By Faye Brookman, special to GMDC
Although Wal-Mart recently promoted its top marketing executive to a new role designed to elevate the chain's fashion stance, competitors still see only dollar signs when vying for shoppers against the nation's largest retailer.
Wal-Mart named John Fleming to a new post as chief merchandising officer. Fleming is a veteran of Target and said he wants to improve the customer experience at Wal-Mart.
This isn't the only manifestation of Wal-Mart's interest in going beyond price competition. Organic products is another area where Wal-Mart has made a major push, which has also encouraged others to follow, including Target and even retailers such as Walgreens (which added organic beauty lines). Wal-Mart senses an opportunity to sell organics at cheaper prices than leaders such as Trader Joe's or Whole Foods.
In addition, Wal-Mart is experimenting with upscale stores such as in Plano, Texas where sushi is served and greeters wear polos and khakis. Edgier fashions under the Metro 7 brand were offered, but not purchased by as many consumers as hoped. Making the situation worse last Christmas was that the hardest hit consumers were low-income shoppers who frequent Wal-Mart.
Some industry experts wonder if Wal-Mart can ever move from its industry position as the ultimate price discounter. Recent actions by Wal-Mart only enhance its reputation on pricing.
In the grocery industry, for example, word that Wal-Mart planned aggressive expansion of its Wal-Mart Supercenters in the St. Louis market sent competitor Schnuck's to the cash registers lowering prices on more than 10,000 items. Local marketer Dierbergs also took the pencil to some prices.
The cuts aren't just on food items, but, in particular, also food, drug and general merchandise. Many supermarkets in other markets have done the same in reaction to pricing when Supercenters invade.
In the drugstore industry - as well as supermarkets and discounters with pharmacies - Wal-Mart also caused a pricing stir late last year when it sliced the price of generic drugs to $4 in select markets. Target immediately followed, as did other chains. However, Walgreens and some drug operators tried to educate patients about the fine print on the deal and stayed the course on pricing. Still, the generic pricing cut is being closely watched and could have a big impact on pharmacy business in the future.
But, what is clear from the reaction of other retailers is that Wal-Mart still is the price king and that when Wal-Mart comes to town, the first thing retailers do is blink...and slice prices. What it all boils down to is Wal-Mart is still perceived as the low price option.
Discussion Questions: Can Wal-Mart effectively move into the area of competing with strategies above and beyond price? If Wal-Mart is successful in doing this, does that shut off a competitive option for many retailers who cannot succeed in price competition alone vis-à-vis Wal-Mart?