The Wal-Mart World: Giant Reaches Out With Banks, C-Stores
NEW YORK — Like a James Bond character who will stop at nothing short of global hegemony, Wal-Mart seemingly wants to rule the world. The $218 billion Bentonville, Ark.-giant has been gobbling up its discount competitors’ market share,...
NEW YORK — Like a James Bond character who will stop at nothing short of global hegemony, Wal-Mart seemingly wants to rule the world. The $218 billion Bentonville, Ark.-giant has been gobbling up its discount competitors’ market share, launching new businesses in industries outside its traditional realm of expertise and developing a raft of retail concepts that leaves no format unturned.
In addition to SuperCenters, Neighborhood Markets and Sam’s Clubs, the company is testing or developing adrive-thru supermarket, a dollar store concept called Hey Buck! and a reinvented convenience store prototype, where apparel could be as much a part of the product mix as soft drinks and chewing gum. Rumors of a department store are also afoot.
Wal-Mart reportedly is exploring at least 10 distinct store formats and more than 20 retail categories. And the trials are earth shattering, given the retailer’s success in beating well-entrenched category killers at their own game: Wal-Mart sells more DVDs than Blockbuster, it’s the number-one toy retailer, followed by Toys R Us, and the largest and most influential grocery retailer.
"Who would have thought back in 1993 when the SuperCenter was just taking off, that Wal-Mart would be a threat to specialty channels such as Sports Authority, Office Max and Sam Goody?" said Therese Byrne, who assesses the operating businesses of retailers and publishes Retail Maxim. "Wherever the boys from Bentonville go, there’s bound to be roadkill."
"With their international operations and their penchant to test, I think anything is possible," said Robert Buchanan, a retail analyst at A.G. Edwards. "They’ve been very innovative over the years."
Wal-Mart doesn’t announce retail concepts under development. Rather, it quietly tests them before subjecting itself to Wall Street and the public’s scrutiny. Byrne believes convenience stores will be the company’s latest growth vehicle, with such elements as fresh produce and discounted meats, items from the George clothing line, a pharmaceutical kiosk, a version of Wal-Mart’s new Personal Business Center with financial, postal and copying services, and a gas station.
There are now more than 700 gas stations at SuperCenters and Sam’s Clubs and Wal-Mart operates its own gas/refining business in the Midwest, a company spokesman said."The convenience store leverages the routine of shopping for convenience-type goods," said Byrne. "It’s in the direct path of America’s SUV culture. Even Starbucks has plans to roll out drive-thru formats in rural America and on highways, recognizing the ‘seat belt’ notion of convenience."
While the majority of Wal-Mart’s customers earn between $25,000 to $50,000 annually, the company clearly wants to straddle two income groups. Upgrades in store appearance have been bringing in new shoppers, particularly from the more upscale Target demographic.
Byrne believes Wal-Mart plans to target households with incomes of more than $75,000, with a department store format. Although Wal-Mart has denied that it has department store plans in the U.S., pieces of the puzzle may be tested overseas, where some of the company’s innovations originate. For example, the George concept was imported from Wal-Mart’s U.K. supermarket subsidiary Asda, where it started 12 years ago.
Wal-Mart International is testing new shoe department merchandising and online home delivery services. In Mexico, Wal-Mart is opening restaurants and department stores — some as small as 10,000 square feet, according to the company’s 2002 annual report.
Wal-Mart is even adopting the language of department stores. For example, in its "store-within-a-store concept, departments are merchandised as if they were separate shops under one roof," the report said.
Buchanan isn’t convinced. "I would be shocked to see them go into conventional department-store retailing any time soon," he said. "There is so much potential in SuperCenters." Still, he said Wal-Mart needs to find new areas. "That’s why they’re expanding into electronics and used cars."
Since early summer, Wal-Mart has been quietly testing the idea of selling used cars in parking lots or land adjacent to five stores in Houston. That way, customers can buy a car and have it serviced at Wal-Mart lube shops in one fell swoop. The car lots are leased operations and owned by Asbury Co. in Stamford, Conn.
When it comes to wooing upscale customers, Wal-Mart has often demurred. "We understand who our customers are and what they’re looking for in apparel — it’s value and we have to stay focused on that," Thomas Coughlin, president and chief executive of the Wal-Mart division, told attendees at its annual analyst meeting in October. He also stressed that being on trend doesn’t contradict Wal-Mart’s low-cost philosophy.But Wal-Mart doth protest too much. The company operates a store in the monied Dallas suburb of Plano, where it is surrounded by homes worth $700,000 to $1 million. Its relentless pursuit of a site in Dallas’ Love Field/Greenway Park neighborhood — known for its old money — is an example of the company’s desire to sell to upscale customers. The bid was rejected last week by the 15-district Dallas City Council (see story, this page).
"Wal-Mart is trying to get a bigger average transaction at its SuperCenters," said Buchanan. "There’s a huge opportunity to hit the floor with a modicum of fashion content and better quality."
Sophisticated home goods such as stainless steel kitchen appliances with a brushed chrome look were paraded at the company’s analysts meeting in Bentonville last month, where a fashion show was also held.
"They showed some new trends," said Buchanan. "For women, they were stressing Bohemian looks and street looks to establish that they’re at least aware of what’s going on in fashion and will try to interpret that for their customers."
George, the U.K. line intended to bring credibility to Wal-Mart’s fashion image and that already has sales of $1.6 billion a year, is just an opening salvo."George is breaking the ice with looks like sueded finishes in tops," he said."Wal-Mart could develop some of its own more modern labels."
Other indicators of Wal-Mart’s upwardly mobile intentions include locating stores on shopping mall pads; stocking gourmet foods in its SuperCenters; producing its own private label wine, Alcott Ridge; vastly expanding its home furnishings area to mimic a small Bed, Bath and Beyond, and selling $5,000-18-karat gold and diamond rings and expensive electronic items such as digital cameras and pricey big-screen televisions.
A new Wal-Mart realty division has been formed to sell land adjacent to its SuperCenters and Sam’s Clubs, and the company said the concept may be extended to include residential real estate transactions. Wal-Mart has been buying a few small regional banks, but other attempts have been blocked with opponents arguing that it will use the banks to build a nationwide network of branches offering personal and business loans and credit card services, wiping out small lenders.Then there’s Wal-Mart’s increasingly sophisticated micromerchandising. A Wal-Mart spokesman told WWD that most future Wal-Mart stores, including those in the U.S., will be merchandised and highly tailored to individual communities.
"Each community has different needs," said the spokesman, citing a SuperCenter in Alferetta, Ga., near a wealthy neighborhood, which carries trendy apparel and home furnishings and gourmet food. A store in Cleveland caters to upscale sportsmen. Conversely, a unit store in Gallup, N.M., with a Native American and Latino consumer base, stocks products indigenous to those cultures.
In an effort to appeal to members of different economic strata, the company also experiments with store design. For example, a store in Pinella Lakes, Fla. is geared to nearby trailer-park residents with its sidewalks connecting to the park and parking areas for golf carts and bicycles.
For all its experiments, Buchanan believes that "at the end of the day, Wal-Mart tends to do better with the big box than the small box. They throw a lot of stuff at the wall and see what sticks."
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast