Wal-Mart offers strategy to move upscale

/ Source: The Associated Press

Under pressure to boost growth, Wal-Mart Stores Inc. is retooling its strategy to pry money from the hands of wealthier, more style-conscious customers by offering a broader array of more fashionable goods.

Wal-Mart Stores USA CEO Eduardo Castro-Wright said Tuesday that the world’s largest retailer, whose famous tag-line is “Always Low Prices,” would unveil an array of higher-priced lawn chairs and fluffy towels, as well as trendier clothing, including a new hip-hop brand for young males called Exsto.

The goal with Exsto, which will hit the shelves in July, is to mimic the success of Metro 7, which is targeted at young women and has scored well since its launch last year.

Other moves outlined by Castro-Wright, who spoke to about 70 journalists on the first of a two-day media conference, include reducing merchandise inventory to reduce clutter, and relocating key regional executives to the areas for which they are responsible, in order to better tailor stores to the communities they serve.

Wal-Mart held its first media conference last April under the twin pressures of sluggish sales growth and bad publicity. A year later, Wal-Mart is still struggling to regain the growth rates of years past. The company remains beset by organized critics, including labor unions.

But the company is hoping that a raft of initiatives, such as those outlined Tuesday, will revive consumer interest and refurbish its image, boosting sales and its stock price. On Tuesday, shares of Wal-Mart rose 58 cents to close at $46.40 on the New York Stock Exchange, in the middle of its 52-week range of $42.33-$50.87.

So far this fiscal year, Wal-Mart has averaged a modest 3.1 percent in same-store sales growth, or sales at stores opened at least a year. Same-store sales are considered the best indicator of a retailer’s health.

Wal-Mart executives also touched on the hot-button labor issue of employee health care.

Susan Chambers, the executive vice president in charge of human resources, said improvements announced previously in health care plans would allow more employees to enroll. The company Monday said it would extend the availability of its lowest premium plan to 50 percent of employees from 10 percent now and shorten the waiting period for part-time staff to enroll, from two years to one.

The lowest cost plan, with a premium of $11 a month, covers the first three doctor visits before an annual deductible of $1,000 for an individual or $3,000 for a family kicks in.

Arkansas Gov. Mike Huckabee, who opened the conference, said he was a strong supporter of Wal-Mart and defended the efforts it is making to expand health care coverage. Besides the low-cost plan, Wal-Mart has extended coverage to the children of part-time staff and launched a $23 a month premium plan for areas that do not have the $11 plan.

“Wal-Mart makes available insurance to 81 percent of its employees. In the retail world that average is 20 percentage points lower at 61 percent. That’s pretty impressive,” Huckabee said.

Chief Executive Lee Scott will close the proceedings Wednesday with a speech titled “Change, Growth and Success for Wal-Mart and the Working Families We Serve.”

On Tuesday, company executives said they were trying to understand their customer even better and have segmented them into three different groups — the loyalist, the selective shopper and the skeptic.

The loyalist shopper shops at Wal-Mart stores 63 times a year, and the skeptic much less so. But the company’s biggest focus is the selective shopper, who shops 46 times a year and buys only basic goods, according to John Fleming, executive vice president of marketing.

As part of its merchandising efforts, Wal-Mart is improving the baby departments, offering organic cotton baby clothes under its store brand George. In January, the company relaunched its furniture departments to offer more compelling merchandise.

WakeUpWalMart.com, a union backed group, sought to steal some of Wal-Mart’s thunder before the meeting. The group brought in civil rights activist Rev. Markel Hutchins, from Atlanta, Ga., along with several former and current workers of Wal-Mart to blast the company for what they believe are meager wages and health care benefits.

Wal-Mart’s backers shot back. Working Families for Wal-Mart, a company-funded group of community leaders headed by former Atlanta mayor and United Nations ambassador Andrew Young, held its own news conference where it defended Wal-Mart’s role in job creation and cutting prices for working families.