Welcome to the 32nd installment of The Wal-Mart Weekly, a column dedicated to bringing you insight, wit, facts, results, opinions and just a bit of everything else when it comes down to a very hot topic these days: Wal-Mart.
Last week, I looked at a recent article in The Wall Street Journal that suggested Wal-Mart Stores, Inc. (NYSE: WMT) era of big retailing was coming to an end. That is, customers are actually tired of the same-ole Wal-Mart, with the same product selections, outdated store formats, and impersonal shopping experiences.
I doubt Wal-Mart is going anywhere anytime soon, but it may just have to be content with the core customer base of 'price is everything' consumers soon unless it wants to win back former customers that have bolted for Target Corporation (NYSE: TGT) stores and attract the 'new' customer who wants a custom shopping experience in an attractive environment -- something Wal-Mart is far from providing with its all-are-the-same Supercenter format.
This week, I'll be tackling a few store efficiency areas for improvement that I have seen recently. Yes, I visit several Wal-Mart locations weekly to see what is changing, what's not and how the company's associates are interacting with customers. I'm surprised I haven't been approached by in-store loss prevention folks since I often wander aisles listening to and observing the environment inside the world's largest retailer.
Changes started happening to Supercenters in my area
About two months ago, the store layout for a local Wal-Mart Supercenter began to occur. Now, this was good news, as the Supercenter's layout had not really changed much since opening in 1993. The same areas had existed in the same places (with enhancements, of course) for 14 years even as the course of retailing and resurgent competitors changed.
So, I was glad to see Wal-Mart 'shaking it up' a bit here. Gone was the huge amount of square footage dedicated to arts, crafts, and fabric -- an area that I've referenced in the past where Wal-Mart has needed help. Honestly, was Wal-Mart selling that much fabric and craft items to keep about 2,500 square feet (probably more) stocked with these items?
Probably not, and changes finally came. The Supercenter's general merchandise planogram underwent a complete overhaul, with almost everything being changed except for the grocery areas. Now, firstly, I heard many customers talking among themselves that they could not understand why this Wal-Mart changed everything.
In other words, some customers don't like change (after getting used to a store format used for over a decade), and I heard many of them venting to themselves and others. Of course, these folks will get over the changes and will get used to another store layout, but until then, the griping will continue. This is a temporary emotion, and I'm quite sure Wal-Mart knows this.
What areas underwent extensive relocation
So, the craft area was downgraded to a single aisle (albeit, a long one) and all that previous square footage gave the electronics and auto care areas room to expand. In other words, more and more Chinese-sourced items were added. I picked up no less than 25 items from both departments, and on 21 of them, there was the moniker we're all seeing more of these days: "Made in China." Ahh, better margins are underway already.
The next change I noted was the electronics area. Although the sheer amount of products really did not look to be much more plentiful, the wall space and display priority give to flat-panel televisions was increased in a large way. Gone was the electronics department centered in the middle of the general merchandise area, and in was the electronics department at the very rear of the store, with a huge wall of 23 (yes, I counted) flat-panel TVs of all shapes and sizes.
This new arrangement reminded me of a Circuit City or Best Buy location immediately. Kind of like the arts and crafts area being somewhat obliterated, Wal-Mart made sure to make its huge selection of flat-panel TVs viewable by probably 99% of its aisle browsing customers.
Another area seemingly containing wasted space
Another change I saw almost immediately was in the sporting goods section. More treadmills and larger-sized exercise equipment was now on display, but these pieces of equipment were on large steel shelves, placing them completely out of the reach of customers. This is not really how the competition does this: at local Academy Sports and Sears locations, exercise equipment like treadmills, ellipticals and the like were displayed at floor level where customers who look at them, feel them and even get on them in many ways.
Customers like to make some kind of emotional connection to high-dollar items like this. From Wal-Mart's perspective, it must not like prospective customers being able to even see these pieces of merchandise. As in: let's display it up high where even the price tags can be hard to see clearly. What on earth is the retailer thinking here? First of all, an entire aisle was dedicated to these untouchable machines, which probably don't sell very regularly. Case in point: I was able to make insignificant marks on each in-stock box that only I would have been able to remember.
After a month, a return visit showed that one of these units had moved (a $129 cheaper elliptical machine). All the others? They were still there, and the marks I had previously made still existed on each package. Now, to Wal-Mart: no reason for alarm here: these little "tags" were just used an as unscientific way to track if any of the products were moving out of inventory. As it turned out, they were not. So, why is there so much space dedicated to these machines in the first place, and why are they "untouchable" by customers? I may never figure that one out.
So far, I've only touched on a few areas that were changed in a recent Wal-Mart Supercenter layout re-design. Two changes were good: the elimination of slow-moving arts and crafts items (well, pretty much), and the impressive "TV wall" containing enough flat-panel television sets to make anyone's head turn. I still don't get the odd displays of rarely sold exercise equipment, though. That was the area that left me a tad baffled.
So, are Wal-Mart's changes soon to product more sales and turn browsers into buyers? Maybe so. The company is changing things up in several stores in my area, no doubt in an effort to get with the retail times and see if it can renew merchandise presentation. If it works, U.S. sales will show it in future quarters and on into 2008.
Join me next week for another edition of The Wal-Mart Weekly. Until then, have a great weekend!
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Reader Comments (Page 1 of 1)
10-15-2008 @ 7:25AM
J.L Parry said...
I think change can be a good thing, if it’s not that big of a change. I worked for Wal Mart for five years, and the one drove customers crazy was when the item they where looking has been moved. Most customers know what they are looking for, and where they can find it. If the item they came in for is in a different area of the store, the customer will think that Wal Mart no longer carries the item they are looking for.
5-02-2009 @ 10:10AM
robertcioli said...
i would like to see pictures of new supercenter in south sacramento california on 65th expressway
10-12-2007 @ 9:34PM
J. Boyle said...
Your constant comments comparing Wal-Mart to others seems to indicate you don't understand the market. (This week it's "Wal-Mart customers are bolting to Target.")
About 70 percent of Wal-Mart's sales are in items Target doesn't sell or sells only a slight amount. That is food, auto products, oil changing, guns, electronics, prescription medicine, gasoline, gardening items and much more.
No retailer has Wal-Mart's product mix and therefore no retailer can be compare to it.
10-12-2007 @ 9:34PM
Brian White said...
Thanks for the comment. I suppose you have sales data to support your findings? My observations are just that -- objective analysis based on what I see with subjective opinion inserted. I doubt any sales data from either retailer can be found to lend credence to your points. If so, please provide.
10-13-2007 @ 1:34AM
Pholtus said...
Working retail my best guess about this
"Another change I saw almost immediately was in the sporting goods section. More treadmills and larger-sized exercise equipment was now on display, but these pieces of equipment were on large steel shelves, placing them completely out of the reach of customers."
Has to do with Safty issues. The number of guests that go into a Wal Mart vs Sears is Loads. The Number to stupid people that would get hurt, or more likly claim that they got hurt (so they could try and scam money from Wal Mart), in turn is loads more.
Odds are the amount of sales in that dept isn't worth the risk in losses. Just look at the number of Over weight people with over weight kids, that shop there.
10-13-2007 @ 4:31AM
Fran Pipkin said...
More customers than not hate the new layouts. They complain everyday. The fabrics are gone in the new setup. Our store in particular made over a million dollars a year in that department alone. That is now gone and so is the customers that used to shop there. All of the departments are smaller and less to chose from. With little or no staffing in the stores the shelves are bare and now customers are going to other stores to find what they used to find there at Walmart. The end will come swiffly to the big giant.
10-13-2007 @ 11:48AM
mark wessler said...
Few points:
#1. Just how many of those craft items do you think weren't made in China? SO Wal-mart dropped thousands of craft items made in China for what 25-30 TV's made in China? Care to do a topic on how that changes the entire ratio of the made in China saga.
Oh and craft item margins are significant double digits, TV margins...lucky to get 5-8%. abiet it is a $200+ ticket verses a $2 ticket.
#2 Care to shop Best Buy or Costco or TARGET and count the # of electronic items made in China to do a fair comparision?
#3 Go into Costco and look for exercise equipment. Up on Steel racks so no one can get on the display. Go figure...they must be baffled too.
( liability issue and people have a habit of breaking dispays)
Also anybody in the mass retail business knows that the majority of exercise equipment in sold during the winter (totally a seasonal item in mass retail). Bring it in the fall, get people use to seeing it, and then blow the inventory out in Dec/Jan. In the meantime capture some sales at the top margin levels.
Layout changes are completely reviewed before being mandated. They are proven to produce more sales than the previous layout, before mandated by homeoffice.
The basic makeup of human nature is to resist change. Everyone always complains about change, yet change is inevitable. If you always do things like you did yesterday, you'll get the same results and never grow. You might want to look at a blog on Mr. Sam's view's of embracing change.
10-13-2007 @ 6:23PM
roudy11z said...
POINTS TO PONDER+++
#5 comment by Mark is right on. I just visited our new Target Super Center here in Longview, Texas and I was shocked at the prices being so much higher than at Wal-Mart item by item. Also all the items I looked at were made in China(my, my).
Let's get off this China thing since most of our things are made there. I found this true also in CVS, and Walgreens.Hey,its everywhere. Get in the real world people. I don't like it either and I'm willing to pay a few cents per item extra if we stop it as I know you are also willing to do. Until then the low and middle income people will do what they have to do including myself to save a little money which projects into a lot of money in a year.
10-16-2007 @ 10:40AM
JOSEPH M. TITONE said...
I am a Wal Mart associate, age 75, started as a greeter about 1 year ago. An opening at my store in the accounting department became available to me a couple of months ago, and I was selected for the job. There is no age discrimination here.(LOL)
As a greeter, I had the pleasure of meeting many of our customers, AND listening to their observations and complaints. No one complained to me about the changes in the store layout, or the "out of reach" exercise equipment. I found that most complaints pertained to the availability and condition of shopping carts, and management at our store has attacked this problem head-on. This problem has lessened dramatically.
Speaking of the MADE IN CHINA merchandise, On July 4th about 3 years ago, I attended a naval open house at the USS Kid in Baton Rouge, Louisiana. American Flags which were being given away were made in China. I brought this to the attention of Officers on board, who had no comments, but did smile.
12-22-2007 @ 11:52PM
JackSprat said...
No offense to the blogger because I've enjoyed reading this site for over a year now, but I feel like the blogger bases his stock decisions on a few visits to some of the older outdated Wal-Mart stores, or a bad shopping experience. Wal-Mart is not in danger of going the way of K-Mart. K-Mart refused to change. Have you been into several K-Marts? Even now, it feels like a time warp back into the days of 80's big box retail shopping. Any new Wal-Mart built in the last few years looks dramatically different and a much more visually appealing shopping experience, and the same with any older store that has been remodeled, although those stores are limited in the extent that they can rebuild. They certainly don't go as far as the new Wal-Mart stores that all have custom designs picked by the local community to match the surroundings, new stone auburn flooring that doesn't have that old white abused tile look, and an industrial ceiling that reminds someone of an Old Navy store more than a classic big box retailer. Wal-Mart saw the threat posed by continuing with its classic cookie cutter layout and changed just in time. The blogger's experience is from someone who does not shop that often in Wal-Mart, anyone who visits these stores around the nation sees the differences in new store design and remodeling. Don't base your stock portfolio on what you remember ten years ago. The real question is if just like the mall department store concept died, has the big box general store concept died, as shoppers favors big box specialty stores (e.g. Petco for pet supplies, Best Buy for Electronics, Staples for office supplies, etc.) over general retailers with less variety and employee specialization.