PRINT THIS STORY:

CHANGE TEXT SIZE:

Wal-Mart hones fashion sense to appeal to the wealthy

By Brannon Boswell

Wal-Mart Stores CEO H. Lee Scott Jr. told investors at a conference in Boston about a billionaire who complained that his wife cannot stay out of the local Wal-Mart.

“We have people from all walks of life shopping our stores,” Scott said. Wal-Mart wants to shatter the myth that all its shoppers are low-income. The problem is not that wealthier people are not visiting Wal-Mart. They are. It is that they do not do all their shopping there.

“The less you have, the more broadly you shop a Wal-Mart store,” Scott said. Conversely, he added, consumers higher on the income ladder do buy such items as shampoo, toilet paper and dishwashing liquid, but no home or apparel goods. “We want to convert that person into someone who shops the whole store,” he said. Wal-Mart wants to cozy up to these people and get them to stay longer and buy more than just cleaning supplies and personal care products. To do that, the world’s largest retailer will need to shed whatever image has kept it from achieving the “cheap but chic” buzz of rival Target’s furniture and apparel businesses, observers say.

So how does the company plan to get higher-income shoppers to spread their wealth around the store? By becoming more fashionable in product and presentation and by selling brand names at discounts, Scott said.

Wal-Mart has moved its line of trendy, British-designed apparel, George, to prominent, front-of-store boutique areas with simulated-wood floors. The idea is to create a more sophisticated environment for these clothes, which are made from heavier fabrics and bear higher price tags than most of Wal-Mart’s other apparel. George apparel is more like that sold in specialty shops such as Gap and Ann Taylor.

Wal-Mart brought George to the U.S. last fall, after acquiring the brand through its $10 billion purchase of the Asda department store chain in 1999. Asda introduced George as a house brand in 1990, and it has since become one of the top-selling apparel names in the U.K.

A department store can take an item of clothing, Scott said, mark it down from $35 to $20, and make it look like the best deal on earth to a shopper. But in Wal-Mart’s apparel departments, “they’d mark the same piece of clothing down to $5 and make it look like it was worth $2.” The dismal surroundings dampened sales, so those new simulated-wood floors are important, he said, because the carpets in the older stores are better for hiding stains than for complementing clothes.

When it comes to store prices, the ceiling may be higher than most observers think Wal-Mart customers will pay, said Scott. Even such high-price items as $600 camcorders and $957 digital cameras sell well at Wal-Mart if the price is lower than at other retailers, he said.

Even as it woos the rich, don’t expect Wal-Mart to abandon its core consumer — some of whom are among the poorest people in America. Scott said the high and low ends can co-exist and even complement each other. Recently introduced 400-thread-count bedsheets have come to make up 20 percent of Wal-Mart’s total sheet sales. At the same time, he said, the most basic sheets — muslin and 200-thread-count — continue to grow in sales volume.

“You can keep the opening price-point consumer,” Scott said, noting that some less-affluent consumers are trading up to the more expensive apparel.