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Wal-Mart’s New Direction

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An educational session about competing with Wal-Mart is sure to draw a big crowd of independent retailers. So NGA prepared a ballroom filled with chairs for this morning’s workshop on that topic. The turnout did not disappoint.

Neither did the content. Steve Dillard, vice president, Corporate Sales and Business Development, Associated Wholesale Grocers, said independents have a big opportunity as Wal-Mart expands its mission to reach new types of customers.

“They’re trying to reinvent themselves,” Dillard said. “But independent retailers can beat Wal-Mart at things they’re not as strong in.”

The reinvention results from Wal-Mart’s need to attract higher income customers to insure ongoing growth, Dillard said. He said Wal-Mart is under-developed with households earning $70,000 or more, compared to retailers such as Costco, Trader Joe’s, Whole Foods and Target.

That has led Wal-Mart to unveil a number of recent initiatives, Dillard said, including:

--Launches of more upscale Neighborhood Market units in select locations. These have enhanced signage and in-store meat cutting through leasing of meat areas to local butcher shops.

--Upgrades of supercenters to draw more higher-income customers. These now have a cleaner, streamlined look with less clutter, including the removal power aisles in many units.

--Reformulations of the Great Value brand to improve quality against national brands.

Dillard said AWG’s research shows ongoing weakness for Wal-Mart in a number of attributes in which independents excel, including perishables and friendly service.

“Wal-Mart’s price image and one-stop shopping have outweighed their weakness in other areas, but I see a great opportunity for independents,” he said.

Dillard urged independents to improve their competitiveness against Wal-Mart by partnering with wholesalers, pursuing special event merchandising, employing non-traditional sales events, differentiating with fresh departments, and conducting research to understand customers.

Glenn Richey, assistant professor of Marketing and Supply Chain, University of Alabama, said Wal-Mart’s reinvention could threaten ties to its existing customer base.

“I think they’re losing their way with a group of core customers,” he said. “They are disenfranchising a lot of customers.”

At the same time, he said, Wal-Mart is under pressure from retail concepts such as dollar stores, which represent a relatively new form of competition for the company.

Contributors

David Orgel

David Orgel is executive director, content & user engagement, of Supermarket News (SN) and its website, SupermarketNews.com. Orgel delivers his opinions on industry trends through a bi-weekly...

Jon Springer

Jon Springer has been writing about food, food retailers and food retailing for more than 10 years, and is in his second tour of duty with Supermarket News. His prior experience includes covering the...
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