Wal-Mart to Tailor Merchandise Mix, In-Store TV
Wal-Mart Stores has begun a store segmentation process that will tailor merchandise to a store’s local consumer base.
At the same time, Wal-Mart tweaks its in-store network, Wal-Mart TV, to run different ads in separate store departments rather than the same ad storewide.
“You’ll see a different Wal-Mart in 2007 as we evolve the brand experience” to suit local communities and to be as relevant as possible to each customer segment, said Senior VP-Marketing Stephen Quinn at the ANA Annual Conference on Friday. “Our task is to upgrade our brand offering.”
The retail giant will upgrade and tailor its merchandise mix in five key categories that appeal to occasional Wal-Mart shoppers: consumer electronics, pharmaceuticals, home goods, apparel and fresh food.
It’s part of Wal-Mart’s focus on “selective” shoppers, the group with the most profit potential among its three consumer segments, followed by “loyalists,” then “skeptics” (PROMO Xtra, April 26, 2006). Brand image ads that broke in February court selective shoppers, who tend to be more upscale than Wal-Mart loyalists (PROMO Xtra, Feb. 16, 2006).
“That’s our most attractive audience segment now,” Quinn said.
He held up three stores as an example of the new merchandising strategy. A suburban Chicago store in Evergreen Park, IL caters to African-Americans with apparel, haircare and music. A New Jersey store in an Hispanic neighborhood carries selected merchandise favored by Hispanic-Americans. And Wal-Mart’s prototype “affluent” store in Plano, TX “proves Wal-Mart can appeal to the Cadillac set and can sell a bottle of wine for $200,” Quinn said. “That’s a $65 savings, by the way—just because you’re affluent doesn’t mean you want to pay more for everything.”
Wal-Mart hasn’t decided how far it will drill down to tailor its merchandise mix, but it won’t happen at the store-by-store level; that’s too expensive, Quinn said.
Best Buy undertook a similar store-segmentation strategy last year, tailoring stores’ merchandise to suit the one or two most prominent segments locally among its five core consumer groups (PROMO, April 2005).
How do brands fit Wal-Mart’s new merchandising approach? Quinn urged marketers to tailor a brand’s message to court Wal-Mart store associates. “Marketers should champion their brand story in such a compelling way that our associates intuitively know what to do,” he said.
Meanwhile, Wal-Mart is rolling out IPTV technology to its in-store TV network so it can air ads in specific departments, rather than storewide. “Someone in sporting goods isn’t interested in an ad for fresh food,” Quinn said. “We want the most relevant message for consumers in each department.” The network reaches 150 million shoppers each month.
