Wal-Marts $2 billion to Plan Win Back Shoppers

Wal-Mart’s $2 Billion Plan to Win Back Shoppers

While same store sales seemingly lags behind projections Wal-Mart has a proactive plan to win back shopper’s loyalty.

At Wal-Mart (WMT +0.58%), the lowest price is once again the law. After its advertising drifted away from reinforcing that pledge — over and over again, to the point where television audiences were ready to scream for mercy — its customers also began to drift away. Many opted to shop instead at "dollar stores" like Dollar General (DG -0.13%), which continued to make explicit "lowest price" promises. Others began shopping online, even for staples like cat food, shampoo, jeans and sneakers — the kinds of things they would have grabbed at Wal-Mart. And they started streaming video from Netflix (NFLX +0.61%) and Amazon (AMZN -0.43%), rather than buying DVDs.

As the retail world has evolved, and as the recession took its toll, shopping habits changed in recent years. In the same way that television broadcasting has changed dramatically over the last decade — with cable channels now challenging the NBCs and CBSs of the world byoffering original shows and miniseries — so retail has morphed and fragmented. If you want cheap shampoo, you can go to a dollar store or buy in bulk at Costco; if you want great produce, you can join a local CSA (community supported agriculture) program for a nominal annual fee that is adjusted based on income levels. Consumers may want to save money on t-shirts in order to spend more on a pair of designer jeans that Wal-Mart is never likely to stock. At the same time, shoppers across every income bracket have become more accustomed to buying online.

The era of the megastore offering one-stop shop ping for a consumer’s every need may be drawing to a close. The question now is whether Wal-Mart’s plan to broaden its product offerings and "invest" $2 billion over two years in lower prices — especially in food and other "consumables" like health and beauty products — can help it battle back. The store is introducing more high-end food and trying to tailor its offerings to appeal to groups like Latinos, Asian-Americans and African-Americans, who may avoid Wal-Mart today simply because it doesn’t offer particular products. Tell those groups that they can get everything they want there and won’t have to make an extra trip, the thinking goes, and brand loyalty to Wal-Mart will follow.

 

 

Yes, it’s all a gamble. But it’s one that Wal-Mart will need to win. The company isn’t about to vanish into the ether any time soon, but if it is to avoid the fate of Sears (SHLD -0.96%), Kmart or any of the other formerly dominant retailers who have watched as their pre-eminence has been eroded, it needs to find some kind of magic bullet. A more coherent ad campaign, low prices and a better product mix may be the solution, but odds are that it will take more innovations to convince shoppers that Wal-Mart offers not only low prices but a unique shopping experience. 

Excerpted from Huffington Post.

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