball team that is stuck, year after year, in the a wild card playoff position. It’s a good team and leads or is in second place in its conference. Its core fans are loyal, but this group doesn’t fill the park.
What is missing?
Wal-Mart is stuck in a price rut, and a gloomy store environment and with inadequate shopper service. Core shoppers still go, but non shoppers don’t like anything about WM.
Back to the baseball team parallel: So what is needed for the baseball team to advance past the playoff position, to winning the Conference and being in the World Series?
One or two newly acquired “star” players may help. But, it takes a new way of thinking and culture to capture THE winning attitude…like the Yankees of the 50’s who knew nobody could beat them in entertainment, excitement, and building a “TOTAL and COMPLETE” top/down approach to filling the stadium every game.
Wal-Mart has to culturally change its thinking and actions top/ down to bring in new ways to build an upscale business and convince non WM shopping consumers that it is totally a different place to shop, and has what these shoppers are looking for…an exciting, entertaining and superior shopping environment for the new consumers. Hmmmmmmmmmmmmmmmmm
Many of the opinions expressed within this discussion miss the mark because they are making assumptions about Wal-Mart’s business model that are simply way off base.
Several comments were made to the effect that in order for Wal-Mart to satisfy the investment community, they were going to have to increase sales and, in order to accomplish this, they would have to expand their customer base (they already enjoy 138 million shopping visits per week) by moving up the income ladder (a large percentage of upper income folks already shop at Wal-Mart for basics) and by moving away from rural, lower income blue collar workers (this description of their core shopper is way off the mark as it excludes the entire service industry).
If their comments are based upon opinions they’ve formed using false assumptions of a business model, then it is no surprise that these comments are so far off the mark.
With 138 million customers already shopping its stores each week, Wal-Mart’s interest isn’t focused on trying to expand its customer base. In fact, in a recent review with its current and potential advertising agents, it issued a brief which in part provides the insight into their strategy. The brief spoke towards its advertising needs that were not necessarily geared towards increasing customers, rather to get its existing shoppers to shop in categories which they normally ignore or rarely visit, thereby increasing sales from existing customers, especially in higher margin categories such as, you guessed it, apparel and housewares.
The brief (which was handed out to the finalist advertising agencies vying for Wal-Mart’s business) outlined that driving traffic wasn’t their core marketing challenge, rather it is to engage those customers who are in Wal-Mart to shop across more of the categories.
So increasing sales does not necessitate increasing your customer count, rather it may be dependent upon increasing your appeal to those customers you already have in categories they don’t typically shop.
Wal-Mart’s emphasis on product lines which accentuate their offer and provide a “good – better – best” selection is both practical and carries little additional risk. As long as the company continues to offer its traditional core customers that product assortment and killer pricing that they always have, what is the downside to becoming more appealing to a broader range of your existing customers?
As “Scanner” says in his comments, this isn’t about Wal-Mart becoming a “me too” retailer, “it’s more about the fact that WM continues to try — and try again” to appeal to its customer base.
If Wal-Mart introduces the “celebrity placement” to anything will they succeed? Interestingly enough, in my opinion yes they will.
Why?
Because large retailers attract all income levels from low to middle class to the affluent.
The affluent save more money than any other income class…which is why they are affluent. Most of the affluent will drive American made cars, don’t wear designer labels (for the most part) but how you can tell is their home. Does anybody really need Ralph Lauren towels?
I agree that if Wal-Mart were to join forces with NASCAR or Tanya Tucker (in certain markets), along with any celebrity that has a general audience base — that product will do well in Wal-Mart.
But it will determine on which markets they roll these celebrities out in. Will Tanya Tucker bedding do well in Terrytown, LA? Uh….probably not. This is a very urban Wal-Mart. Bring out Ludacris towels and you have a winner!
Take for example Rachel Ray. She has a cooking show, a magazine AND now a talk show. I didn’t even know who she was until a few days ago with talk of her new talk show. But to the rest of the world she is “it.” A handful of energy and at 38 years old – bubbly and bright, will probably be the next “celebrity” to make her mark selling something at one of the larger chains…most likely Wal-Mart.
Bottom line: a store — any store — needs to know their market and they need to work with local consulting firms in specific cities to get to know that market if the store isn’t already compiling data on this.
Celebrities will help sell anything, which is why product placement is a huge business (I know, Bella POOCH has placed several hundred celebrities in award show goody bags)…BUT…it goes back to the market that shops at the store.
More Discussions
Is Five Below Poised For Even Greater Growth?
Five Below is hitting serious growth numbers. Can this trend continue?Should IKEA Be Flattening Management?
Should IKEA be trimming down its management headcount?Is Legislation the Answer on Visa, Mastercard Swipe Fees as ~$200 Billion Record Is Set?
Is lawmaking the way forward on swipe fees?
Wal-Mart has tried this approach in the past numerous times, attempting to get upscale products at Wal-Mart prices. It just doesn’t work. They tried it in domestics, in women’s apparel, in countless categories. It just flies in the face of the way they do business. They might sell a few widgets; Wal-Mart shelf space guarantees a certain level of sales, but that’s about all that can be expected.
Not even the most loyal Wal-Mart shoppers look to the retailer for true fashion. They want rock bottom prices on merchandise of reasonable quality.
What’s behind this is an attempt to attract more affluent shoppers. This might work with things like big-screen TVs, because in many WM markets, there’s no one selling products like that at a discount. They’ve also done well with relatively upscale computer products, but again, they more or less followed their customer as they got into computing and were intimidated by computer specialty stores or had none that were easily accessible.
I don’t think a purported designer teapot is going to have the stores overrun with soccer moms and their offspring. Target has that niche pretty well cornered.
It all depends on the celebrity. Could a NASCAR driver like Jeff Gordon help Wal-Mart? Probably. Should Wal-Mart try to be more like Target? The answer is philosophically, “No,” but pragmatically, “What choice do they have?” Let’s face facts. Wal-Mart has to keep the analysts happy and the only way to do that is to increase sales. And, the only way for the world’s largest retailer to increase sales is to expand its customer base, i.e., in this case move up the income ladder. It isn’t good retailing, but since when did analysts think like good retailers?
In Wal-Mart’s quest to grow sales, they’re trying to push themselves to be everything to everybody and this move is another indication of how they will try anything. Yes, the line will be successful in terms of total sales but I doubt it will do much in terms of bringing in new traffic. The risk is, the more they attempt to reach upscale consumers, the more the possibility of turning off the consumer base that made them what they are. In the end it’s difficult to see how this move is going to help them in the long-run.
Personally, I don’t think you have to invent every new trend to hop aboard; being second or third or 178th can work just fine, too, if you give it your own spin or merely do it right. Wal-Mart has in fact been moving slowly more upscale. Not upscale, mind you, but definitely toward higher-income shoppers. ACNielsen recently had some great data on how the profile of the Wal-Mart shopper has changed significantly in the past eight years. I would hope that Todd Hale, who occasionally writes in this spot, will chime in with the data. Suffice it to say that partly because of its new store locations, and partly by will, Wal-Mart is moving away from rural, lower income blue collar workers and more toward more affluent families. It’s not sudden or dramatic, but it’s definitely there. I see their new efforts fitting neatly into plan; nothing seismic, but all moving forward.
Wal-Mart is late to the party signing up a celebrity designer (as opposed to a TV celebrity like Kathie Lee Gifford). Target has been a pioneer but let’s not forget that Kmart enlisted Martha Stewart years ago, and that product provided one of their few bright spots over the years.
Lots of stores have taken a page from Target, including the Kohl’s initiative announced recently with Vera Wang. Wal-Mart doesn’t need to worry about how this move is perceived by “the experts” but rather how the consumer responds to it. It’s a move consistent with the other upgrades going on at Wal-Mart today, such as store redesign initiatives.
The Cowie experiment is so limited in terms of timeframe and product development that the risk is minimal. The reward comes from what Wal-Mart learns — good or bad — and how it can affect their overall Home Store positioning with consumers.
I continue to find the “spin” on Wal-Mart’s designer alliances and up-market moves comical. By spicing up its national and private brands, Wal-Mart is aping Target, right? Hmmm, or perhaps they are mimicking Kohl’s with their going-up-market Ralph Lauren exclusive, Chaps (a readily-available example of a middle-tier retailer going up-market rather than down – ditto with Kohl’s Estee Lauder launch, Beauty Bank)…no, wait, they are definitely copying J.C. Penney…it’s obvious, what with the Miss Bisou line and Nick Graham…wait a minute…They are so totally copying H&M! First Karl Lagerfeld, then Stella McCartney, and Viktor and Rolf on the way! Why, they are “copying” everyone! And, it looks like Nine West, with their tie-ins with Vivienne Westwood and frumpy, budget shoe house Easy Spirit giving Tara Subkoff (designer of Imitation of Christ) a crack at the line…are they imitating Wal-Mart? Gosh, depends on when the lines launched. I’m so confused!
This is an INDUSTRY TREND and as the song goes “Everyone’s doin’ it!” Final point, Target is the best example out there of a retailer that started “down-market” and went steadily “up.” How soon we forget!
Mark Hunter has it exactly right. Wal-Mart is really rolling the dice here. You can’t be all things to all people. I think I’ve said this before about their current initiatives – the dustbin of history is littered with retailers who decided it would be great to get a few more gross margin dollars per sale by moving uptown.
Even if the prices are relatively low, they will have a perception problem with their core constituency. It’s a dangerous road, and I do not think they will succeed. There’s only one Target, and it’s not Wal-Mart.
On another note, I am troubled by the number of “critical initiatives” W-M is running at the same time. They’re still bullish on RFID in the supply chain, are driving their vendors to reduce inventories without affecting out of stocks, are trying to move up-market and are also trying to change their merchandise mix. Boy…if they can pull it all off, I’ll tip my hat to them.
If there is one thing I have learned in my many years as a retail hack, it’s that change and seeking areas in which to change are vital components to the health of a business. It’s not a matter of whether Wal-Mart is jumping on an already crowded bandwagon, it’s the willingness to try an approach that is new to you, and to see what your expertise and experience can bring to the project. The challenge for Wal-Mart is to bring a fresh approach to its marketing of housewares and not to fear following retail trends.
It’s interesting. If the topic was that Wal-Mart carries high-end wide screen TV’s – is that a “me too” approach to electronics? Or, for that matter, almost anything else in the store? Most everything they carry is sold elsewhere in a fairly similar fashion. It’s really not about the kitchen utensils themselves.
Recently, we discussed innovation. Webster’s defines it this way: “something new or different introduced; or introduction of new things or methods.” I think that this is the most important part of this story.
This really isn’t about being a “me too.” It’s more about the fact that WM continues to try — and try again — if not daily, then close to it. Whether it be used cars, new cars, banking, or simply kitchen utensils, they continue nearly daily to attempt to look for something new or something different to introduce to their stores to expand both their offering and market appeal.
Like them or not, they are not at rest. Interpret it however you may, their goal is dominance, plain and simple. No offering is left out, no offering is beyond their bounds. If you think otherwise, you’ll be shown differently nearly every day. They care not whether they fail. What they know is that the more you try, the more chances there are one of these offerings will stick and they will have won. Some might interpret this as passion. If so, they are likely correct. You can not dominate the world of retailing without it.
It’s funny that when you have a group of people together and they see the new commercials, inevitably someone makes the comment “Oh, that’s just Wal-Mart trying to be like Target.” So the question becomes, is this a good or bad thing? On one hand, it does gives the impression that WM is trying to be a little more hip and stylish, on the other hand does it give the impression of a wanna-be and actually help Target? I think it’s too early to tell, but we should know soon once the Holiday shopping season is analyzed for this year.
For all the fine opinions and discussions above, nothing matters but the consumer response to a merchandising effort that converts into sales.
When Wal-Mart sees something that works in the marketplace they go back to one of Sam’s core philosophies of studying the competition, taking great merchandising ideas and modifying to make it their own.
If there is a Target and a Wal-Mart in the same market area, consumers shop both.
If the Wal-Mart customer is responding at Target to something they couldn’t find at Wal-Mart, as a smart merchant, what would YOU do?…’nuf said.
Today’s question about Wal-Mart’s latest “move” reminds of a conversation I had with the late Democrat Sen. Hubert Humphrey after a ribbon-cutting ceremony. We then had a one-on-one chat in a private corner about free enterprise and how he had run his family business in Waverly, Minnesota. As I listened I heard him stay things he had never said publicly. I began to wonder if what I was hearing him say were his real beliefs. So I said to him, “Senator, based on what you just said, if I didn’t know better, I would guess you were a Republican.”
He looked around to see if anyone was listening and replied,
“Gene, you do what you got to do.” And that’s what Wal-Mart is doing.
The use of Colin Cowie’s name at Wal-Mart doesn’t mean Wal-Mart will dramatically change its price points or quality or customer appeal or identity. Kmart’s use of the Martha Stewart name didn’t change Kmart’s basic identity. Furthermore, Colin Cowie consumer franchise (his “star power”) is only a fraction of Martha Stewart. Wal-Mart hasn’t announced the financial terms of the Colin Cowie deal, either. Is it possible that Wal-Mart simply wanted some brand name other than their own, who’d take a reasonable fee, to make today’s Wal-Mart shoppers feel better about buying home goods?
The biggest and most difficult problem for Wal-Mart is changing its image, perceived or real. This is a major hurdle and neutralizes any upscaling efforts WM tries. When price is ingrained in consumers’ minds for all these years, and the core shopper is middle and below in household income, the feat to bring in a new target audience is very complicated, if not down right overwhelming.
A parallel to Wal-Mart’s desire to change its image (and become more upscale) is like any baseball team that is stuck, year after year, in the a wild card playoff position. It’s a good team and leads or is in second place in its conference. Its core fans are loyal, but this group doesn’t fill the park.
What is missing?
Wal-Mart is stuck in a price rut, and a gloomy store environment and with inadequate shopper service. Core shoppers still go, but non shoppers don’t like anything about WM.
Back to the baseball team parallel: So what is needed for the baseball team to advance past the playoff position, to winning the Conference and being in the World Series?
One or two newly acquired “star” players may help. But, it takes a new way of thinking and culture to capture THE winning attitude…like the Yankees of the 50’s who knew nobody could beat them in entertainment, excitement, and building a “TOTAL and COMPLETE” top/down approach to filling the stadium every game.
Wal-Mart has to culturally change its thinking and actions top/ down to bring in new ways to build an upscale business and convince non WM shopping consumers that it is totally a different place to shop, and has what these shoppers are looking for…an exciting, entertaining and superior shopping environment for the new consumers. Hmmmmmmmmmmmmmmmmm
Many of the opinions expressed within this discussion miss the mark because they are making assumptions about Wal-Mart’s business model that are simply way off base.
Several comments were made to the effect that in order for Wal-Mart to satisfy the investment community, they were going to have to increase sales and, in order to accomplish this, they would have to expand their customer base (they already enjoy 138 million shopping visits per week) by moving up the income ladder (a large percentage of upper income folks already shop at Wal-Mart for basics) and by moving away from rural, lower income blue collar workers (this description of their core shopper is way off the mark as it excludes the entire service industry).
If their comments are based upon opinions they’ve formed using false assumptions of a business model, then it is no surprise that these comments are so far off the mark.
With 138 million customers already shopping its stores each week, Wal-Mart’s interest isn’t focused on trying to expand its customer base. In fact, in a recent review with its current and potential advertising agents, it issued a brief which in part provides the insight into their strategy. The brief spoke towards its advertising needs that were not necessarily geared towards increasing customers, rather to get its existing shoppers to shop in categories which they normally ignore or rarely visit, thereby increasing sales from existing customers, especially in higher margin categories such as, you guessed it, apparel and housewares.
The brief (which was handed out to the finalist advertising agencies vying for Wal-Mart’s business) outlined that driving traffic wasn’t their core marketing challenge, rather it is to engage those customers who are in Wal-Mart to shop across more of the categories.
So increasing sales does not necessitate increasing your customer count, rather it may be dependent upon increasing your appeal to those customers you already have in categories they don’t typically shop.
Wal-Mart’s emphasis on product lines which accentuate their offer and provide a “good – better – best” selection is both practical and carries little additional risk. As long as the company continues to offer its traditional core customers that product assortment and killer pricing that they always have, what is the downside to becoming more appealing to a broader range of your existing customers?
As “Scanner” says in his comments, this isn’t about Wal-Mart becoming a “me too” retailer, “it’s more about the fact that WM continues to try — and try again” to appeal to its customer base.
If Wal-Mart introduces the “celebrity placement” to anything will they succeed? Interestingly enough, in my opinion yes they will.
Why?
Because large retailers attract all income levels from low to middle class to the affluent.
The affluent save more money than any other income class…which is why they are affluent. Most of the affluent will drive American made cars, don’t wear designer labels (for the most part) but how you can tell is their home. Does anybody really need Ralph Lauren towels?
I agree that if Wal-Mart were to join forces with NASCAR or Tanya Tucker (in certain markets), along with any celebrity that has a general audience base — that product will do well in Wal-Mart.
But it will determine on which markets they roll these celebrities out in. Will Tanya Tucker bedding do well in Terrytown, LA? Uh….probably not. This is a very urban Wal-Mart. Bring out Ludacris towels and you have a winner!
Take for example Rachel Ray. She has a cooking show, a magazine AND now a talk show. I didn’t even know who she was until a few days ago with talk of her new talk show. But to the rest of the world she is “it.” A handful of energy and at 38 years old – bubbly and bright, will probably be the next “celebrity” to make her mark selling something at one of the larger chains…most likely Wal-Mart.
Bottom line: a store — any store — needs to know their market and they need to work with local consulting firms in specific cities to get to know that market if the store isn’t already compiling data on this.
Celebrities will help sell anything, which is why product placement is a huge business (I know, Bella POOCH has placed several hundred celebrities in award show goody bags)…BUT…it goes back to the market that shops at the store.