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Wal-Mart Trading Up

Slowing same-store sales and lower than projected earnings have spurred Wal-Mart to consider trading up its largely low-end assortment.

Michael Duke, president/CEO of the company’s flagship store division, told shareholders and employees at this month’s annual meeting, here, that “We did a great job of focusing on the opening-price-point customer [but] may not have focused enough on the customer who is willing to pay for a little better quality and style.”

Wal-Mart has already begun up-trending its CE assortment with satellite radios and a growing selection of flat-panel LCD and plasma displays, and will likely expand the effort to include better housewares, trendier apparel and even organic food, the company said.

The strategy, which borrows from upscale discounter Target, would ease Wal-Mart’s over-dependence on low-income shoppers, a core demographic which has been hardest hit by high gas prices (see story below).

Duke also pledged to improve the shopping experience through shorter checkout lines and cleaner stores and restrooms.

A snazzier CE department could put added pressure on Best Buy, which has long identified Wal-Mart as its No. 1 competitive threat. Indeed, Wal-Mart’s aggressive pricing on commodity-type electronics was a key driver in Best Buy’s decision to move its assortment further up the pricing curve, which in turn has squeezed midtier specialty A/V chains like Ultimate Electronics.