Balancing between commodity and style - Wal-Mart - Merchandising: home goods & housewares

DSN Retailing Today, Jan 26, 2004 by Mike Duff

The year 2004 will see Wal-Mart build on initiatives it has put in place to boost its position in the home goods market. After re-theming home a couple of years ago with new signage to distinguish the department, the company began to revitalize segments with new presentations, a process that may take on critical momentum in the year ahead.

Clearly, Wal-Mart wants to do more in home and, in many ways, has. Whether it was the introduction of pima cotton blends in domestics, wood-look display racks in tabletop or a new merchandising plan in candles, Wal-Mart recognizes that it has opportunities in the home department.

Home was a consistent strong point for retailers during the economic downturn.

Yet, Wal-Mart probably doesn't come to mind as the foremost beneficiary of surging home goods sales. A close assessment, though, demonstrates that the tough economic times brought the market closer to Wal-Mart. Specialists and broadliners, including mid-tier operators, dropped opening price points in many categories over the past several years to strengthen their position versus discount stores and off-pricers. Low-price providers, over that time, procured better goods as manufacturing went offshore and overseas factories began to provide improved products.

Today, Wal-Mart is poised to make significant inroads in even more product areas, but that is only part of the story. The company is taking a close look at its opportunities in home goods and that could prompt basic changes.

Compared to its competitors, Wal-Mart's merchandising is behind the times. Constricted and confusing, the old discount store stack-it-high-and-let-it-fly merchandising has seen its day pass. Wal-Mart's product selection has become more fashionable and has developed a higher quality cachet, but its merchandising hasn't. Even its discount store competitors have made improvements in home department merchandising that Wal-Mart has yet to match.

Obviously, vendors don't believe that situation will continue. Indeed, incremental changes that the retailer has imposed, such as adding more attractive fixtures for tabletop, but also developing a more product- and information-intensive merchandising system for electric floor care and, perhaps most demonstrably, bringing RTA furniture down onto the sales floor, indicate that Wal-Mart has more comprehensive changes in store.

Yet another example is the candle and fragrance area. Originally a limited selection, Wal-Mart recently realigned the department and thoroughly remerchandised it in a closely planogramed presentation that mixes fashion and basic items. It then moved the whole presentation out of a standard aisle and put it on the power aisle where customers couldn't help but notice that Wal-Mart sells candles.

In domestics, Wal-Mart has rotated Spring-Maid and its own Jubilee product into the mix such that one clears as the other rolls out, keeping the presentation fresh and dynamic while using only two core brands. It has added Egyptian, Pima and Supima products, but in blends that keep costs down and constructions tough. By doing so, it has been able to provide the premium constructions customers have come to embrace but at price points substantially below $5.

With all the thought Wal-Mart has put into its home business in recent years, one can't help but realize that its store-level merchandising will catch up soon. Such a change will create its share of challenges, but it will put display on par with product in an environment that will still be more inviting to consumers.