What Would Sam Say? Wal-Mart Continues Moving Away From Its Roots

By Linda Orlando

Wal-Mart used to be the friendly neighborhood department store where everybody was friendly, the prices were terrific, and the shopping was pleasant and familiar. Times have changed since those first years of Sam Walton’s dream taking shape, and the resulting monolithic Wal-Marts just barely resemble the originals of decades ago. The latest iteration of Wal-Mart will be so different that shoppers might just forget they’re even in a Wal-Mart until they see the name on their receipt.

In its boldest effort yet to attract affluent shoppers to other areas of the store besides groceries, the nation’s largest retailer recently opened a new store in Plano TX, with an expanded selection of high-end electronics, more fine jewelry, hundreds of varieties of wine with prices ranging as high as $500 a bottle, and even a gourmet deli and sushi bar. The store is over 200,000 square feet in size, about 20,000 square feet bigger than the average Wal-Mart Supercenter. The familiar blue and gray Wal-Mart exterior is gone, replaced by a tasteful two-tone brick façade. Although the store sits across the street from a SuperTarget, and Costco is easily spotted from the parking lot, once you get inside, the feeling instantly changes from middle-class suburban sprawl to upscale retail.

The inside of the store is unrecognizable as Wal-Mart. Aisles are wide, and the floors are polished hardwood. Shelves are lower to reduce clutter. Even the traditional Wal-Mart employee blue-smock look is nowhere to be seen. Clerks wear khaki pants and navy polo shirts. The store has rows of high-definition plasma televisions, several with price tags over $2,000. There are expanded sections for yoga equipment and baby clothes. Apparel areas have discreet fitting rooms and their own cash registers. A cards and books section features rich cherry-finish wooden racks and arching halogen gallery lighting. The trademark McDonald’s at the front of the store has been replaced by an espresso bar serving deli sandwiches and free wireless Internet service.

Business analysts say that Wal-Mart’s new store is a response to public perception that their merchandise is of lower quality, an idea that turns away consumers who feel they can afford better. "The challenge they face is value, and upper-end consumers define value differently than a moderate-income shopper," said Patricia Edwards, an investment counselor. "If it was just price, they would drink the office coffee instead of going to Starbucks."

In designing the store, Wal-Mart executives paid close attention to comments from focus groups of "selective shoppers," the company’s term for affluent customers. "The upscale customer is shopping our store," said regional general manager John Murphy. "Are they interested in everything we have to offer? No. This is a test store. Can we make that leap to where they are interested in other parts of the store?" Murphy said that the company hopes so. If they are able to reach affluent consumers, they will be able to persuade vendors who are currently reluctant to sell their wares in a Wal-Mart. Target has already succeeded in selling designer lines of certain items.

The new store delivers a new image of Wal-Mart with the new additions. But it’s equally notable for what it’s now missing. The store won’t sell any guns or ammunition. It devotes much less floor space to lawn and garden, fishing, camping, and automotive items. "This customer is telling us that they’re not doing it themselves," said Ryan Lincks, the store’s project manager. "They don’t change their own oil."

Retail analysts believe that the shift in public perception won’t come as quickly as Wal-Mart may hope. It took Target years to shift to selling upscale products to affluent customers, and it may take Wal-Mart longer because the company has been around much longer. In the meantime, while Wal-Mart waits to see if their new gamble takes off, they need to guard against making so many changes to attract rich people that they end up alienating the core middle-class customers who made Wal-Mart a household name.