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Walmart’s Duke details consumer outlook, company initiatives

New York – Wal-Mart Stores Inc. president and ceo Mike Duke said he is “moving faster” and more aggressively on several initiatives, such as sustainability and productivity enhancement, that were implemented by his predecessor, Lee Scott.

Speaking to analysts during his presentation at the Goldman Sachs Retailing Conference here today, Duke also offered updates on the retailer’s growing traffic, consumer shopping trends, and his outlook for the coming holiday season.

Wal-Mart’s four core initiatives underway, Duke outlined, are:

-- Re-energizing the productivity loop, which includes driving down expenses, increasing productivity, lowering SG&A and operating expenses, buying and flowing product more efficiently, and “giving the benefits and savings to our customers because that brings more traffic into our stores, which increases sales per square foot and improves productivity, and the list goes on and on;”

-- Continue “smart, aggressive” growth, which includes further improving capital efficiencies;

-- Expanding internationally by, among other efforts, leveraging advancements in marketing learned in the U.S. to other markets;

-- “Obsessing” about the customer, an initiatives that Duke said is “a focus for me, personally, and the company. It’s not just about focusing on the customer but really being obsessed with knowing and understanding the customer.”

Other key points for Walmart include sustainability, an effort first established by Scott several years ago.

“Lee kicked this off, and we have seen so much momentum,” Duke said. “We’re getting the benefit and the customer is getting the benefit; our relationships with the government and communities have improved. So I would say…let’s move even faster.”

Duke reiterated what the company has been reporting for the past several months – customer traffic is on the rise, and Walmart is increasingly attracting new shoppers who fall under the middle- to higher-end income brackets.

“Traffic is something that we think is very, very important, and the increase in traffic at times like this is something we pay a great deal of attention to,” Duke said. “We’re pleased to be keeping the customers we had but also expanding our base of customers across all income levels because today everyone wants to shop smarter and we believe we offer that opportunity.”

Elaborating, he said shoppers’ strategies are changing – likely for the long term. They want to spend on “something that lasts and makes them feel good about their repurchase.”

Consumers are also waiting longer to make their purchases; this is demonstrated in the recent boost in those shopping on the first of each month after midnight. “Almost like a formula, there is a drop-off in sales at the end of the month, and then a spike in sales on the first and second of the month,” he explained. “It shows that over these past few quarters, our customers have been under strain. But now the customer is smarter and enjoys being smarter about purchasing even during difficult times and this will continue on into the future.”

These “new realities,” he continued, “I think are the new normal. This is not something that will change when the economy gets better. And we in retailing will want to anticipate this.”

Looking to the approaching holiday season, Duke said he expects shoppers to be savvier about what and when they shop, and to continue deferring their spending rather than buying in advance in anticipation of a future need, as many consumers typically did before the recession.

“It will be a late Christmas, one where value is important,” he continued. “The customer will use every bit of intelligence – price comparisons, shopping on the internet – to make decisions. But the customer will want quality, too, and I think we’re in a great position to meet the customer’s needs.”

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