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graphic's going upscale
Online unit's CEO says he's trying to court more affluent shoppers with new pricey holiday products.
November 18, 2004: 3:16 PM EST
By Parija Bhatnagar, CNN/Money staff writer

NEW YORK (CNN/Money) - Discounter Wal-Mart can keep "rollin', rollin', rollin'" back its prices but has loftier intentions.

The retailer's online unit next week is launching a four-day Thanksgiving online special that will feature upscale items such as cashmere sweaters, high-end electronics like flat-screen TVs, portable multi-media systems and even shiatsu massage chairs exclusively for Web shoppers.

"These are high-end items that consumers typically find at specialty stores and not necessarily at Wal-Mart," CEO John Fleming said In an interview with CNN/Money Thursday. "The idea is to take our base business and layer it with unexpected products."

Said Fleming, "I think of this as going above and beyond in terms of price points and the assortment of products that we currently offer."

The high-end products may be a little out of character for the world's largest discounter, but Fleming said shoppers will be pleased with the competitive prices.

The cashmere sweaters are less than $40. There's a 5 megapixel digital camera for under $200, an MP3 player for less than $50, a 27-inch LCD TV priced under $1,000 and a shiatsu massage chair under $400.

"As much as 85 percent of U.S. households go to Wal-Mart and we get 100 million visitors a week at the stores. Yet everyone who goes there buys consumables but not apparel or electronics, which are two huge categories," said Fleming. "We want to complete the shopping experience for our loyal customers and as well as appeal to a different kind of customer."

Wal-Mart's dot-com unit got off to a shaky start. First launched independently in 1996 with no online puchase functions, then relaunched in January 2000 as a joint venture. In 2003 it finally became fully acquired by Wal-Mart and has grown to become one of the leading online shopping destinations, competing with industry leaders (Research) and eBay (Research) in terms of average visitors per week. (for more on's history click here)

The unit is averaging 8 million visitors a week, up from about 3.5 million visitors at this time last year. It also expects sales to grow faster than the industry average of 25 percent growth over the next three to four years.

Fleming declined to discuss sales or financial results for the online operation. However, he said the company would track next week's promotions to gauge consumer response and demand for the new initiative. If it's successful, could adopt it as a long-term strategy, he said.

Jupiter Research analyst Patti Freeman Evans said Wal-Mart's upscale experiment makes sense.

" is trying to figure out where growth and best margin opportunities are," Evans said. "It's smart to test this area because predominantly the online consumer is more affluent than in store shoppers. Also, with the online channel, they can expand into more categories than offline where limited shelf space is a factor."

Evans said Wal-Mart has been quiet about its online business and compared to a "sleeping giant." She predicts that "If this strategy works and expands into non-traditional categories, then it could become dangerous for other big players in field."

Who in particular? "I think if you're a big player in consumer electronics, you should be a careful," she said.  Top of page

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