Welcome to the 83rd 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 to a very hot topic these days: Wal-Mart.
Wal-Mart Stores Inc. (NYSE: WMT) has seen its stock price rise and sales rise as well in 2008. Even folks who would have shunned Wal-Mart just a few years ago as "beneath them" are seeking out bargains and looking for the sweet deal on everything from groceries to interior latex paint.
So, does it come as any surprise that Wal-Mart is seeing triumphs as the U.S. economy completely implodes? We're not even done yet, and layoffs mount daily as corporate earnings and vehicle sales take a huge nosedive. All the while, Wal-Mart is probably thinking it's living in some kind of alternate universe.
The feeling scoring a bargain gives you
What Wal-Mart did in 2008 as the American economy started sinking was to scale down the "all-things-to-all-people" approach and start reducing prices again. This time, it looked at all products, including its most popular ones. It's going back to a simplified approach with the tagline "Save Money. Live Better," and it's investing in what has worked for it since its inception: low prices.
It's hard to say if the economic downturn has actually put Wal-Mart in a place to reap great rewards or if the company saw this coming and decided to really focus on its "low prices" roots. Regardless, the company is seeing success when very few companies are. It has continued to take on the competition and try to expand its horizons above cheap retailing, but retail prices are now in the forefront of most Americans' minds. The retailer has settled down, it is constantly changing product mix and has zeroed in on lowering prices on its most popular products instead of expanding its offerings.
Target's loss is Wal-Mart's gain
All of this success in 2008 probably sits well with Wal-Mart Chief Merchandising Officer John Fleming. Fleming, who came from Target Corp. (NYSE: TGT) and who was widely credited with turning that retailer into a very serious threat to Wal-Mart, has called Wal-Mart's current strategy "win, place or show."
Here's the breakdown: the "Win" category includes products Wal-Mart can win due to price outmaneuvering (flat-screen TVs, electronics). The "Place" category is where Wal-Mart can easily compete but is unlikely to dominate (apparel). The "Show" category includes necessity items like hardware where it can compete with the larger home improvement chains. My guess is that those are "draggers" -- they get feet in the door. That's half the battle at the moment, but there are more and more feet coming into Wal-Mart's doors these days as well.
How about holiday categories? Smaller stores?
This year, purses and wallets will be quite thin and almost everyone from every income bracket will be looking to save a buck on holiday gifts. Instead of slashing retailer holiday prices by 30% across the toy aisle this year, Wal-Mart is taking a different approach: it will advertise a "$10 price discount" on some of the hottest toys. What kind of discounts it will give to its other assortment of toys is unknown.
Combine that with the modernization of its stores from the boring blue and grays to earth tones and wood floors, and Wal-Mart is trying to become more of an intimate shopping experience -- even while low prices remain its constant pull. The retailer's store openings in 2009 will focus on smaller stores with more natural lighting and mustards and tan paint and decorating schemes. It will also open an estimated 142 stores in fiscal 2009 instead of the 218 openings in fiscal 2008.
You add up all the strategy changes, merchandising reversals and price adjustments and it's pretty clear to see that Wal-Mart is recession-proofing itself. As I noted last November, the retailer is also being semi-innovative in its approach to a retail landscape that more customers are seeking out in the new economic environment we are living in.
Wal-Mart stands to be the retailer with the most to gain this holiday season as well. Another retailer I think will do well is Best Buy Co, Inc. (NYSE: BBY). With rival Circuit City Stores, Inc. (NYSE: CC) being almost snuffed out of existence, Wal-Mart and Best Buy will duke it out over consumer electronics this holiday season. It's where the margins are (in many cases) and it's where the main prize fight will be. If Best Buy carried hot holiday toys, we would really be seeing a 12-round fight.
While we're just hours away from determining the next president of the United States, I hope you voted today (if you're in the U.S.) and I hope you also vote with your wallet this holiday season as you plan for gift exchanges at the same time you count your pennies and pay that gas bill.
Join me next week for another edition of The Wal-Mart Weekly. Until then, safeguard those wallets and purses, okay?
What Wal-Mart did in 2008 as the American economy started sinking was to scale down the "all-things-to-all-people" approach and start reducing prices again. This time, it looked at all products, including its most popular ones. It's going back to a simplified approach with the tagline "Save Money. Live Better," and it's investing in what has worked for it since its inception: low prices.
It's hard to say if the economic downturn has actually put Wal-Mart in a place to reap great rewards or if the company saw this coming and decided to really focus on its "low prices" roots. Regardless, the company is seeing success when very few companies are. It has continued to take on the competition and try to expand its horizons above cheap retailing, but retail prices are now in the forefront of most Americans' minds. The retailer has settled down, it is constantly changing product mix and has zeroed in on lowering prices on its most popular products instead of expanding its offerings.
Target's loss is Wal-Mart's gain
All of this success in 2008 probably sits well with Wal-Mart Chief Merchandising Officer John Fleming. Fleming, who came from Target Corp. (NYSE: TGT) and who was widely credited with turning that retailer into a very serious threat to Wal-Mart, has called Wal-Mart's current strategy "win, place or show."
Here's the breakdown: the "Win" category includes products Wal-Mart can win due to price outmaneuvering (flat-screen TVs, electronics). The "Place" category is where Wal-Mart can easily compete but is unlikely to dominate (apparel). The "Show" category includes necessity items like hardware where it can compete with the larger home improvement chains. My guess is that those are "draggers" -- they get feet in the door. That's half the battle at the moment, but there are more and more feet coming into Wal-Mart's doors these days as well.
How about holiday categories? Smaller stores?
This year, purses and wallets will be quite thin and almost everyone from every income bracket will be looking to save a buck on holiday gifts. Instead of slashing retailer holiday prices by 30% across the toy aisle this year, Wal-Mart is taking a different approach: it will advertise a "$10 price discount" on some of the hottest toys. What kind of discounts it will give to its other assortment of toys is unknown.
Combine that with the modernization of its stores from the boring blue and grays to earth tones and wood floors, and Wal-Mart is trying to become more of an intimate shopping experience -- even while low prices remain its constant pull. The retailer's store openings in 2009 will focus on smaller stores with more natural lighting and mustards and tan paint and decorating schemes. It will also open an estimated 142 stores in fiscal 2009 instead of the 218 openings in fiscal 2008.
You add up all the strategy changes, merchandising reversals and price adjustments and it's pretty clear to see that Wal-Mart is recession-proofing itself. As I noted last November, the retailer is also being semi-innovative in its approach to a retail landscape that more customers are seeking out in the new economic environment we are living in.
Wal-Mart stands to be the retailer with the most to gain this holiday season as well. Another retailer I think will do well is Best Buy Co, Inc. (NYSE: BBY). With rival Circuit City Stores, Inc. (NYSE: CC) being almost snuffed out of existence, Wal-Mart and Best Buy will duke it out over consumer electronics this holiday season. It's where the margins are (in many cases) and it's where the main prize fight will be. If Best Buy carried hot holiday toys, we would really be seeing a 12-round fight.
While we're just hours away from determining the next president of the United States, I hope you voted today (if you're in the U.S.) and I hope you also vote with your wallet this holiday season as you plan for gift exchanges at the same time you count your pennies and pay that gas bill.
Join me next week for another edition of The Wal-Mart Weekly. Until then, safeguard those wallets and purses, okay?
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