NEW YORK — Mike Duke, who took over as president and chief executive officer at Wal-Mart Stores earlier this year, said he would step up the retailer's focus on consumer research and reemphasize its commitment to operational efficiency to meet those customer's needs.
“I would say it's not just really focusing on the customer,” Duke said in remarks at the Goldman Sachs 16th Annual Global Retailing conference here. “It's really being obsessed with knowing the customer, understanding the customer and solving the customer.”
Those insights — gleaned from researching about 1 million customers a month, according to Duke — are guiding much of the reshaping of Wal-Mart.
Duke, who succeeded Lee Scott as Wal-Mart's top executive in February, identified customer research to be among his four core priorities for the Bentonville, Ark.-based retailer. He also said the company would pursue “reenergizing” its focus on productivity; “smart and aggressive” store growth; and to accelerate investments in technology and processes that can be executed on a global scale.
Wal-Mart's current customer research shows that its customer base has changed the way it shopped in response to the economic recession, Duke explained. But an increase in shoppers' price perception has accompanied greater sensitivity to the quality of what they buy, he said. They are also timing their purchases — deferring their shopping until the moment they need an item, and spending in rhythm with their paychecks.
These changes, he said, are long-term in nature.
“Customers are buying now when they need product — not anticipating the future,” he said. “I say this is a new normal. This is not something that will change as the economy gets better. The smart-shopping customer that really looks at price and value is something that will be with us for a long, long time.”
Further research revealed Wal-Mart customers have reduced their spending on vacations by 25% this summer. This data presents an opportunity, Duke said, to create integrated offerings for families spending more of their time at home.
Wal-Mart announced one such initiative last week, saying it has added “Family Night Centers” in its stores featuring specially priced board games, DVDs and snacks.
Duke said improving Wal-Mart's “productivity loop” — lowering expenses and investing the savings into pricing — was a top global priority.
“The focus on productivity loop is a critical area,” he said. “Not just to drop expenses down and be more productive. But giving the benefits to customers, helping customers save money and live better, brings more traffic to our stores. More traffic to our stores increases sales per square foot. And that sales per square foot increase gives us greater opportunity to increase productivity to have lower expenses as a percent of sales, and the loop goes on and on.”
Duke also said the company would focus on “smart and aggressive” growth, looking at building stores more effectively and pursuing acquisitions.
“We have to optimize our formats and invest in an optimal manner, and in some cases that may mean smaller stores,” he said. “It may mean instead of opening a 200,000-square-foot store like we did a couple of years ago, maybe we can do that store in 170,000 or 150,000 square feet.”
