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A Changing Wal-Mart to Focus on Hispanic Market

Describing Wal-Mart as a company in "transformation," president and ceo Lee Scott said Hispanics represent a key opportunity for the retailer.

ROGERS, Ark. — Describing Wal-Mart as a company in “transformation,” president and chief executive officer H. Lee Scott said Wednesday that Hispanics, the fastest-growing U.S. population group, represent a leading business opportunity for the giant retailer.

Scott, in closing remarks at Wal-Mart’s two-day media conference here, reiterated that despite vocal opposition the $312 billion company is focusing on growing “as long as the customer allows us to grow.” He said Wal-Mart is readdressing its role in the national health care debate, environmental sustainability and workplace diversity.

“What is going on at Wal-Mart these days cannot be denied,” he said. “Wal-Mart is a company in transformation.”

The world’s biggest retailer has been criticized as an irresponsible employer that bullies communities, fails to provide adequate wages and health benefits to its hourly workers and wreaks havoc on the environment. Wal-Mart’s stock price has been lackluster through much of Scott’s tenure as ceo, although sales and earnings have gained. The retailer increased sales by $27 billion and net income by about $1 billion in fiscal 2005 alone.

Scott said that efforts to improve the quality and style of merchandise, while reducing inventory at U.S. stores, should pay dividends for the retailer this year, but that results could be dampened by record oil prices.

“Even with high fuel prices, we should have a good, stable year at Wal-Mart,” he said. “We are growing a rose, but not as big of a rose as it could be.”

Part of Wal-Mart’s reinvention, and future growth, is better serving Hispanics, whom Scott sees as a major constituency. Hispanics are projected to have $1 trillion, or 10 percent of the U.S. buying power by 2010 and $2 trillion by 2020.

“We are making a special effort to enhance our relationship with the Hispanic community,” Scott said. “Hispanics have a greater affinity for Wal-Mart than any other segment.…We are well positioned to capture a significant portion of this specific market.”

He noted that Wal-Mart has identified 1,300 of its 3,200 U.S. Wal-Mart stores as already serving a significant Hispanic customer base. Within that segment, a core group racked up sales gains of 9 percent last year, increases that outpace the performance of the average U.S. Wal-Mart.

The retailer already spends $45 million in Spanish-language advertising, but will ramp up marketing around pivotal events such as Cinco de Mayo and soccer’s World Cup, Scott said. Wal-Mart also sponsored the Latin Grammy Awards last year.

When the company developed Metro 7, the trendy apparel line that has exceeded sales expectations since its launch in October 2005, the Bentonville, Ark.-based team worked with apparel merchants at Wal-Mart de Mexico, which serves a high percentage of budget-conscious, fashion-forward Latina shoppers, said Karen Stuckey, senior vice president general merchandise manager.

Wal-Mart used the second day of the conference to tout environmental initiatives — from campaigns to convince customers to use compact fluorescent lightbulbs to the launch of No Boundaries organic cotton T-shirts for back-to-school.

“Wal-Mart’s first foray into organic clothing, George Baby Organic, hits stores in May.

Other changes are in store for No Boundaries. Wal-Mart will be “turning up the fashion dial and not playing it safe” for No Boundaries, said Deanah Baker, vice president and divisional merchandise manager for junior and activewear, during a presentation that included vignettes of summer merchandise.

The label, Wal-Mart’s biggest junior brand, will be better delineated as a destination point by being repositioned on a corner aisle in the apparel department, Baker said. George, the retailer’s contemporary-classic brand, already occupies the opposite corner of the department, a move that has improved the brand’s performance.

The retailer is also going to be using half-racks of merchandise to give its older, smaller discount stores a fashion injection.

In its Supercenter in South Rogers, Ark. — an upgraded store that’s served as prototype for many of its new Supercenters — Wal-Mart was testing Metro 7 plus-sized apparel and new George corner fixtures that featured full-length model shots of the outfit presented on the racks.