Mar 24, 2006

New Wal-Mart Downgrades Green GoodsSource: Various

Wal-Mart has decided to start targeting a more upscale demographic. It won’t stock guns, but it will have big-screen TVs, fine jewelry and a sushi bar. Additionally, there will be wider aisles, wooden floors and a Starbucks complete with Wi-Fi. The new Wal-Mart Supercenter, opening in Plano, Texas, also will have a scaled-down lawn and garden section.

The store is not trying to alienate any current customers with fancy merchandise and higher prices; Wal-Mart hopes the additions will attract a new class of customers. The sections directed toward do-it-yourselfers, such as automotive equipment and tools, will be cut back. Customers will have a harder time finding power tools and lawn and garden supplies on the shelves.

But growers shouldn’t worry that this test store will push them to do business with other retailers, said Stan Pohmer, president of Pohmer Consulting Group in Minnetonka, Minn. He does not give much credence to the idea that Wal-Mart will expand the Plano prototype nationally. It is hard to retrofit new ideas into existing stores, he said, and it would take time to change existing consumer purchasing habits at new stores.

Wal-Mart is hoping the new store may change the amount of shopping people do at Target. One of Wal-Mart’s biggest competitors, Target attracts a more “upscale” customer and, in some consumers’ eyes, signifies a stylishness Wal-Mart doesn’t have. Target doesn’t leave much room on its store shelves for lawn and garden supplies, and soon the new Wal-Mart Supercenter won’t, either.

“Stores don’t have rubber walls,” Pohmer said. “Something’s got to give.” But some of Wal-Mart’s locations could pose a risk to the feasibility of the Plano store. “There aren’t a lot of Planos out there,” Pohmer said. “If you’re in the middle of a rural community, $500 bottles of wine aren’t going to cut it.”

Wal-Mart claims it has no intention of launching upscale Supercenters around the country. The Plano store will merely test how consumers spend at a Wal-Mart filled with more expensive electronics and clothing.

Growers should take a wait-and-see attitude toward the store’s development, Pohmer said. They should be mindful of retail developments but not jump to conclusions about an upscale store opening up on every corner.

“[Growers] have to continue to protect their turf by doing the best job they can to ensure the (lawn and garden) department is profitable.”

This means growers should continue to think about the current big box consumer. If the store is profitable and the customer is happy, the grower will see business thrive.