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.”