By  on March 10, 2006

NEW YORK — Wal-Mart has had a taste of fashion with a capital "F," and it wants more.

At Bear Stearns' 12th annual retail conference here, Stephen Quinn, Wal-Mart's senior vice president of marketing, said the company has its eyes trained on the consumer who has made its Metro 7 brand a success and is developing additional fashion products for her.

Quinn spoke on Wednesday. Bear Stearns provided a transcript of highlights of the conference, which was closed to the press.

Calling the Metro 7 introduction a "very important experiment to offer fashion-forward merchandise," Quinn said, "We found that if you make the fashion apparel available to them, they will buy it."

Wal-Mart plans to continue expanding Metro 7 into complementary product categories, such as shoes and jewelry. Separately, it is upgrading its basic apparel and introducing organic clothing. The retail giant is also working on new marketing initiatives, including movie and television character tie-ins.

"Later this spring, we believe the company will announce additional initiatives in its fashion offerings," said Bear Stearns retail analyst Christine Augustine. "In men's, we believe the company could announce a designer line, perhaps even a collection by Tommy Hilfiger."

Wal-Mart has been testing a line of urban apparel in one of its Chicago stores, which has been successful, Augustine said.

Some apparel basics categories at Wal-Mart command a 40 to 50 percent share of all U.S. sales and the retailer wants even more. It's working to improve quality to make basics attractive to a wider audience by sourcing more high-end fibers, such as silk. "We have a ton of cashmere," a spokeswoman said.

There are indications Wal-Mart's customer is getting more sophisticated. Quinn said the company is introducing organic apparel and food in response to consumer demand for organic products. Wal-Mart is rolling out organic cotton baby clothes by George in June. "We actually purchased an entire farm crop of organic cotton," he said. The retailer will have about 400 stockkeeping units of organic food on shelves by summer.

"We are going to be expanding beyond baby clothes into other organic apparel," Quinn said.Wal-Mart is targeting "selective" shoppers, or those who only buy consumables, with a new marketing campaign, "Beyond the Basics," aimed at encouraging them to discover upgraded merchandise throughout the store. Wal-Mart even has its eye on "skeptics." Quinn said the retailer hopes to catch their attention "with our change in marketing and merchandising and store operations."

The retailer will try to make itself more attractive to consumers with mini remodels of 1,800 stores over the next 18 months. The effort will begin in the New York metropolitan area with electronics, apparel, home departments and bathrooms to be redesigned. Quinn said the stores will have a graphic look and feel with less signage.

Meanwhile, the Web site is being redesigned for greater functionality and to make it more attractive overall, he said.

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