In an effort to attract higher-income shoppers and boost the average ticket, Walmart tried to offer fashion clothes, organic food, sexy flat-panel TVs, and other more expensive design stuff, but clearly this strategy has so far been disapointing, with same-store growth for stores with above a year history of a pale 1.5%, significantly below the 2-4% target.
What happened is pretty simple : while Walmart's core business is the everyday low price offer, and they are unbeatable at this game, they fundamentally failed to offer an attractive shopping experience, with the right mix of product, service and layout the high-end customer was looking for. They haven't given up the strategy, they are learning from their mistakes and will fine-tune their high-end offer, but for the immediate future and the crucial Christmas season, it's back to basics.
Indeed, Walmart has publicy stated they were coming back to their core turf : unbeatable prices, deep discounts ! This is where they are very good, with an unique combination of massive purchasing power and an fantastic supply chain. Lee Scott, Walmart's CEO recently declared "this season, no one will doubt Wal-Mart's leadership on price and value...We are implementing our most aggressive price strategy in our stores for the holiday season".
Trying to lure customers in higher-end segments not only requires attractive products - Walmart apparently had that - but those also have to be sold with the right layout and the adequate service, something Walmart still has to learn...
Despite being the world leader in providing basic stuff at unbeatable prices, Walmart is just a beginner in the higher-end game...
Plus there was another issue : the introduction of more expensive stuff which, failed to attract higher-end customers, also bewildered and frightened lower-end customers...
Tough to tackle several customer segments at once ! When a customer comes in a store to buy everyday low price items and find upscale offerings, he has a right to feel nervous.
The above of course is also true for e-commerce businesses : I think the name of the game is to target a specific audience and to offer what it wants in terms of products, services and general shopping experience, but mixing cutomer segments is exceptionnaly difficult.
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