Wal-Mart acting on shifts in consumer spending

ROGERS, Ark.—If the mood on Wall Street is grim, then consumers must be feeling even more bleak, right?

Fuel prices remain high, inflation has hit food prices hard and consumer confidence is down. Yet Wal-Mart Stores Inc. executives said Thursday that the key for retailers is to look beyond the frustration to how families can have a good time even though their money isn't going as far.

Stephen Quinn, chief marketing officer, shared a stage with fellow Wal-Mart executives John Fleming, chief merchandising officer and Bill Simon, chief operations officer, at a retail trends conference put on near company headquarters by the Sam Walton College of Business at the University of Arkansas.

Rather than assume shoppers will flock to the lowest price items, Quinn said Wal-Mart customers are using the broad range of items available at the store to sustain their standard of living while still cutting back. For instance, Ben & Jerry's ice cream sales are up. On its face that seems strange but the top-shelf ice cream is a bargain if it is replacing a trip to an ice cream parlor.

The same goes for high-definition TVs, which consumers are buying with the thought of spending more evenings at home. Likewise for food items, with more people eating at home and cooking from scratch.

Wal-Mart has streamlined its offerings in a way that emphasizes growth items yet still lets customers find items the company must stock to remain a one-stop destination, calling it the "Win, Play, Show" strategy.

For a win category, such as flat-panel televisions, Fleming said the company stocks a full range of the TVs, both online and in the stores. While Wal-Mart is the country's biggest seller of denim, the company treats it differently, offering attractive prices but with only enough selection to sustain the play category. For the show category -- Fleming use the example of hammers and measuring tapes -- the company keeps a limited line in stock.

That's a change from a few years ago, when Wal-Mart tried to keep a full range of products in all categories.

"That created a lot of chaos in the stores," Fleming said.

Quinn said the number of shopping trips consumers make has been declining for the past 10 years, and the current economic woes are "speeding consumers up to where they were going anyway."

Fleming said more shoppers are at the stores in prime time and fewer in the early and wee hours.

"They are absolutely changing their behaviors," Quinn said.

Wal-Mart had spent the early part of the decade experimenting with different ways it could attract the well-heeled shopper, a move that the executives acknowledged lacked focus.

"We kind of got our act together a couple of years ago," Quinn said.

The emphasis on moms, with women doing about two-thirds of the family shopping, is a focus in Wal-Mart advertising.

"We're going with the voice of mom in our commercials," Quinn said.

Speeding checkout times, having cleaner stores and friendlier clerks is an important element to making the stores more attractive. Wal-Mart has essentially the same people in its stores as it did two or three years ago, Simon said. To motivate them, the company emphasized that employees are helping families live better -- long a mantra of Wal-Mart -- and that faster, cleaner and friendlier were the way to carry out that mission.

Among the challenges for the future are marketing to other groups, such as customers 50 and older and doing a better job of targeting different cultures. But first, Quinn said he wants to succeed with women shoppers.

"Let's just work together to get mom first," Quinn said.

Simon said building talent to keep the company growing is another point of emphasis.

Noting that it takes two to three years to develop a new store, Simon said, "it takes us longer to build a store manager than build a store. We've got to find a way to close that gap."