What's in a Name? For Wal-Mart, a New Tactic

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Michelle from Austin, meet Nancy from Neosha.

As Wal-Mart shifts emphasis, by adding upmarket products and marketing to compete with Costco and Target for the more-moneyed customer, it is also segmenting its audience-adding Michelle, who is more upscale and suburban than the rural Nancy, as a target-and overhauling its stores to better match the demographic they represent.

According to an internal presentation circulated at its supplier summit earlier this year, not only is Wal-Mart trying to reduce inventory as a means to boost gross margin return on investment, but it's also rethinking other company tenets. For example, last year's "Stack 'em up!" product philosophy has given way to "quality trends" in assortment, the presentation said. And the key Wal-Mart consumer, identified last year as "Nancy from Neosha, Mo.," has now morphed into the more upscale-sounding "Michelle from Austin, Texas."

In fact, by the end of this year, Nancy may find she's only one of a gaggle of targets. Others, sans moniker so far, will include shoppers from rural, suburban and even urban markets, each of which will be subdivided into two types of shoppers: the frequent Wal-Mart customer (more like Nancy), who shops the store weekly and buys everything there, and the selective shopper who goes only for certain items.

Wal-Mart has not abandoned price in its sales focus in 2006. But it's evolving its focus from volume-producing items to those aimed at making customers say, "Wow, great value," according to the document. "They're basically moving from a supply chain to demand chain, from logistics to marketing," said one executive familiar with the document. "They realize they cannot create demand anymore."

To that end, the chain is trading up everything from its beverages to lawn furniture. "Wal-Mart will be carrying grills retailing for $1,500 this year," said one slide in the presentation. To accommodate and display this new merchandise, Wal-Mart aims to cut down on inventory.


Certain stores will be overhauled for specific markets, too. For example, a recently opened Wal-Mart in Middlefield, Ohio, which caters to a number of Amish shoppers, has been designed to include 37 hitching posts for horse-drawn carriages. In its Plano, Texas, superstore, which has been described as the world's first high-end Wal-Mart, guns and DIY products are out, because the upscale locals generally don't shoot and prefer to have someone else do their home improvement. Instead, the Plano store has a bigger-than-usual wine cellar, sushi, micro-brews and a Wi-Fi coffee shop.

Still, that's just a one-off right now. "We don't want to give [the impression] we're abandoning low price," said Gail Lavielle, senior director-corporate communications at Wal-Mart. "Our position is to give our customers the best value, and value is a combination of price, quality, time [saving] assortment."

contributing: jack neff
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