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Wal-Mart: Home is Hopping

Wal-Mart is experiencing recent and notable successes in its enhanced home department — with specifically bedding and towels, among its best performing categories right now, the chain said last week during its lunchtime presentation at the Barclays 2009 Retail and Restaurant conference in New York.

"Walmart is winning in categories that would otherwise be counter-intuitive in this kind of economic crisis — categories or entire businesses like home, where we have registered very strong comps now for several months," said Eduardo Castro-Wright, vice-chairman, Wal-Mart Stores Inc.

And largely driving that growth, he continued, is an uptick in traffic — particularly among new customers who are also spurring growth in ticket.

"What's interesting about the traffic growth we're experiencing is that in many cases that traffic is also driving our ticket," he said. "So it's not only traffic that is healthy [but] also our mix that is improving." Castro-Wright said in the month of February, out of that big traffic growth, 17% of those customers were new customers.

"So new customers are driving some of this growth," he continued. "And how do we know they are new? Trust me, they are. We know because we have the data. Those new customers are buying more than the rest of the customers."

He said 27% of the growth in sales is being driven by new customers, whose average ticket is 40% higher than the ticket for the rest of the chain's customers.

"And by the way, those new customers are not changing their diet. So don't think they are buying more eggs," Castro-Wright elaborated. "They are actually shopping for other stuff at Walmart that they might have shopped for elsewhere before, and we know that because they have a higher income."

According to Wal-Mart's data, 55% of these households earn an annual incomes of more than $50,000.

"And more often than not, they are buying, we find, across the aisle," he continued. "They are considering Walmart for things they might not before but are now." Why? he asked.

"We have a very clear merchandise strategy," which is based on recent in-store category transformations that started in electronics and continued into the home business more recently.

In the past quarter, Wal-Mart's home business reported "a whopping 900 basis points higher comps" than its closest competitor, Castro-Wright said. This improvement, he reiterated, "has been driven by that clarity of offering that we have today in home, and the customer is giving us credit for that." This, despite the current market's conditions, which are not perceived as "friendly" to the home furnishings industry.

"It's a market that, because of the reduction of new homes sold and all the factors that we all know, has seen some significant declines," Castro-Wright said. "If I told you that our furniture category, for example, has grown double digits you might think that I've smoked something. But I have not. It is driven by the clarity of offerings, which are driving comps. The way we have taken brands and made them affordable, providing access to them, has built our authority to play there."

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