The Wall Street Journal reports this morning that in a move to cater to more upscale customers, Wal-Mart plans to remodel 1,800 of its stores with “buffed concrete flooring in its aisles; mock hardwood in departments such as apparel and accessories; lower gondolas, or rows of shelves, to allow shoppers to see into adjacent aisles of merchandise; and wider aisles separating racks of merchandise.” The makeover campaign should take about 18 months to complete.
Over the next two years, Wal-Mart plans to open a total of 1,500 new stores, increasing the size of the company by almost 50 percent.
While he would not reveal the cost of the program, John Menzer, Wal-Mart's vice chairman of U.S. stores, characterized it as a "very minor capital expenditure for a very high productivity gain."
The WSJ writes, “The remodeling program is part of Wal-Mart's effort to appeal to a broader range of shoppers. The retailer intends to retain its base of cost-conscious shoppers while also enticing higher-income, selective shoppers to buy more merchandise. Much of that effort entails providing a more relaxed, aesthetically pleasing environment to lure those shoppers from Wal-Mart's grocery aisles into its general-merchandise sections, where they might make higher-margin purchases.”]
Interestingly, in a different part of the paper, WSJ columnist Alan Murray asks whether, in fact, Wal-Mart is trying to serve too many masters – especially as it goes upscale in some areas and tries to address its public relations problems while keeping costs down wherever possible and pleasing the investment community.
“The problem created by all of this, of course, is one of focus,” Murray writes. “As Wal-Mart tries to be all things to all people, how well can it continue to do the one thing that made it great?”
Over the next two years, Wal-Mart plans to open a total of 1,500 new stores, increasing the size of the company by almost 50 percent.
While he would not reveal the cost of the program, John Menzer, Wal-Mart's vice chairman of U.S. stores, characterized it as a "very minor capital expenditure for a very high productivity gain."
The WSJ writes, “The remodeling program is part of Wal-Mart's effort to appeal to a broader range of shoppers. The retailer intends to retain its base of cost-conscious shoppers while also enticing higher-income, selective shoppers to buy more merchandise. Much of that effort entails providing a more relaxed, aesthetically pleasing environment to lure those shoppers from Wal-Mart's grocery aisles into its general-merchandise sections, where they might make higher-margin purchases.”]
Interestingly, in a different part of the paper, WSJ columnist Alan Murray asks whether, in fact, Wal-Mart is trying to serve too many masters – especially as it goes upscale in some areas and tries to address its public relations problems while keeping costs down wherever possible and pleasing the investment community.
“The problem created by all of this, of course, is one of focus,” Murray writes. “As Wal-Mart tries to be all things to all people, how well can it continue to do the one thing that made it great?”
- KC's View:
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We have trouble believing that Wal-Mart will lose its relentless focus on price as it tries to address other institutional and cultural issues.
We think that its bigger problem is trying to do everything it needs to do while keeping the stock market happy. That’s problematic, because a bunch of investors and analysts who don’t know a thing about retailing start making demands and suggestions that don’t help the company in the long run. (Take a look at how they’re always complaining about Costco CEO Jim Sinegal because he keeps prices too low and pays his people too much…)
There doesn’t seem to be any danger that Wal-Mart is going to start opening Greenpeace or ACLU branch offices in its stores.
