Posted Date: 7/29/2009

Wal-Mart Rewires Success

By Christina Zarrello
Wal-Mart's relentless focus on low prices plays perfectly to the growing number of shoppers in distress. The retailer's extraordinary customer reach allows the mass merchandiser to compete effectively in nearly every retail category.

Wal-Mart has redefined and rewired many of the ways it touches shoppers, focusing on layout, convenience, new media and sustainability.

Here are just a few examples of the retailer's new approaches:

• Wal-Mart's "Win, Play, Show" merchandising strategy has improved the efficiency of assortment and merchandising investment.
• "Fast, Friendly, Clean" demonstrates Wal-Mart's renewed focus on speeding up checkout time, ensuring associates are friendly and providing a less cluttered shopping experience.
• Wal-Mart has created the ElevenMoms network of influential bloggers. In addition, multiple beta sites on Wal-Mart.com focus on issues and solutions important to shoppers, and its presence on Twitter, Facebook and LinkedIn touch younger shoppers tapping into social media.
• Wal-Mart's aggressive sustainability goals include becoming 100 percent supplied by renewable energy, creating zero waste and selling a greater range of sustainable products.

• Wal-Mart has redoubled its private label strategy. Its "Great Value" label is the nation's largest food brand, with products across more than 100 categories. Great Value combined with Wal-Mart's other private label brands account for just under 25 percent of Wal-Mart dollar sales.

"It is easy to dismiss Wal-Mart's success as based solely on its "Everyday Low Prices focus," says Thom Blischok, IRI Consulting and Innovation President. "While this is a critical component of the retailer's success, it is just one of many. Wal-Mart's management has done a superlative job of understanding shopper attitudes and behaviors. Wal-Mart's value proposition is continually evolving to meet changing shopper needs."

Emphasizing Loyalty
Despite its position as the market leader across all retail segments, Wal-Mart stands to benefit from gaining even stronger relationships with its customer base by further emphasizing its loyalty programs.

"Wal-Mart could become even stronger if it began to develop better relationships with customers," says John Zhang, marketing professor for the Wharton School of Business. "The company falls short in developing these connections because it does not emphasize loyalty programs. For example, Wal-Mart could offer points for purchases of groceries and other necessities that could then be put toward big-ticket consumer electronics. Wal-Mart has a lot of touch points with the consumer and could leverage the other products in the store."

Tips for Mass Merchandisers
Retailers should consider the following action items within competitive strategies with respect to Wal-Mart strategic initiatives and growth trends:

• Increase frequency and focus of consumer and market assessments; identify and implement strategies to drive trips and basket rings among key consumer segments.

• Drive purchase behavior through solutions-based promotional and merchandising strategies with a clear value proposition.