Wal-Mart goes after the ‘Selective’ customer

ROGERS, Ark.—Don’t call it “upscale.” Wal-Mart’s new merchandising and store initiatives are intended to drive the world’s largest retailer deeper and closer to its customers, while reaching out to a career-driven, time-pressed (read: higher spending) consumer segment that shops the stores less frequently and then, only for the basics.

“We are really trying to understand that customer,” said Eduardo Castro-Wright, president and CEO of Wal-Mart Stores USA, at the company’s second annual media conference taking place here. About 75 invited journalists from around the world are attending. Despite 800-thread count sheets, a two-ct. $5,400 diamond ring, and $2,300 flat panel television sets that have been added to the mix in recent months—and it’s new upmarket test store that opened in Plano, Tex., last month—Wal-Mart is going to great pains to repeat, over and over, this is not upscaling, a term that might imply it’s leaving its core customer base behind.

“That would be ridiculous,” suggests CEO Lee Scott outside his office during an impromptu visit with reporters touring Wal-Mart’s Home Office on Monday. “That business is just too important to us” to leave behind.

The “Loyalist,” one of three broad customer segments Wal-Mart has identified—and its core customer — shops in a Wal-Mart store 63 times a year and spends 77 percent of her grocery dollars there, explained John Fleming, executive vp of marketing. By contrast, the “Selective” shopper — the one Wal-Mart is wooing—shops at Wal-Mart only 46 times a year and spends just 28 percent of her grocery dollar there.

“The Loyalist shops items, they shop price points and they love the big broad assortments that Wal-Mart offers,” Fleming explained. “It becomes one-stop shopping for them. The Selective shopper, on the other hand, is looking for solutions. This is a customer who is looking for value for their money. This is a customer who is very focused on convenience, in fact, time becomes their currency … They shop for value, not just price.”

And “value” is becoming the new Wal-Mart mantra. While the company has always used the term in explaining its consumer proposition, it has taken on new meaning lately, as Wal-Mart moves from its low opening price point position to a place that offers “value” in any price point range it enters.

“So our objective is to champion a broader range of customers with products, services and a more compelling experience,” Fleming said. “It’s not about going upscale. It’s about understanding the customers who are already in our stores and focusing on the selective shopper — not at the expense of the Loyalist, because that is still a very important segment and we will continue to develop our relationship with that customer — but to focus on the selective shopper and … drive a deeper level of loyalty with the selective shopper.”