Wal-Mart makes bold moves; new merchandising initiatives under way

Discount Store News, June 23, 1997

FAYETTEVILLE, ARK. -- Major changes are underway in Wal-Mart's merchandising strategy as the retailer looks for ways to make good its stated goal of achieving annual sales of $200 billion. The changes are in keeping with a renewed emphasis on experimentation being spearheaded by executive vice president of merchandising Lee Scott.

"We are not playing it safe, we are playing to win," Scott said referring to new merchandising initiatives.

Winning in this case means merchandising products in ways that customers use them as opposed to way retailers buy them, according to Scott, and cross merchandising is a crucial piece of that strategy. Since Wal-Mart's stores are large, "if you don't cross-merchandise in a big store, people will never know about it," Scott said.

The many changes highlighted by Scott at the recent annual meeting and visible at various stores include:

* Sporting goods department. The next evolution of Wal-Mart's sporting goods strategy can be seen in the Bentonville, Ark., supercenter across the street from headquarters. The new layout is a radical departure from past strategies. According to Scott, the new layout will be rolled out to other stores later this year and early next. "It's a very different sporting goods department that our customers will find attractive," Scott said.

What makes it so different is the location, signage and configuration of gondolas. First of all, the department is located on the inside perimeter of the racetrack where it can be easily spotted by customers. All of the fitness equipment has been placed on the floor in the center of the department, new revolving gun displays have been added as well as new displays for fishing rods. Large overhead banner signs, which identify the department as "sports country," have been suspended from the ceiling while generic gondola topping category signs have been replaced with brand signs.

* Vitamins/supplements. The One Source nutritional supplement stores in Bedford, Texas and St. Louis represent Wal-Mart's newest store-within-a-store concept. The recently opened units offer what can best described as a GNC-type of product mix, including such products as health related books and magazines. The opening of One Source stores within the two Wal-Mart units is in addition to an already substantial nutritional product mix merchandised near the pharmacy department.

"Vitamins and minerals is the fastest growing area of our stores," Scott said. Wal-Mart's proprietary One Source multivitamin nutritional supplement was launched last year and was immediately popular. It achieved twice the sales volume of the national brand and contributed $12 million in profit, according to Dave Dible, executive vice president of the specialty division.

* Apparel. Different adjacencies, fixtures and new carpeting in the soft lines area, unveiled in the Bentonville supercenter, will be rolled out nationwide for the Back-to-School season. The layout, with its more impactful displays, makes the department easier to shop. The carpeting is thicker, more attractive and wear-resistant than the familiar gray carpeting found in most stores. It is also designed to hide stains since it was developed after examining the various hues of carpet stains to produce a carpet with a bluish gray color and swirling strips of multicolored ribbons.

* Photo. As an example of Scott's commitment to bring together products as customers buy them, all photo-related products (frames, cases, film, point and shoots and video cameras) are being merchandised around the one-hour photo center, which was separated from the electronics bullpen. Photo recently became Wal-Mart's sixth specialty division.

Wal-Mart has also revamped its stationery department to focus on home office type products, housewares with an emphasis on cookware, and a new paint department prototype with new adjacencies is being tested.

Other initatives include:

* Elevating jewelry display cases by four inches to make product viewing easier for customers, accessibility easier for associates and to simplify replenishment;

* Encouraging vendors to develop more pre-pack displays like prepacks being tested for travel size products. The boxes are simply cut open and placed on shelves, minimizing the amount of time it takes an associate to refill a fast-turning display loaded with so many small skus.

The Bentonville supercenter also has a hearing center complete with a testing facility, which Wal-Mart is considering rolling out to other stores.

Wal-Mart is also back in the gas business with completely automated self-service gas stations installed at stores in Lewiston, Idaho, Rogers, Ark., Tulsa, Okla., and the suburban Denver community of Highlands Ranch. Wal-Mart partnered with Gary-Williams Energy Corp. to operate pay-at-the-pump gas stations in the parking lots of those stores. The four-store test is expected to be expanded and may also include Sam's Clubs. Wal-Mart said it will promote gas four to six cents lower than the average price of a particular market.