Walmart "back to basics" in merchandise and price points

Retail Editor 3, Marvin Lazaro, October 12, 2011

Bentonville, Ark. - Three words sum up Walmart's approach going forward: back to basics.

At the mega-retailer's 18th Annual Meeting for the Investor Community event today, Walmart U.S.'s chief merchandising officer Duncan Mac Naughton cited a boost in basics across the board - merchandise assortment, price and in-store message - as one of Walmart U.S.'s tenets in its effort to improve business and streamline expenses.

Home will follow the same path as apparel, which was recently revamped to center on core necessities like socks, underwear, jeans and tops. Walmart U.S.'s home assortment and price makeover is "focused on basics and value," Mac Naughton said, "and these changes are real time.

"What you will notice is a focus on improved quality and a focus on basics," he continued. "Our value here is unmatched and resonates well with customers. They come to us for basics in home because that is what we are good at."

Home is also being given a "simplified in-store presentation." The assortment's key items include bedding, bath, candles, floor care, outdoor living and, especially, small appliances, he added.

Mac Naughton offered a more complete outline on Walmart U.S.'s merchandising improvement plan - a $2 billion, self-funded effort, noted Walmart U.S. president and ceo Bill Simon - that has already begun.

At the top is price, which represents "a big initiative," Simon said. Walmart U.S. is focused on reducing price points throughout the store in response to shoppers' ongoing, and in some cases, increasingly cautious approach to spending. At the onset of this effort, the retailer is focused on cutting tickets "in areas with a reasonable amount of price elasticity, so that when we make the change our gross margin dollars will go up," Simon said.

The price reduction strategy is long-term and more encompassing. Walmart is already two years into the effort and plans to continue working on it in all areas of the store.

With the price reduction comes "looking to traffic-driving categories and areas of the store that will show price and allow customers to come in more frequently," he added.


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