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Wal-Mart Details New Initiatives

4/24/2006 02:00:00 AM Eastern

Don't call it “upscale.”

Wal-Mart's new merchandising and store initiatives are intended to drive the world's largest retailer deeper and closer to its customers, while reaching out to a career-driven, time-pressed (read: higher spending) consumer segment that shops the stores less frequently and then, only for the basics.

“We are really trying to understand that customer,” said Eduardo Castro-Wright, president/CEO of Wal-Mart Stores USA, at the company's second annual media conference that took place here last week.

Despite 800-thread count sheets, a two-carat $5,400 diamond ring and $2,300 flat-panel television sets that have been added to the mix in recent months — and it's new upmarket test store that opened in Plano, Texas, last month — Wal-Mart is going to great pains to repeat, over and over again, this is not up-scaling, a term that might imply it's leaving its core customer base behind. That would be ridiculous, suggested Wal-Mart Stores CEO Lee Scott outside his office during an impromptu visit with reporters touring Wal-Mart's home office on Monday. “That business is just too important to us” to leave behind.

The “loyalist,” one of three broad customer segments Wal-Mart has identified — and its core customer — shops in a Wal-Mart store 63 times a year and spends 77 percent of his or her grocery dollars there, explained John Fleming, marketing executive VP. By contrast, the “selective” shopper — the one Wal-Mart is wooing — shops at Wal-Mart only 46 times a year and spends just 28 percent of his or her grocery dollar there.

"The loyalist shops items, they shop price points, and they love the big broad assortments that Wal-Mart offers," Fleming explained. "It becomes one-stop shopping for them. The Selective shopper, on the other hand, is looking for solutions. This is a customer who is looking for value for their money. This is a customer who is very focused on convenience. In fact, time becomes their currency ... They shop for value, not just price."

While the company has always used the term "value" in explaining its consumer proposition, it has taken on new meaning lately, as Wal-Mart moves from its low opening price-point position.

"So our objective is to champion a broader range of customers with products, services and a more compelling experience," Fleming said. "It's not about going upscale. It's about understanding the customers who are already in our stores and focusing on the selective shopper — not at the expense of the loyalist, because that is still a very important segment, and we will continue to develop our relationship with that customer — but to focus on the selective shopper and ... drive a deeper level of loyalty with the selective shopper."