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Keeping a new flock
Wal-Mart’s T.F. store is an example of where it wants its other stores to be to keep upscale customers coming back
Times-News staff and wire reports
The Wal-Mart Supercenter in Twin Falls is an example of what the company hopes to do with nearly 3,600 others stores across the nation.
That’s because the recession steered a new type of customer to Wal-Mart – deeper in the pockets and suddenly looking for bargains.
Now the world’s largest retailer has to figure out how to keep that customer when the economy recovers.
So Wal-Mart is bringing in more brand names, ditching scores of other products and even redesigning hundreds of stores to give them wider aisles, better lighting and better sight lines.
It’s more than just a cosmetic upgrade. That new breed of customer also spends about 40 percent more than the traditional Wal-Mart shopper, and the retailer senses an opportunity to accelerate its growth.
It’s placing a big bet on the redesign of most of its 3,600 stores, started last fall. This fiscal year, it plans to redo up to 600 at a cost from $ 1.6 billion to $ 1.7 billion.
A corporate spokeswoman said the prototype for the remodeling will be similar to the Supercenter that opened in Twin Falls in June, which includes lower shelves to make it easier to see across the store, better lighting and wider aisles. Expanded electronics areas will include interactive displays to test video games and portable gadgets.
The store now carries brands like Danskin and Better Homes and Gardens, and its electronics section now stocks pricier products like Palm Inc.’s well-received new Pre smartphone.
Whether it all works, Wall Street analysts say, depends in part on how quickly the behemoth retailer can remodel and keep shoppers satisfied. Concerns about how Wal-Mart will keep its momentum have sent its stock down 13 percent this year.
The early signs are positive, putting pressure on the rest of the industry. Target Corp., whose sales have been hampered by its emphasis on nonessentials like trendy jeans, is expanding its fresh food offerings. Best Buy Co. is beefing up customer service.
Other discounters, including TJX Cos. Inc., which sells name-brand fashions and home furnishings, Costco Wholesale Corp. and BJ’s Wholesale Club Inc., are focusing on how to hold on to new customers lured by low prices during the recession.
But Wal-Mart, which only three years ago struggled with cluttered stores, long lines, stiff towels and unattractive clothing, has a bigger hurdle to climb. And it has to move fast to win over people who still have negative feelings about shopping there.
Wal-Mart, which topped $ 400 billion in sales last year, attracts more than 140 million customers per week. But to get them to buy more than just groceries, which account for about half of annual sales, it’s paring its product lineup and making room for better brands.
Consultant Burt P. Flickinger III estimates the remodeled stores are carrying 10 to 15 percent less inventory, particularly getting rid of no-name labels.
Wal-Mart executives say 17 percent of the chain’s traffic growth in February came from new customers, and they’re spending 40 percent more per trip. More than half of those shoppers living in households that take in more than $ 50,000 a year.
While that may not be considered affluent, it’s a big departure from Wal-Mart’s core customers, of whom one in five does not have a bank account or has limited access to financial services.