Lie #10: Wal-Mart Likes Its ‘Low Prices’ Image
“Wal-Mart is paying more attention to trends,” said spokesman Gus Whitcomb. “We are not going to stray away from our value message, but there are customers in the store who are looking for a little extra flair, and we want to make sure we serve them as well.” [Associated Press, 4/14/05]
Until now, Wal-Mart "may not have focused enough on the customer willing to pay a little more for higher quality...The goal now is to ‘meet the needs of every American.’” - Mike Duke [Washington Post, 6/4/05]
“We've only had one real problem with "Metro 7," and that is, we're having a hard time keeping up with the demand in our stores.” – Tom Schoewe [Lehman Brothers Annual Retail Conference, 5/2/06]
The Truth:
Wal-Mart receives the lowest possible score in customer satisfaction survey. According to the University of Michigan’s American Customer Satisfaction Index, “Wal-Mart ranked lowest among U.S. discounters and department store chains in an annual survey.” While Target was able to maintain its score, Wal-Mart’s number fell from 72 to 68 this year. The retailer’s grocery department has been at the bottom of the list every year since ACSI started tracking in 2004. [Bloomberg, 2/19/08]
Wal-Mart shakes up apparel unit. After months and months of slumping sales, Wal-Mart shut two apparel divisions at it headquarters – the first such layoffs in years. Despite widespread optimism within the company, Wal-Mart’s strategy of offering trendy clothing lines did not resonate with its customer base. Bill Dreher, an analyst at Deutsche Bank Securities, said, “They had tried to overreach — on their own, with little expertise or credibility in fashion. It was not bound for success.” [New York Times, 1/30/08]
Wal-Mart abandons upscale strategy and reaches out to core audience. Wal-Mart, of Bentonville, Ark., has for several months sought to win back shoppers by slashing prices on a broader range of goods than usual at the expense of its profit margins. The low-price push comes in the wake of a failed bid in 2005 and 2006 to lure more affluent shoppers by stocking trendy merchandise in apparel and home decor -- some of which it is liquidating at marked-down prices. [Wall Street Journal, 8/15/07]
Wal-Mart tries and fails to be trendy. After realizing that affluent shoppers were shopping at Wal-Mart, the company in the last two years aggressively moved towards offering trendy fashions under a new label called Metro 7, doubled the organic food in its aisles and started offering 400-thread count bed sheets. Wal-Mart even bought ads in Vogue magazine and sponsored an open-air fashion show in Times Square. [Business Week, 6/1/07]
Wal-Mart means low price, not high quality. Metro 7 fashions didn't really attract upscale shoppers, who continued to visit Wal-Mart only for their staples like detergent and milk and spurned Wal-Mart's organic offerings. Chief Executive Lee Scott conceded in an April meeting with BusinessWeek that the company has struggled to persuade customers that Wal-Mart can mean high-quality, rather than simply low price. "I think we went too far too fast," he said [Business Week, 6/1/07]
Wal-Mart attempts to compete on Target’s turf. Wal-Mart Stores Inc., the world's largest retailer, offered a line of premium bath and bedding items in more than 1,000 stores to lure affluent shoppers… The change is being introduced amid investor concern that Wal-Mart's merchandise isn't as enticing as products sold by No. 2 discount chain Target Corp. Wal-Mart's same-store sales gains have trailed Target's for the last 10 months. [Bloomberg, 4/9/05]
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