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Wal-Mart adds style to the aisle

By MARK ALBRIGHT
Published April 19, 2006

	[Wal-Mart photos]
	A Texas test store offers premium wines, gourmet cheese and even a sushi bar to attract shoppers from more elevated income levels.
	Along with the new, higher priced items, the Wal-Mart chain is altering the look of stores. The idea is to look less junky and crowded and offer more displays that the better-heeled buyers expect.

BENTONVILLE, Ark. - Wal-Mart Stores Inc. is going after a more affluent customer, but please don't use the "U" word.

"We are not going upscale," insisted Eduardo Castro-Wright, president and chief executive officer of Wal-Mart USA. "This is about getting customers who already shop our supercenters for food to venture for the first time into the rest of our store."

Indeed, the chain, which funnels 130-million Americans through its doors every week, has plenty of traffic but an abundance of doubters about the chain's fashion sense, which keeps them in the grocery aisles.

There are plenty of signs of the new strategy. A new test store in Plano, Texas, stocks 700 premium wines and gourmet cheese, and boasts a sushi bar. The chain's advertising - once nothing but an endless parade of low price ads - has quietly changed to a balance of price, fashion and lifestyle ads. The chain is promising to clean up the densely packed, run-down look of its stores and package the buildings and merchandise displays in ways that more affluent customers expect.

Neiman Marcus need not lose sleep. Wal-Mart is feathering in a new level of more expensive goods at a value price without cutting back on its low price leaders.

The discount chain's new apparel lines, such as the women's contemporary Metro 7 line that has been advertised in Vogue, are meant to compete with Target and JCPenney. And once Wal-Mart started selling 400-thread-count sheets, JCPenney immediately responded with a 1,000-thread-count model. Wal-Mart's patio set used to be priced from $88 for a six-piece set to $298. This spring, the $88 set is there, but the chain added five sets priced as high as $698 that are more likely to be seen at Home Depot.

"A lot has been made of our Plano store, but only 3 percent of the merchandise is new," said Lee Scott, president and CEO of Wal-Mart Stores Inc. "We just used creative display techniques that make it stand out, but the low-price items are right next to them."

The strategy to bolster the chain's fashion image and store experience was outlined Tuesday at the kickoff of the retail giant's second annual two-day press briefing.

Experts say Wal-Mart has little choice but to jazz up its stores and stock more bargain-priced merchandise that the affluent customer demands.

The chain may have the low-end market all but sewed up. But competitors have zeroed in on research that shows shoppers slightly above median income dislike the store experience of a Wal-Mart. Much of the problem is that Wal-Mart's pressure on suppliers to keep lowering prices is making the chain synonymous with cheap.

Some of the solution is packaging. For instance, Wal-Mart sold gourmet coffee in its store snack bars for more than a decade at 50 cents for a foam cup. But in the Plano model it serves up gourmet coffee at prices and in surroundings reminiscent of Starbucks.

A bigger challenge, said Joe Pillota, vice president of BIG Research, a Worthington, Ohio, consumer research firm, is affluent shoppers by nature don't feel comfortable in stores where they are overwhelmingly outnumbered by people who look lower class.

That's why he thinks the company's first steps to develop a Wal-Mart store that fits into more affluent neighborhoods may not be enough.

"They proably will have to give it another name," he said, noting that in England Wal-Mart rival Tesco calls its most fashionable stores Tesco Plus.

To ease its way through zoning battles, Wal-Mart has restyled its basic steel gray and blue supercenter box to better fit surrounding architecture.

In Naples, it has used a "coastal" Florida style that comes painted in pastels, outfitted with decorative tin roofs and outfitted with big Bermuda-style storm shutters.

A small California supermarket chain executive said his customers see through the veil.

"You can put lipstick on a pig," said Ray Agah, a store designer for Save Mart Supermarkets in Modesto, "but it is still a pig."

In Lebanon, Ohio, the Wal-Mart chain mimics the historic century-old downtown by adding faux windows to create the illusion of the second floor of a row of Main Street buildings.

"They stayed true to the red brick facades," said Andrew McQuilkin, vice president of design for FRCH Design Worldwide, a Cincinnati store design firm. "But they used red brick paint instead of actual red bricks."

While the chain has been on a decadelong binge of building supercenters, the old discount stores have been left to deteriorate.

"The new supercenters may look fine, but their discount store in my neighborhood is still dark, dingy and cramped," said Charles Fishman, author of The Wal-Mart Effect. "And the aisles of the apparel department are so jammed with merchandise you cannot even negotiate a shopping cart through them."

Bob Buchanan, a securities analyst with A.G. Edwards & Sons, recently counted 139 shopping carts in the parking lot of a Baltimore Wal-Mart and 37 abandoned but fully loaded ones inside.

"They talk a good game of taking care of the customer and jazzing up the look of the stores, but they need to follow through."

Mark Albright can be reached at albright@sptimes.com or 727 893-8252.

[Last modified April 19, 2006, 01:58:13]