Friday, July 24, 2009 1:39:16 PM
Enjoy!
***Wal-Mart to renovate 70% of its stores over next few years.***
"The effort's goal: to remodel most of the chain's 3,600 U.S. stores (it has 7,900 worldwide) and make them more inviting. Duke is spending $1.6 billion to upgrade 600 stores this year, on top of 300 that were recently redone."
Wal-Mart Moves Upmarket
http://www.businessweek.com/magazine/content/09_24/b4135000941856.htm
exph
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Wal-Mart Moves Upmarket
Sprucing Up
The question is whether Duke can hold on to that more affluent demographic once the economy improves. Wal-Mart's reputation for humdrum goods and aggressive labor tactics has made it tough for the chain to gain a following among wealthier customers. To help keep them, Duke is expanding the presence of brands such as Dell (DELL) and Apple, putting pressure on manufacturers to advertise more in stores, and aggressively ramping up an initiative called Project Impact.
The effort's goal: to remodel most of the chain's 3,600 U.S. stores (it has 7,900 worldwide) and make them more inviting. Duke is spending $1.6 billion to upgrade 600 stores this year, on top of 300 that were recently redone. He is also continuing a push to reduce the number of items in stores, which means less clutter but less variety for customers. And despite Wal-Mart's growth, he has laid off 800 staff at the Bentonville (Ark.) headquarters and slashed other costs to keep the chain lean.
Such moves suggest Duke is taking a bolder role than expected by industry experts, who paint him as a caretaker CEO. They see his main mission as keeping Wal-Mart steady until execs such as 43-year-old international head C. Douglas McMillon get seasoned. Morgan Stanley (MS) analyst Gregory Melich calls Duke "the keep-it-going" leader.
But insiders say he's taking a big hand in moving Wal-Mart upscale while continuing to emphasize its low-price mantra. Aisles are being widened, lighting improved, and shelves lowered to give the stores a more sophisticated feel. Even the well-trafficked corridor known as "Action Alley" is no longer packed with pallets of random merchandise.
The spruced-up aisles provide a more inviting home for brands that previously had little exposure in Wal-Mart but are now desperate to find customers. Newer offerings range from Danskin apparel to gadgets from Dell, Palm (PALM), and Sony (SNE). Dell Vice-President Michael Tatelman says the two-year-old partnership is expanding fast: "Some were skeptical of whether it would benefit us, but it has." The home department now features brands such as KitchenAid and Dyson, and a new line of products endorsed by celebrity chef Paula Deen.
Executives have learned some lessons from the last time Wal-Mart tried to shift its identity upmarket. In 2006 the chain went after Target's (TGT) "cheap chic" customer by launching Metro7, a line of fancier apparel. Despite a splashy ad campaign, the clothes failed miserably. They simply weren't hip enough to attract a new style of buyer or cheap enough to appeal to the old one.
http://www.businessweek.com/magazine/content/09_24/b4135000941856.htm
"Additionally, the company will soon unveil a new proprietary product line intended for consumers. The company expects to leverage existing relationships to speed market penetration."
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