Wal-Mart’s New Upscale Strategy: Major Changes Necessary

For Immediate Release
Tuesday, February 20, 2007

Washington, D.C., – Recent news stories have focused on Wal-Mart’s efforts to re-package, re-brand, and re-create itself for a more upscale audience that will “step across the aisle” to buy higher-margin items. But market research shows that this strategy is impractical and impossible under their current business model, since these very customers are the most likely to have significant concerns about Wal-Mart’s business practices and reservations about shopping there.

Wal-Mart’s efforts to reach out to this audience have prompted widespread criticism from financial analysts and marketing experts, and prompted shakeups at the highest levels of its marketing division. But these superficial changes are addressing symptoms rather than problems, because Wal-Mart’s struggle with high-income shoppers runs deeper than just its advertising slogans. Simply put, Wal-Mart will have to change its business practices and its reputation in order to reach these new customers.

Excerpted below are the results of a national segmentation study, conducted by Wal-Mart Watch, of Wal-Mart’s new consumer targets – infrequent Wal-Mart shoppers with annual household incomes of over $60,000 – that shows the audience has serious concerns about Wal-Mart’s health care plan, the Dukes v. Wal-Mart gender discrimination case, treatment of workers, and Chinese imports.

Key Findings: $60K+ Rare/Non-Shoppers
Higher-income consumers who rarely or never shop at Wal-Mart are more inclined than the rest of the population to:

  • View Wal-Mart negatively (58%); and
  • Believe that Wal-Mart “competes unfairly” (62%), “gives workers poor benefits” (53%), and “treats workers unfairly” (50%).

This segment is also particularly likely to report concern about the following facts:

  • Over half of Wal-Mart employees are not covered by the company’s health insurance plan (62%).
  • Wal-Mart is the defendant in the largest gender discrimination lawsuit in American history (59%).
  • Wal-Mart limits many of its employees’ hours to keep them from becoming full-time, to avoid paying them benefits and promoting them to better-paying positions (59%).
  • Wal-Mart has dropped its “Buy American” program and is now the largest American importer of Chinese goods (43%).