After some neglect, Walmart US catering to core customer

Retail Editor 8, October 13, 2010

Bentonville, Ark. - Although shopping by higher-end households is holding up, Walmart US is losing share among low- and middle-income shoppers and will turn its attention to the core customer as it looks to drive top-line sales.

"We're going to talk today about growth, top-line growth, and we see it coming from three places - our base core business, grow access to EDLP [every-day-low-price] through new store growth, and expand multi-channel," said Walmart US ceo Bill Simon during the company's annual analyst presentation today.

At the crux is Walmart's phased assortment project, which calls for: adding back some previously deleted items to assortments; identifying modular layouts that don't reflect the way consumers make purchasing decisions; analyzing departmental space impacts due to project impact stores; and product availability (shelf availability).

Within that realm is Action Alley, which returned this in July - one month after Bill Simon became Walmart U.S.'s ceo and president.

"Promotional intensity has returned with Action Alley," Simon said.

Originally, Walmart brought it back with a heavy concentration on snacks and beverages. "Since then, we've seen a 65 basis point improvement in those items since before Action Alley was bright back [in July]."

Simon explained that at Walmart brings back skus and gets back into Action Alley, "we are seeing a very slight bump in inventory," such as the recent 4% increase. He noted inventory is still lower than in 2007 and said the company's goal is to grow inventory at half the rate of sales.

"We will add some [inventory], but we're not going back to where we were," he continued. "But we do have to support this initiative with some inventory."

Looking to the fourth quarter and holiday, Walmart U.S. expects to see improvements for the period. Walmart's holiday offering will be tailored to serve its core $50,000-$70,000 annual income customers, many of whom are unemployed and have seen their unemployment benefits run out, Simon noted.

"This holiday season will be very, very strong price focus - we are ready for that. The priority will be on kids, and consumers will be focused more on needs than wants," he said. "We are ready to deliver, especially to our core customer."

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