Wal-Mart Goes Upscale to Increase Sales

By ANNE D'INNOCENZIO and MARCUS KABEL
AP Business Writers

ROGERS, Ark.

Under pressure to boost growth, Wal-Mart Stores Inc. is retooling its strategy to pry money from the hands of wealthier, more style- conscious customers by offering a broader array of more fashionable goods.

Wal-Mart Stores USA CEO Eduardo Castro-Wright said Tuesday that the world's largest retailer, whose famous tag-line is "Always Low Prices," would unveil an array of higher-priced lawn chairs and fluffy towels, as well as trendier clothing, including a new hip-hop brand for young males called Exsto.

The goal with Exsto, which will hit the shelves in July, is to mimic the success of Metro 7, which is targeted at young women and has scored well since its launch last year.

Other moves outlined by Castro-Wright, who spoke to about 70 journalists on the first of a two-day media conference, include reducing merchandise inventory to reduce clutter, and relocating key regional executives to the areas for which they are responsible, in order to better tailor stores to the communities they serve.

Wal-Mart held its first media conference last April under the twin pressures of sluggish sales growth and bad publicity. A year later, Wal-Mart is still struggling to regain the growth rates of years past. The company remains beset by organized critics, including labor unions.

But the company is hoping that a raft of initiatives, such as those outlined Tuesday, will revive consumer interest and refurbish its image, boosting sales and its stock price. On Tuesday, shares of Wal- Mart rose 58 cents to close at $46.40 on the New York Stock Exchange, in the middle of its 52-week range of $42.33-$50.87.

So far this fiscal year, Wal-Mart has averaged a modest 3.1 percent in same-store sales growth, or sales at stores opened at least a year. Same-store sales are considered the best indicator of a retailer's health.

Wal-Mart executives also touched on the hot-button labor issue of employee health care.

Susan Chambers, the executive vice president in charge of human resources, said improvements announced previously in health care plans would allow more employees to enroll. The company Monday said it would extend the availability of its lowest premium plan to 50 percent of employees from 10 percent now and shorten the waiting period for part- time staff to enroll, from two years to one.

The lowest cost plan, with a premium of $11 a month, covers the first three doctor visits before an annual deductible of $1,000 for an individual or $3,000 for a family kicks in.

Arkansas Gov. Mike Huckabee, who opened the conference, said he was a strong supporter of Wal-Mart and defended the efforts it is making to expand health care coverage. Besides the low-cost plan, Wal-Mart has extended coverage to the children of part-time staff and launched a $23 a month premium plan for areas that do not have the $11 plan.

"Wal-Mart makes available insurance to 81 percent of its employees. In the retail world that average is 20 percentage points lower at 61 percent. That's pretty impressive," Huckabee said.

Chief Executive Lee Scott will close the proceedings Wednesday with a speech titled "Change, Growth and Success for Wal-Mart and the Working Families We Serve."

On Tuesday, company executives said they were trying to understand their customer even better and have segmented them into three different groups _ the loyalist, the selective shopper and the skeptic.

The loyalist shopper shops at Wal-Mart stores 63 times a year, and the skeptic much less so. But the company's biggest focus is the selective shopper, who shops 46 times a year and buys only basic goods, according to John Fleming, executive vice president of marketing.

As part of its merchandising efforts, Wal-Mart is improving the baby departments, offering organic cotton baby clothes under its store brand George. In January, the company relaunched its furniture departments to offer more compelling merchandise.

WakeUpWalMart.com, a union backed group, sought to steal some of Wal- Mart's thunder before the meeting. The group brought in civil rights activist Rev. Markel Hutchins, from Atlanta, Ga., along with several former and current workers of Wal-Mart to blast the company for what they believe are meager wages and health care benefits.

Wal-Mart's backers shot back. Working Families for Wal-Mart, a company-funded group of community leaders headed by former Atlanta mayor and United Nations ambassador Andrew Young, held its own news conference where it defended Wal-Mart's role in job creation and cutting prices for working families.

I don't think "upscale" and "lowest possible common denominator" are a great match.

Maybe it's just me.

Maybe they will copy Vegas and have a "high limit" section.  

Joleen Sue an' Bubba is registerated fur thar weddin at WawlMart.

"Under pressure to boost growth..."

How much more growth can they possibly have? There's a Wal-Mart everywhere. Hell, there are six of the darn things within 20 miles of where I am sitting.

Quoted: "Under pressure to boost growth..." How much more growth can they possibly have? There's a Wal-Mart everywhere. Hell, there are six of the darn things within 20 miles of where I am sitting.

That’s what I was thinking as I read the article. Wal-Mart is at saturation level, how can they grow anymore?

There is definitely a lot of prejudice against WM in the 'upper circles'.  A lot of nicer areas won't even let one be built, and some will only allow it if they build it out of stone and make it look like a little castle.  I think that's half prejudice against the presumed clientelle, and half leftist anti-Walmart third-world-exploiting paranoia.

Good for Walmart!! My stocks could use a boost!!

Wal-Mart Stores USA CEO Eduardo Castro-Wright said Tuesday that the world's largest retailer, whose famous tag-line is "Always Low Prices," would unveil an array of higher-priced lawn chairs and fluffy towels, as well as trendier clothing, including a new hip-hop brand for young males called Exsto. Other moves outlined by Castro-Wright, who spoke to about 70 journalists on the first of a two-day media conference, include reducing merchandise inventory to reduce clutter.

Just what we need: less variety, higher prices and more trendy crap (in other words, another Target).

They just built the largest and "most upgraded" Wal-mart in Texas in an upper class area a couple months ago (Plano), haven't been to it cause its all the way across town, but a lot of folks in DFW make it a point to go check it out.  I remember there bing lots of news stories on the community not wanting them to build in the area.

www.nbc5i.com/newsarchive/8161624/detail.html

"You will buy what we sell, and you will like it!" Fidel-Castro CEO Wal-Mart...

Wal-Mart Stores USA CEO Eduardo Castro-Wright

Whiskey Tango-Foxtrot!  What kind of hypenates a male's name???

By adding upscale products and having in-store banks sure puts added pressure on the similar businesses.

I'm surprised they don't sell cars....

HH

Quoted: That’s what I was thinking as I read the article. Wal-Mart is at saturation level, how can they grow anymore?

They have to increase profits. They used to be able to do this because they could build more stores. Now they have to grow their per-store profits.

One way to do this is to draw in customers who don't ususally shop at WalMart.

I, for one, would never buy clothes at WalMart, but that's just me.

Quoted: It's getting to be like McDonalds.

We have McDonalds in our Walmarts...  just in case you need a big mac to make it down one more aisle.

Quoted: Wal-Mart Stores USA CEO Eduardo Castro-Wright Whiskey Tango-Foxtrot!  What kind of hypenates a male's name???

Hispanic surnames are traditionally hyphenated to include both the father and the mother's names.

This isn't some libtard new kind of thing,  The grand old Spanish families did it back when marriages were alliances of political and business familiies.

Quoted: Quoted: "Under pressure to boost growth..." How much more growth can they possibly have? There's a Wal-Mart everywhere. Hell, there are six of the darn things within 20 miles of where I am sitting. It's getting to be like McDonalds.Starbucks

Someone tried to tell me that those people with really long names are because the mother wanted to name her child after everyone at the gangbang.

It's just what I heard..

Anyway, I think it is just peachy that they are coming out with a new line of HIP HOP clothing.  I presume that bail bonds and abortion services are coming next...

Quoted: "Heck yeah.  Me and Jo-Leen shop in the fancy section of Wal-Mart."

Quoted: By adding upscale products and having in-store banks sure puts added pressure on the similar businesses. I'm surprised they don't sell cars.... HH

They are already planning to sell Chinese made cars...

JEsus Cherist. They just built over 400+ stores in the last 2 years. The store I worked at was bringing over 3 Million dollars in just on Saturday.

They are gonna get too big to fast and collapse on their on weight

Quoted: Quoted: By adding upscale products and having in-store banks sure puts added pressure on the similar businesses. I'm surprised they don't sell cars.... HH They are already planning to sell Chinese made cars...

That's a new one - Where'd you hear that?

Quoted: Quoted: Quoted: By adding upscale products and having in-store banks sure puts added pressure on the similar businesses. I'm surprised they don't sell cars.... HH They are already planning to sell Chinese made cars... That's a new one - Where'd you hear that?

At least the parts for now-see below

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/17/AR2006031701128.html

By Warren Brown
Sunday, March 19, 2006; Page G02

The automotive industry has its characters. One of the most notable is Malcolm Bricklin, an entrepreneur variously identified as the man who brought Subaru and Yugo to America, a dauntless visionary and an impractical dreamer.

Perhaps he's simply a clever person who sees the inevitable and takes advantage of it before it occurs.

That is what he seems to be doing with Chinese cars. They are coming to America, sooner or later, despite any opposition from American car companies, their unions or the politicians who have sworn to protect their collective interests.

It's a version of the Wal-Mart Effect -- the tendency of consumers to ignore nationalism, politics or product origin in pursuit of the best deal. Bricklin understands that motivation, and he sees what he firmly believes is a good deal in the prospective importing of mid-priced cars from Chery Automobile Co., of Wuhu, China, into the United States.

People with money apparently believe that Bricklin is on to something good. He has secured $225 million in initial funding from Atlantic-Pacific Capital Inc., a venture capital company founded in 1995 that has raised, by its own estimate, $21 billion to help start-up businesses.

To put it in perspective, $225 million is not much money in the automobile industry. It barely covers the cost of a modest cosmetic change on an existing line of cars, or a marketing campaign for a new model. It certainly is nowhere near enough money to do everything that has to be done -- safety and emissions compliances being two of the most important items -- to get a little-known foreign car ready for U.S. entry.

But none of that technical stuff is really Bricklin's concern. He is first and foremost a salesman, and his New York-based Visionary Vehicles LLC is primarily a retail operation currently without any known ability to service any cars it might sell.

Bricklin, ever the optimist, sees no obstacle there either. Publicly, at least, he still contends that Visionary can start bringing Chery-made cars to the United States in 2007 -- a formidable undertaking, considering all of the things that have to be done to make that a reality.

Ultimately, Bricklin hopes to have 250 Chery dealerships in the United States with annual sales of 250,000 cars. Early planning has those dealerships doing much of the servicing, using parts sourced from overseas, possibly even stocked by general retail outlets such as Wal-Mart, according to several sources.

Clearly, Bricklin recognizes that 250 dealerships are not enough to service several hundred thousand cars being used all over America. So, he is floating the idea of certifying independent repair shops to handle warranty-covered Chery repair work. That could be an interesting and, perhaps, beneficial development for consumers. But the nation's traditional franchised new-car dealerships, nearly 20,000 of them represented by the National Automobile Dealers Association in McLean, are not likely to be amused.

NADA, for the moment, is keeping mum on the entire Bricklin-China venture, wishing him neither good luck nor ill will. But NADA officials privately concede that they will have to deal with him eventually. "If he is successful, we won't be able to ignore him," one NADA official said at a recent national dealers meeting in Orlando.

Indeed, ignoring Bricklin has never been in any rival's best interest, although the man has had more than his share of spectacular, even laughable flops.

Mention of the Yugoslavian-made Yugo, which Bricklin started bringing into the United States in the early 1980s, still brings chuckles. And eyes roll skyward north of the border when anyone talks about the Bricklin SV-1, a dramatically ill-fated, gull-winged sports car backed by the Canadian government and produced in St. John, New Brunswick, from 1974 to 1976.

Some 2,854 Bricklin SV-1 cars were produced before the Canadian business went bankrupt, owing $23 million.

But there was also Subaru, an automotive subsidiary of Japan's Fuji Heavy Industries, which Bricklin helped to establish in the United States in the late 1960s and early 1970s. Bricklin is no longer a part of Subaru. But the people who were laughing at him back then are not laughing at the highly successful Subaru of America now. It's a contender.

They should refocus their energy on providing good service and low prices.  

I can't wait to run out and get me some HIP HOP clothes!!! "NOT"

Quoted: I shop at walmart for three reasons.  First, they are convenient and have convenient hours.  Second, they save me significant amounts of money over other stores for comparable items.  Example - Hunts pasta sauce, $1.29 at Giant Eagle, $0.96 at walmart; White flyer clay targets, $4.27 at walmart, $5.99 at dicks.  I still shop at mom and pop local stores for specialty items that Walmart does not carry.   Last reason, they are non union and I don't feel like I'm bankrolling some unionist scum bucket who makes his living off of scaring working folks into submission.

Is the PD you are with unionized? Most that I know of are if they are in a larger community.