Walmart loves to shock and awe. City-size stores, absurdly low prices ($8 jeans!) and everything from milk to Matchbox toys on its shelves. And with the recession forcing legions of stores into bankruptcy, the world's maximal retailer now ostensibly wants to take discover the remaining survivors.
Thus, the company is in the beginning stages of a massive accumulation and strategy remodeling effort, which it has dubbed Project Impact. One content of Project Impact is cleaner, less cluttered stores that module improve the shopping experience. Another is friendlier customer service. A third: home in on categories where the competition can be killed.
"They've got Kmart ready to take a standing eight-count incoming year," says retail consultant psychologist Flickinger III, managing administrator for Strategic Resources Group and a veteran Walmart watcher. "Same with Rite Aid. They've knocked discover quaternary of the top fivesome toy retailers, and are now feat after the last one standing, Toys "R" Us. Project Impact module be the catalyst to wipe discover a second round of national and regional retailers." (See 10 things to buy during the recession.)
Though that's bad news for some small businesses that can't compete, Walmart investors hit clamored for this push. Despite the company's consistently strong financial performance, Wall Street hasn't cheered Walmart's growth rates. During the 1990s, the company's have toll jumped 1,173%.
In this decade, it's downbound around 24% (Walmart's have closed at $51.74 per share on Sept. 3). "Walmart is under excruciating pressure from employees and frustrated institutional investors to get the have up," says Flickinger. (Read "Can Toys "R" Us Sell Toilet Paper?")
Many analysts believe that the store-operations background of new CEO Mike Duke module ready investors quite happy. Though the recession finally caught up to Walmart last quarter, when the company reportable a 1.2% modify in U.S. same-store sales, Walmart was a conformable succeeder during the worst days of the financial crisis, as frugal consumers traded down.
While most retailers are shutting downbound stores, Walmart has unsealed 52 Supercenters since Feb. 1. Joseph Feldman, retail analyst at Telsey Advisory Group, estimates that each accumulation costs Walmart between $25 and $30 million. In order to move the momentum that it has picked up during the retail recession, over the incoming fivesome eld the company plans to remodel 70% of its approximately 3,600 U.S. stores.
So what does a Project Impact accumulation look like? One time weekday salutation I toured a brand new, 210,000-sq.-ft. Walmart in West Deptford, N.J., with Lance De La Rosa, the company's Northeast general manager. "We've listened to our customers, and they want an easier shopping experience," says De La Rosa. "We've brightened up the stores and unsealed things up to make it more navigable."
One of the most noticeable changes is that Project Impact stores reshape Action Alley, the aisles where promotional items were pulled off the shelves and prominently displayed for shoppers. Those stacks both crowded the aisles and cut off range lines. Now, the aisles are all clear, and you can see most sections of the accumulation from some vantage point.
For example, standing on the crossway intersection of the auto-care and crafts areas, you can look straight ahead and see where shoes, pet care, groceries, the pharmacy and another areas are located. And the reduction toll tags are still at receptor level, so the value message doesn't get lost. (See how Americans are spending now.)
"They are same roads," De La Rosa says proudly. "And look around, the customers are using them. We've already gotten feedback most the wider, more breathable aisles. Our shoppers fuck them."
The layout is also smarter. "You can category of guess where everything is feat to be," says Sharon Tilotta, 73, a shopper in the West Deptford store. The pharmacy, pet foods, cosmetics and health and beauty sections are now conterminous to the groceries. In the past, groceries and these another sections were often at opposite ends of the store, which made it more difficult for someone hunting to pick up some quick consumables to get in and discover of Walmart.
"Under Project Impact, Walmart is providing more of a full supermarket experience within its walls," says Feldman. "The biggest complaint against them has ever been that it takes a long time to get through everything. This definitely improves efficiency."
De La Rosa also points discover the party-supply section. Favors, wedding decorations, cards and scrapbooks are all in one area. "In the past, these products would be in three different places," he says.
And although Walmart won't admit to targeting specific competitors - "We're just perception to what our customers want," De La Rosa says - it's clear that, under Project Impact, Walmart module make major plays in winnable categories.
The pharmacy, for example, has been pulled into the middle of the store, and its $4-prescriptions program has generated healthy buzz. With Circuit City discover of business, the electronics country has been beefed up. Walmart is also expanding its presence in crafts. Sales at Michael's Stores, the country's maximal specialty arts-and-crafts retailers, hit sagged, and Walmart sees an opportunity.
Stores are chock-full of scrapbooking material, baskets and yarns. "Look, they're selling the clog that accounts for 80% of Michael's business, at 20% of the space," says Flickinger. "It's very hard for some company to compete with that." (Read "That Viral Thing: People of Walmart.")
Apparel, one of Target's traditional strengths, gets a prominent position at the center. The color palettes of the shirts and dresses are brighter and more appealing than they've been in the past. "Walmart has figured discover fashion for the first time in 47 years," Flickinger says. "They've gone from a D to an A-minus." Briefs and underwear hit been shuttled to the back. "That's a smart move," Flickinger says. "People know to become to Walmart for the commodity clothing.
Now, they hit to walk time the higher margin, more fashionable merchandise to get what they need."
Of course, Project Impact isn't perfect. You'd think that if Walmart was feat to open a massive new accumulation with a cutting-edge layout, the company would at least put a sign up. In West Deptford, it's easy to miss the entrance to the Walmart - which is buried in the backwards of a parking lot - patch driving along a main thoroughfare.
And of course, customers module ever nitpick. One old shopper complained most a shortage of benches in the accumulation (she needed a rest). Another had a more esoteric, yet legitimate, gripe. "Their meat is leaky," says Jeff Winter, 30, a West Deptford shopper. "And instead of giving you a wet wipe to clean it off, they give you a dry towel. How's that feat to prevent E. coli or whatever?" (See which businesses are bucking the recession.)
What analysts rattling want to see from Project Impact, however, is a faster measure of implementation. "The biggest hurdle covering Walmart is the speed with which they can roll this out," says Feldman. As more Project Impact stores pop up, the existing stores appear worse by comparison.
For example, patch the merchandise at the Project Impact accumulation right of Philadelphia rattling speaks to that particular mart - there's tons of Eagles and Phillies gear - at one regular reduction accumulation right New York City, Minnesota Twins and Seattle Mariners pajama pants wasted absent on the racks.
There were plenty of associates staffing the electronics country at the Project Impact store; at the reduction store, fivesome frustrated shoppers waited in line for help from a customer-service rep. Soon, it was fireman to 10.
What most the friendly service? In West Deptford, the associates were sunny and bright. At the New Yorkâ€"area reduction store, not so much. "You'll notice we've been in the accumulation for two hours, and no one has even said hello to us," Flickinger says after he and I toured that store.
He's right, we weren't feeling some love. But if Project Impact keeps picking up momentum, some more Walmart salespeople, and shareholders, should be smiling.
By SEAN GREGORY / WEST DEPTFORD, N.J.
