Wednesday, March 22, 2006

Upscale Wal-Mart?

I'm going to start out by going ahead and telling you that I am not a fan of Wal-Mart. I get most of my groceries there because they are about 5 miles closer than the next nearest grocery store (who I do still go to on occasion for their excellent meat deals) and their name brand diaper prices are ususally the best around. Other than that, I'd rather go elsewhere.

So Wal-Mart has done a pretty good job of getting every penny they can out of lower and middle class America. They're now setting their sites on upscale shoppers by offering fancy wine, high end electronics, and a sushi bar among other things at a test site out in Plano, TX (which has become quite the upscale area in Dallas from what I hear).

This plan really shows to me that Wal-Mart has absolutely no idea why the upscale shopper goes to Target instead. Sure Target has some decent name designer clothing but they don't have much along the lines of high-end electronics and they sure don't have a sushi bar. What do they have then? Target has a better shopping experience. Target is often less crowded and is more accessible with a shopping cart. Most importantly though, people can actaully get through the checkout line at Target in a reasonable fashion. This is partially due to Target's policy of opening a new checkout lane whenever more than three people are waiting in line. I can't count the number of times I've been into Wal-Mart when there is the one regular lane open and the four self checkout stations full of customers who have absolutely no idea how to do self checkout. I've also noticed that Target's cashiers are much more likely to fetch a supervisor for help when they encounter something they cannot immedeately handle (like incorrect price ringing up) but that may be anecdotal evidence on my part and not actually company policy.

This brings me to perhaps the biggest reason Target has the upscale shoppper advantage right now. Target doesn't have the riff raff. Wal-Mart won the retail battle for lower and middle class America and quite frankly the upscale shopper doesn't want to shop in the same building. They don't want to be stuck behind the lady using 30 paper food vouchers to purchase her groceries and they don't want to shop around the people who are there to hang out on a Friday night. If Wal-Mart is serious about gaining the upscale shopper audience, then they need to open a Wal-Mart and then open a Tram-Law right next store (or better yet across the street) that is everything Wal-Mart is not: a clean well-oiled machine of a store. They're simply not going to get the low-end and high-end shoppers together under one roof. Stores like American Fare and Hypermart have tried that before. They're no longer in business.


petallic said...

I completely agree with you on this one, Dante. Like so many businesses, they seem not to understand their target audience.

Quite to PB's chagrin, I shop at Wal-Mart. I make no apologies. During the summer months and vacations, I go in the middle of the night for the exact reason you listed: to avoid the rabble. I work with the rabble everyday; I do not wish to shop with them. I desire a quieter, more peaceful shopping experience. Even at 3 in the morning, however, I still wind up waiting 20 minutes in line because only one lane is open.

They do not provide a pleasant shopping experience.

Patrick Armstrong said...

In general, PB has much chagrin, I have discovered.

An upscale Wal-Mart? Ha! I completely agree with you, Dante. This is hilarious.

(I also didn't realize that Target was the more 'upscale' retailer, but I shop there for all the same reasons you mentioned. I guess that's just more evidence of my stunning liberal elitism...)

I don't go to Wal-Mart because I've found that the service is awful and the stuff they sell is cheap in both price and quality.

I am awful picky about my sushi, and I am not going to set myself up for the Wal-Mart-San-California-"RollBack"-Roll-that-is-imitation-imitation-crab-with-"Made in China"-stamped-on-the-seaweed-brand of disappointment I would be sure to face in a place like that.

Patrick Armstrong said...

Oh, and DADvocate has more on Wal-Mart in general both here and here.

Dante said...

Personally, I've been a fan of Target ever since I was very young but back then their store in Dallas (which is now a Salvation Army building in a very rough neighborhood) had a bakery in it that sold sugar cookies frosted to look like a Smurf. All Wal-Mart and K-Mart ever had were ICEEs and Gibson's never even had that.

Target started becoming more of an upscale retailer during the late 90's economic boom. When it turned out upscale shoppers were shunning the more traditional mall stores more and more for big box discount stores, Target decided to position themselves to grab as large a piece of that pie as they could manage.

For what it's worth, Wal-Mart is making some nice money selling a lot of the higher end electronics, finer wines, etc already at their Sams Club locations (though I've never seen a sushi bar at one). I could certainly see Wal-Mart building Sams Clubs in more suburban locations and positioning them to take on the upscale market.

petallic said...

Ah, but the beautiful illusion at Sam's is that it's a "club" for people who are working class or better. Sam's gets crowded, but it's so big you hardly notice. And there are always plenty of lines open.

You bring up an excellent point, dante. If they already have the upper working class at Sam's, why do they want them at Wal-Mart as well? Aren't they sort of competing with themselves? Or am I not seeing this thing correctly?

S.A.W.B. said...

It's a different mentality about going to Sam's Club than it is about going to Wal-Mart, Petallic.

Sam's Club has been positioned in a way that your upper-middle class shoppers want to go there for the deals, because of the brands they carry, and the prices they offer. Wal-Mart has the stigma that we have discussed already in this topic. If Wal-Mart can get some of the upper-middle class money away from target, it only benefits the Wal-Mart company as a whole.

Sam's sales will not be affected by Wal-Mart encroaching on what is percieved to be it's market, because they serve two distinct consumer groups. Add to that the fact that you have to be a 'club member' to shop at Sam's, and can't just walk in, along with the other restrictions on shopping at Sam's(cash/check or Discover card only), and you can see why Wal-Mart is charging at this segment of the population.

Dante said...

SAWB makes some good points, but I'd argue the reason that Sams Club won't ever replace something like a Target without some serious reimaging is that Sams Club doesn't have everything you'd buy at a Target. As a longtime Sams Club shopper, I usually make a shopping list, go to Sams Club and see if they have the stuff on my list and if that stuff is actually a deal (sometimes it's not), and then go elsewhere to get the rest of the items on my list. After a while, you'll get a general feel for the type of thing Sams Club usually carries but their inventories shifts a lot and most of it is overrun merchandise that isn't available for long anyways.

If anything, I'd think the requirements for membership and for the Discover card (which is not a universal requirement, I've been in at least one Sams Club in the past two years that takes VISA out on I-20 and Hampton Rd in the Dallas, TX area) would only help attrach upscale shoppers. I pretty sure those newfangled welfare cards don't run through the Novus system. What upscale shopper doesn't already have a Discover card or can't get one easily? Also, what upscale shopper is hesitant to throw down the $25 yearly membership fee?

GP said...

You're right Dante, Wal-Mart is full of "riff-raff". The Banks Crossing Wal-Mart in Commerce on a Friday night is a prime example.

The only store that I have seen able to pull off this "upscale" concept is Fred Meyer. Unfortunately, I don't think they have them east of the Mississippi.

Also, props for using the term "riff-raff." For some reason I found it very amusing and it made my day about 17% better

hillary said...

Let me mention it once again: Target does not sell cigarettes. If there's a niche for Walmart to get the upscale people, it's there.