Understanding the Wal-Mart Shopper

By Al McClain

Exactly who is the Wal-Mart shopper?

The easy answer might be everybody, but Todd Hale, SVP - Consumer Insights, ACNielsen, gave a more specific profile, largely based on Nielsen Homescan information, at the recent Consumer 360 Conference.

Here are some highlights from the highly detailed presentation (my comments in italics):

• In the U.S. Wal-Mart is shopped by 84% of households, compared with 58% for Kmart, and 56% for Target
• Wal-Mart is Fortune's 'most admired company,' for the second year in a row - ironic with all the bad P.R. they get
• Wal-Mart Supercenters will outnumber its discount stores sometime this year.
• A Supercenter focus is driving Wal-Mart's success in the U.S., via higher shopper penetration, increased shopping frequency, and larger basket rings
• Wal-Mart has 1.4 MM employees versus 1.3 MM for the U.S. Military
• Annual turnover is 44%
• They'll be adding 160,000 new positions in 2004
• Wal-Mart saves consumers an estimated $ 20 B annually
• Wal-Mart drives up to 25% of the market's productivity gains
• Regular Wal-Mart shoppers are still making lots of trips to supermarkets, although heavier Wal-Mart shoppers naturally spend less in other stores
• The dollar channel is the only one seemingly immune to Wal-Mart, as they are convenient, low-priced, and provide for a quick trip -- immune that is, until Wal-Mart makes a competitive move
• Convenience and location are especially important to non Wal-Mart shoppers -- these are two of just a handful of factors that tilt in competitors' favor, indicating having an outstanding real estate department is critical
• Wal-Mart's growth is beginning to tilt towards improved frequency and loyalty, versus just new stores
• Opportunities for Wal-Mart competitors exist in perishable variety, specialty grocery, and special niches -- because Wal-Mart is mainstream oriented
• Among Wal-Mart top shoppers, largest negative category trip categories (more trips to competitors than Wal-Mart) include: bread and baked goods, milk, carbonated beverages, tobacco, fresh produce, snacks, packaged meats, condiments/gravies, cheese, candy -- largest gaps are in high frequency and immediately consumable categories, indicating big box shopping isn't always convenient
• Largest positive trip gap categories include medications, disposable diapers, hair care, oral hygiene, vitamins, skin care, diet aids, pet care, stationery and school supplies, and automotive
• The future for Wal-Mart: Aggressive expansion, especially with Supercenters; extra services including gas, rental cars, Kid Connection, Wal-Mart TV Network (in-store), and financial services. Plus, better fashion focus; Neighborhood Market expansion; testing of Kicks Café coffee and 'Dollar Store' boutiques.

Moderator's Comment: Assuming Wal-Mart continues to grow and expand at a rapid pace, how can other retailers succeed, and how should suppliers balance their desire to sell more to Wal-Mart with the need to keep the playing field competitive?

As the population ages, it seems to me there is a tremendous opportunity for retailers to focus on location, cleanliness, and convenience, as those things are of paramount importance to the aging consumer. Only thing is, price seemingly trumps everything. - Al McClain - Moderator