Wal-Mart: One size may not fit all
No. 1 retailer begins Arkansas conference aimed at improving image by stressing need to reach out to customers.
ROGERS, Ark. (CNNMoney.com) - As Wal-Mart's marketplace become more diverse, company executives conceded that the retailer's "one size fits all" strategy is losing relevance with consumers.
"We're really trying to understand the customer," said Castro-Wright. "The [Wal-Mart] loyalist shops across the store. The selective shopper is shopping for great value and prices but she's shopping mostly for food. We're trying to help them to shop the rest of the store."
Wal-Mart's biggest customer challenge, however, is trying to appeal to what he called the "skeptic" shopper, or someone who hasn't yet become a regular Wal-Mart customer.
Industry watchers say the pressure is on for Wal-Mart to grow its customer base outside of its core low-to-mid income shoppers and aggressively court higher income consumers in order to boost slowing sales and profits at Wal-Mart stores.
Castro-Wright said Wal-Mart has a game plan and offered a preview of "exciting new customer merchandise that's coming up."
Although Wal-Mart executives repeatedly denied that the low-cost leader is "not going upscale," some of the new products that will hit stores this year include higher-priced lawn and garden furniture and home electronics, better quality towels and bedding collections made of Egyptian cotton, and a new line of trendy urban clothing for men called "Exsto" expected to debut in July.
Another big push for Wal-Mart going forward would be in the organic category. Executives said the retailer was expanding its offering of organic food products, including baby food.
Castro-Wright, formerly CEO of Wal-Mart's Mexico unit, Wal-Mart de Mexico, was promoted to his current position early this year. Analysts said he's the one tasked with improving not just sale but also revamping the shopping experience for customers.
This includes everything from redesigning stores and updating merchandise to attract a higher-income shopper to removing store clutter and reducing the long lines at the checkouts which can result in lost sales as frustrated shoppers abandon their shopping carts.
Reducing the clutter
To that end, Castro-Wright said the retailer would focus on reducing inventory and using new technology to better manage store clutter and reduce costs tied to unsold goods.
In a question and answer session with reporters, Castro said the company has heard from suppliers about how Wal-Mart is making inventory reduction a priority.
"We said (to suppliers) that this is about the need to clear stores of clutter," he said.
Earlier, Arkansas Gov. Mike Huckabee welcomed the media to the conference, saying the retailer has helped "empower millions of consumers" across the nation.
"The secret of Wal-Mart's success is that 138 million people must like it because they shop there every week. They wouldn't shop there if they didn't." he said.
Chief financial officer Tom Schoewe is among Wednesday's scheduled speakers. His presentation is expected to focus on customer service as a path to growth.
Last but not least, CEO Lee Scott will tie up any loose ends as the conference's final scheduled speaker.
Todd Jones, an analyst with investment firm PNC Advisors, which holds Wal-Mart stock in its $50 billion portfolio, said he perceived the media conference to be a positive for Wal-Mart.
"I think it's in Wal-Mart's best interest to portray its business in a positive way to the public. Last year's conference was a step in the right direction," said Jones.
But he specifically wants to hear Wal-Mart's game plan to improve its merchandise, and how it intends to get customers to shop for higher-priced and higher-margin items such as electronics, in addition to food and household products.