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The Austin Business Journal reports on how Wal-Mart is upgrading its image in some markets, such as Dallas and Austin, to appeal to more affluent shoppers.

The Journal writes: “Wal-Mart made headlines when it opened a Plano luxury store, featuring $500 wine, wood floors and sushi. The company has since opened another high-end concept store in Highland Village in Dallas that features an upgraded interior design and a bike and repair shop instead of its standard tire and lube shop. The Highland store also uses energy-efficient technology, such as LED lighting and motion detectors.

“In Central Texas, Wal-Mart plans to squeeze in a multilevel Supercenter alongside Austin's Northcross Mall, and plans call for the store to have high-end materials incorporated into the design of the store. The exterior of the Northcross Wal-Mart looks more like a department store rather than it's usual beige box design.

“Wal-Mart says it has always tinkered with store formats, but some analysts say the retailer is thinking more outside of the Supercenter-sized box to gain market share.”

The story notes that Wal-Mart plans to incorporate many of these design and products details into other stores, using the prototype stores as a kind of feeder mechanism that it can use to keep the entire chain up to date.

KC's View:
Wal-Mart’s moves are particularly interesting right now because as the country’s economic situation worsens (see Michael Sansolo’s column above), its “always low prices” approach would appear to be well-positioned to take advantage of consumers’ shifting priorities.

At the same time, Wal-Mart has had a few years to test the notion of what “upscale” means. It has learned that certain things work, like a focus on sustainability and environmentally friendly buildings, and more up-market electronics; it has learned that certain things are at odds with its image and appeal, like upscale clothing that many shoppers find jarring. Which means that Wal-Mart, in many ways, may be a stronger and more competitive entity than it was a few years ago.

The Journal makes the point that Wal-Mart currently operates three formats, but in a few months it will have a fourth – the new small-store food-driven concept it plans to test in Arizona, pitting it directly against Tesco’s own-small-store format.

I’m just guessing here, but I think it seems like a logical bet to suggest that the new small-store format could integrate many of these up-market touches … which would create a very different shopping experience from Tesco’s Fresh & Easy, which have fairly been criticized for being somewhat sterile … and yet will not abandon the value foundation upon which it is built.