The Six American Nations of Wal-Mart
While Wal-Mart is often seen s as unstoppable retail-juggernaut, same-stores sales-growth has actually slowed dramatically for the Arkansas-based company over the past few years and is now hovering around 3%, down from 9% in 1999.
Eduardo Castro-Wright, the Chief Executive Officer of Wal-Mart’s U.S. stores has designed a new strategy to boost sales growth. Mr. Castro-Wright wants each of the company’s approximately 3,400 stores to server one of six segments, according to an article in The Wall Street Journal (”To Boost Sales, Wal-Mart Drops OIne-Size-Fits-All Approach” September 7, 2006). The segments are:
- Affluent
- Empty-Nesters
- Suburbanites
- Rural
- Hispanics
- African-Americans
The segmentation strategy is a deprature from the company’s current practice of stocking all stores pretty much the same way, and luring customers with the same low-cost approach.
The rural stores make up about half of Wal-Mart’s U.S. stores.
An example of how Wal-Mart is trying to snag higher-end customers is it promotional tie-in with Monday Night Football on ESPN, where it will pitch high-definition plasma TVs this fall.
Whites make up about 67% of the U.S. population, Hispanics 14%, and African-Americans 12%.
While Wal-Mart is trying to better serve different customer groups, and snag more affluent or hip shoppers who now snub it in favor of Target (which really is like a Wal-Mart with brighter colors and wider smiles) it also wants to remain the low-cost store of choice, as Mr. Castro-Wright made clear at a presentation to analysts at a Goldman-Sachs conference, according to CNN Money:
Wal-Mart is preparing to go deeper with discounts in a bid to boost customer traffic and offset lost sales as higher gas prices force its core low-income shoppers to cut back, Wal-Mart CEO Eduardo Castro-Wright told an industry gathering Thursday.
“We’ve reenergized our rollback program to convince consumers that the smart thing is to go to Wal-Mart and save more.”
…
He added that the move was in response to Wal-Mart’s (Charts) own market research, which evaluated its customers’ exposure to gas prices and asked what “we could do to help make it worthwhile for shoppers to make the additional two to three mile trip to our stores.”
He said the recent run-up in fuel prices was changing the way Wal-Mart customers shopped. “They’re cutting down on the number of trips to Wal-Mart stores and stocking up on weekends.”