June 4, 2009
A 30-something mom heads toward her Infiniti luxury SUV with bedding-in-a-bag she just purchased for her teenage daughter.
The Plano resident was leaving the Wal-Mart on Central Expressway and Spring Creek Parkway, where she said she’s stepped up her shopping – especially for groceries – in the last six months.
“I still buy a lot at Kroger, things like Boar’s Head lunchmeat, but for staples I’m shopping more at Wal-Mart,” she said. The comforter set was an impulse buy, one from Wal-Mart’s new home brands by Better Homes and Gardens. She was happy to talk about her new shopping habits but declined to give her name.
Meet the new Wal-Mart secret shopper: Someone who has become a regular but may not be ready to tell the world.
Wal-Mart knows these new customers are in their stores, and it doesn’t want to lose them when the economy improves. Mostly overnight but while stores remain open, the company is remodeling 650 to 700 U.S. Supercenters, including 15 in Dallas-Fort Worth, this year to make them “cleaner, faster and friendlier.”
For years, the world’s largest retailer has been trying to be cool like Target, to gain the attention of higher-income shoppers and to persuade its grocery clientele to cross over into its home, apparel and consumer electronics aisles.
While the global recession and a stronger U.S. dollar have hit Wal-Mart’s international operations hard, the retailer says it is gaining market share in Dallas and across the U.S.
In June, Wal-Mart’s Dallas-Fort Worth grocery market share hit 40 percent for the first time as Supercenters gained 0.86 percentage points.
This remains Wal-Mart’s biggest market, with 70 Supercenters, 21 Neighborhood Markets, 21 Sam’s Clubs and one original Wal-Mart discount store. Replicating that footprint in other major metro areas leaves Wal-Mart with huge growth potential in the U.S., especially with new shoppers acquiring a taste for Wal-Mart.
Wal-Mart vice chairman Eduardo Castro-Wright recently told analysts that new households represented 17 percent of store traffic growth and 27 percent of U.S. sales growth in February. Those new customers are spending 40 percent more than the average Wal-Mart shopper, and 55 percent of them had incomes greater than $50,000 a year, he said.
“Wal-Mart has proven itself a winner in this tough economy. Shoppers have really resonated with the retailer’s ‘Save money, live better’ brand promise,” said Jennifer Halterman, senior consultant at Retail Forward. “Wal-Mart also is positioning itself to retain shoppers post-economic turnaround with its newly remodeled stores, enhanced portfolio of brands and overall improved shopping experience.”
Wal-Mart’s U.S. sales have increased every month during the recession. In April, traffic increased for the seventh consecutive month, said Todd Slater, analyst at Lazard Capital Markets, in a May research note.
On Wednesday, major chain stores report May results, but Wal-Mart won’t be propping up the group, as it has been. Last month, Wal-Mart said it will stop reporting sales monthly, joining a growing list of retailers reporting sales only with quarterly earnings.
Wal-Mart has slowed its store growth over the last two years and focused on replacing discount stores with larger Supercenters. Average sales at its Supercenters had been declining since 2004, but early estimates indicate improved performance in 2008, Retail Forward’s Halterman said.
Whether Wal-Mart can sustain its recession momentum is a big question mark, hence its aggressive remodeling program, called “Project Impact.” So far, remodeled stores get a sales lift of 0.75 to 1.25 percentage points, Castro-Wright said.
In North Texas, three of the 15 stores scheduled for remodeling in 2009 are done. After that, the pace will continue to be about 15 remodelings per year in the area, said John Murphy, Wal-Mart regional general manager and vice president.
High-volume stores and high-traffic stores, which get the most wear and tear, were redone first, he said.
Consumers can tell their store has the latest interior when the exterior loses the flag blue in favor of a tan facade with the new, no-hyphen Walmart sign punctuated by a yellow starburst.
Stores are being reorganized, grouping together the most popular merchandise. Lower shelves allow clearer sightlines. Brighter wall paint and lighting and easier-to-read signs point to departments with wider aisles.
The difference is jarring for regular customers, who have also noticed what Wal-Mart has told analysts: There’s less inventory in these remodeled stores.
Murphy said he’s heard the complaints, and he’s making adjustments. He said it’s a combination of space issues and priorities. For example, the remodeled stores have more consumer electronics and less hardware.
Shoppers Tuesday evening at the newly remodeled Supercenter at 6001 Central Expressway said the store was cleaner, but they weren’t quite ready to call it friendlier.
Plano resident Terry Millspaw said he “grew up on Wal-Mart” in eastern Oklahoma. “That’s all we had. When I moved here after college in 2003, all my friends kept talking about going to Target.”
He’s noticed that prices have gone up in the last six or seven months, and he’s stopped buying some items, such as individual pizzas that recently spiked from $2.25 to $3.50.
“It looks nice, but they don’t have as much stuff,” said Gail Thompson of Plano, noting that the store is missing the frozen chicken that her two school-age daughters prefer.
Jan Ammons said the store is cleaner and she isn’t used to the new layout, but she’s noticed fewer lines of vitamins, biscuits and ice cream. As for Wal-Mart’s plan for stores to be friendlier, she and other shoppers said it’s not quite there yet.
“The checkout person didn’t say a word to me,” Ammons said.
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