There was an interesting article in the WSJ yesterday titled: “Wal-Mart’s Fashion Faux Pas: Soft Apparel Sales.” We often hear some version of the now familiar old refrain, Wal-Mart is killing everybody… don’t even try to compete with them. We hear this from all levels of management at both large and small companies. There seems to be a general sense of paranoia when it comes to Wal-Mart. Wal-Mart is a tough competitor for sure, and overall a very well run company, but they are not infallible or invincible. They often make mistakes and they are also not very adept at serving certain market segments.
Here are some notes from the WSJ article. Same store sales at Wal-Mart rose only 1.3% in September, and apparel sales were a big reason why. And this is despite a year long push of advertising and promotion, and even opening a New York City fashion office. And lest you think this is due to a slow retail month take note that the Lazard Retail Index for September rose 8.8%. Meanwhile, Target continues to pound away at Wal-Mart, beating them on same store sales 12 of the past 13 months.
Some interesting competitive points to ponder….Wal-Mart store managers are tightly managing labor just to run the store, so implementing a new display often does not get a high priority. Company merchandisers often do not have the clout to push change back up to the corporate level. Don’t make the mistake of thinking the simple act of opening an office in the fashion district will give you the insight you need. The Wal-Mart brand is equated with convenience and value, not necessarily quality or fashion. Wal-Mart is spending significant money to update 1,800 of their 3,800 stores, suggesting they believe the older stores do not perform as well.
If you are competing with Wal-Mart, and isn’t everyone, spend some time considering your position in the market as compared to Wal-Mart. If you look hard enough you are sure to find some holes, and those are your big opportunities. In fact, two retailers I’ve spoken to this week purposely seek out Wal-Mart locations when selecting new sites to open a new store. Why? Because Wal-Mart creates a lot of foot traffic and they want to be right in the middle of it. That’s good competitive and strategic analysis… and its paying off!