Business StrategyUS

Walmart Going Upscale?

Is Walmart going high-end? Seems so! A new Walmart in Plano seems to suggest!

On Mar. 22, thousands of shoppers, vendors, and media got a glimpse of what could be the Store of the Future for the No. 1 worldwide retailer. This upscale version of a Wal-Mart Supercenter in Plano, Tex., is a 203,000 square-foot laboratory where management intends to test some radical strategies and tactics that aren’t in the tried and proven Wal-Mart (WMT) playbook.

When you think high-end for Walmart – you automatically come to think of Target! Heck it may even be copying the Super-T!!

For many of us — and a handful of Target (TGT) managers who showed up to spy on the competition — the first impression was that you were someplace else. It looked a lot, like, well, a Super Target. “You copied us,” complained one Target official to Marcus Ludwig, the manager of the Plano Wal-Mart.

For Ludwig, the hostile comment was water off a duck’s back. The 16-year Wal-Mart veteran makes no apologies for taking into account rivals’ customer-pleasing strategies. “This store is a laboratory for us to see if we find better ways to do things, and we’ve scouted out all kinds of competitors,” explains Ludwig, adding that Wal-Mart’s pioneering box-store formats and other strategies have always been widely imitated by other retailers.

Or is it? It seems to be bringing a lot of other stuff to be considered high end and exclusive!

….you find not the standard-issue McDonald’s (MCD) but a Kick’s coffee and snack shop that has the looks — and nearly the prices — of a Starbucks (SBUX). Wander into “Foods” and you may think you’re at Whole Foods (WFMI) or Central Market, the successful high-end stores of Southwestern grocer H.E.B.

There’s a big wine section — more than six times larger than the usual Wal-Mart wine shelf — that features a 2004 Pouilly Fuisse for $20.37 alongside the customary $5.57 brands. There are 500 (four times normal) natural or organic food lines — and even a small sushi bar. Altogether, there are more than 2,000 premium items in wine, dry grocery, meat, cheese, and produce that are new to Wal-Mart.

In “Electronics,” the $3,000 wide-screen TVs, the build-your-own computer components, and, yes, dozens of those slick, super-aggressive sales guys remind you of a trip to Best Buy (BBY) or CompUSA. Auto parts and fishing gear have been deemphasized, and guns aren’t sold at all.

It seems fairly clear that this is an attempt for Walmart to take on WholeFoods, Best Buy, Circuit City, Starbucks, etc on for a nice ride!! These retailers beware!! Is this going to be a successful strategy? Only time will tell whether a Supply Chain model that works wonders at the lower end will do the same on the higher end!

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Desh Kapoor

The panache of a writer is proven by the creative pen he uses to transform the most mundane topic into a thrilling story. Desh - the author, critic and analyst uses the power of his pen to create thought-provoking pieces from ordinary topics of discussion. He writes on myriad interesting themes. Read the articles to know more about his views and "drishtikone".

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