Custom-fitting the plan for Wal-Mart: Will target six demographic groups

[DeepModem Mom]

CNN/Reuters: Custom-fitting the plan for Wal-Mart
Under new approach, retailer will target six different demographic groups, paper reports.
September 7 2006

NEW YORK (Reuters) -- Wal-Mart Stores Inc., the world's biggest retailer, is trying to boost sluggish sales gains by dropping its one-size-fits-all approach to retailing, The Wall Street Journal reported on Thursday.

Instead of stocking mostly the same products, Wal-Mart is custom-fitting its merchandise assortment to reflect each of six demographic groups - African-Americans, the affluent, empty-nesters, Hispanics, suburbanites and rural residents, the newspaper said.

The Journal quotes Eduardo Castro-Wright, chief executive of the Wal-Mart's U.S. stores and architect of the new approach. Castro-Wright is a director of Dow Jones & Co Inc., publisher of The Wall Street Journal.

Wal-Mart's attempt to divide its roughly 3,400 U.S. stores into six different models is a big shift for a company that grew on the strength of standardization, The Journal said....

http://money.cnn.com/2006/09/07/news/companies/wal_mart.reut/index.htm?cnn=yes

[Coyote_Bandit]

1. Divide and Conquer?

One of the reasons Wally World became so successful was its inventory, warehouse and supply chain operations. Moving away from standardized operations will complicate those operations and increase operating costs. Me thinks perhaps there is a chink in their "Made in China" armor. Combine the need to diversify merchandising efforts with increased costs in doing so and further reduction in customers (whether through boycott or new levels of customer dissatisfaction) and maybe just maybe they will start to lose some of their luster. Most of the money managers and professional investors I know dropped them years ago based on diminishing prospects for continued growth.