Wal-Mart announces new segmentation strategy
September 14, 2006
DeKALB | In response to recent losses, Wal-Mart is targeting consumers.
Wal-Mart announced last Thursday it will revamp its current product line in order to cater to six specific groups of customers.
The key groups are Hispanics, African-Americans, “empty-nesters/bloomers” and affluent, suburban and rural shoppers.
The new strategy, called segmentation, has been announced as a revival for the mega-chain. Recently, the corporation suffered its first quarterly drop in profits and has fallen behind rivals like Target. According to its quarterly reports, Wal-Mart’s net income fell 11 percent from 2005 to 2006. While Target’s gross sales were lower than Wal-Mart’s, Target experienced a 12 percent net growth from June 2005 to June 2006.
The segmentation follows months of new initiatives from Wal-Mart to make sure each store is better tailored to serve its locale and lure more shoppers.
“Stores will be getting a more specific mix of products and layout to appeal to one of the six target groups, based on what market research showed was the best approach for that location,” said Eduardo Castro-Wright, president and chief executive of Wal-Mart.
“In the Wal-Mart in Evergreen Park, IL, the customer base is 90 percent African-Americans,” said Julie Hillery, Kohl’s professor of retailing and merchandising. “Wal-Mart has altered their merchandise mix there and now offers more health and beauty items and ethnic food products. Since altering the product mix at this store, Wal-Mart has experienced an increase in sales.”
Hillery describes the new strategy as a “store of the community.”
“Wal-Mart has always recognized that their product mix in a college town — such as DeKalb — should be altered to reflect the needs of college students.” Hillery said.
If Wal-Mart would offer new products aimed toward college students, Janei Thomas, a junior vocal performance major, said she would shop there more often.
“I’m still struggling with school and work,” Thomas said. “Cheaper [products] would be nice.”
However, critics of Wal-Mart may not be easily swayed by the store’s new items.
“I have no faith in Wal-Mart whatsoever,” said Nick Berardi, a senior English and math education double major.
Tad Eggleston, a senior math education major, echoed Berardi’s views.
“I don’t go there for political reasons,” Eggleston said.
The Associated Press contributed to this article.
Katie Trusk is a City Reporter for the Northern Star.