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Wal-Mart readies big holiday offensive
Execs determined to shake things up, plan revamp of clothes, electronics and home units.
October 26, 2005: 11:12 AM EDT
By Parija Bhatnagar, CNN/Money staff writer
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CNN's Andy Serwer reports on Wal-mart's proposal to raise the minimum wage and the No. 1 retailer's new health plan. (October 25)
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NEW YORK (CNN/Money) - Eager to erase the memory of Wal-Mart's colossal blunder last year, company executives boldly declared to analysts Tuesday that the world's largest retailer was on the cusp of launching its earliest and "most aggressive" advertising and merchandise strategy for the 2005 holiday shopping season.

"We have a very focused message. We want to establish Wal-Mart as the holiday destination for shoppers," Wal-Mart's chief marketing officer John Fleming told a gathering at the retailer's annual two-day analysts' conference in Rogers, Ark.

Shoppers shunned the retailer last year after Wal-Mart skimped on early discounts in hopes of boosting its profits.

"Our 'Home for the holidays' campaign, which breaks on Nov. 1, will be our earliest and most aggressive launch for the holidays," Fleming said during the conference, which was monitored via web cast in New York.

Fleming, however, did not disclose whether or not Wal-Mart would offer deep discounts at the onset of the gift-buying season.

Wal-Mart (Research) is clearly upping the ante in clothing, home furnishings and decor and consumer electronics, three areas that analysts say have been among its weakest performing divisions.

What can consumers expect?

More trendy clothing following the recent launch of "Metro 7," Wal-Mart's more fashion-forward apparel line intended to draw in style seekers on a budget.

In addition to its bed and bath products, Wal-Mart is gearing up to launch "Project Decor," a collection of color-coordinated home decoration products.

But perhaps the most significant initiatives focus on consumer electronics.

Among the hot gadgets for the holidays, Wal-Mart said it will carry Apple's iPod Nano, the new Motorla ROKR, iTunes-compatible cell phone, Bluetooth technology-enabled cell phones and a few exclusive items such as the MobilBLU 1-inch cube MP3 player.

"We're clear about who we're targeting but we also want to increase cross-store shopping with our customers," Fleming said.

He gave an example: "11 percent of Wal-Mart shoppers also shop at Best Buy but 62 percent of Best Buy shoppers also go to Wal-Mart."

And while 29 percent of Wal-Mart shoppers shop at Target, Fleming said 61 percent of Target shoppers also shop at a Wal-Mart.

"There's significant opportunity here to increase sales," Fleming said.

All about change

Deutsche Bank analyst Bill Dreher, said he thinks the steps Wal-Mart is undertaking to improve in-store customer service, merchandise and organizational structure could "lead to very meaningful change in the way the company operates."

I don't think this is just lip service," Dreher said, also alluding to Wal-Mart CEO Lee Scott's speech Monday which outlined changes to the company's healthcare, environmental, waste management and product sourcing policies.

Said Dreher, "While the results are unlikely overnight, these changes hold huge potential for Wal-Mart to evolve into a better retail concept for today's global retailing market."

Indeed, Wal-Mart executives repeatedly hammered the point that the company was on the path to "radical change,"

"This is what you're going to hear about over the next two days," said Tom Schoewe, Wal-Mart's chief financial officer. It was Sam Walton who said 'Never get so set in your ways that you can't change."

John Menzer, vice chairman of Wal-Mart Stores, echoed that sentiment.

"We're trying to accelerate the move to be a truly global company," Menzer said. "Size is often seen as a liability for us. But we'll show you that we're very nimble and very different from what you know us as."

"I know Wal-Mart can become a trend forward merchandiser," said Menzer. "It can become a preferred store for Hispanic consumers. It can become a premier retailer of fresh foods. That's why we are expanding our organic food offerings."

Dreher dismissed speculation that all this talk about change is in part a response to the constant and persistent pounding the company has recently faced from its critics about its wage and benefits programs.

"This is because of Wal-Mart's flat stock price and the inability to grow profits faster than sales," said Dreher. "Addressing critics is just part of the equation. The bigger issue is addressing investors."

Mark Husson, analyst with HSBC Securities, agreed. "If this was about answering critics, then we would have heard more than we have about how Wal-Mart will improve the labor side of the business. I think the subtext is that Wal-Mart wants to become more like Target by improving customer service, merchandise and ask employees to be more pleasant."


Wal-Mart call for hike in minimum wage. Click here to read more.  Top of page

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