Wal-Mart Looks to Lift Spirits
By George Anderson
As a Wall Street Journal piece from Aug. 17 correctly pointed out, Wal-Mart’s alcohol-free headquarters is located in a dry county and, when it comes to the sale of hard liquor, the retailer is a far ways from the dominant position it holds in numerous other product categories.
That doesn’t mean, however, that the retailer isn’t out to change things.
As John Westling, Wal-Mart’s senior vice president for nonperishable food told the WSJ, “We’re putting hard liquor in our stores where we can. This is an area where we are focused on growing sales.”
As it has done elsewhere, Wal-Mart is likely to select the most popular products and run them out on the floor with huge displays and extremely low prices.
The retailer is also following suit by partnering with the leading manufacturer in the category, in this case Diageo PLC, to work out a supply and merchandising plan that includes tripling the amount of space dedicated to stores carrying spirits. Wal-Mart is also looking at new store construction with the intent of opening units where stores will be able to sell spirits.
Some question whether Wal-Mart’s decision to increase its share of the spirits market is in keeping with the public image it seeks to perpetuate “as a folksy all-American enterprise and an arbiter of social mores.”
Mothers Against Drunk Driving and other groups have raised concerns whether busy supermarkets — Wal-Mart’s or any other company’s — can be as effective in reducing the sale of alcoholic beverages to underage drinkers as those stores that primarily sell alcohol.
Wal-Mart has also found an opportunity, as others have, in building new stores with larger departments for spirits or expanding hard liquor sets in locations that stand just outside dry counties.
A case in point is a new store Wal-Mart opened in Pineville, Mo. last January. While shoppers in Bentonville may not be able to purchase spirits, they can drive 10 miles to the new Wal-Mart in Pineville where they will find a separate 5,000-square-foot section selling spirits at prices well below other retailers in the market.
“We would not have enough space in that store, if we hadn’t built a separate liquor department,” said Wal-Mart’s Westling. “We are looking at our other stores where we are running out of stock quickly in spirits and trying to find where we can get more space from.”
As you might expect, Wal-Mart’s push into the business has other spirit retailers understandably nervous.
Moderator’s Comment: What will Wal-Mart need to do to succeed in growing spirit sales and market share? What will its competitors need to do if they
wish to remain viable? –
George Anderson – Moderator