Wal*Mart Changes Things Up, Again

On Friday, March 4, 2007 the New York Times published an article detailing Wal*Mart's new way of looking at customers' buying styles. The fact that a search of the blogosphere has only produced only a couple of results (TracyPlaces, Ponder Marketing) is troubling; perhaps we'll see more on Monday. As we should all know by now, the Wal*Mart Effect affects us no matter where we shop, even if we boycott Wal*Mart.

To all of the manufacturers and wholesalers out there that sell to retail merchandisers, this should have a huge impact on how you look at your future sales; even if you do not sell to Wal*Mart. If you don't sell to Wal*Mart, but have a high-end brand, perhaps this news would make you consider Wal*Mart as a merchandiser who could carry your product and not tarnish your brand.

In fact, if what Wal*Mart says is true, there are people with lots of money shopping there, and if your product is there too, they might pick it up. Even if it is for no other reason than to save a buck, but still appear in front of their friends with name-brand items. This could really change a lot of things in the retail merchandising business. Don't be surprised when those three categories ("brand aspirationals", "price-sensitive affluents", "value-price shoppers") begin to circulate as the defacto standard in the discount retail segment (Target, K-mart, etc.).

Of course, my standard warning to any manufacturer or wholesaler considering selling to Wal-Mart applies here. Just because you can, doesn't mean you should. Are you adequately prepared operationally to deal with their supply chain efficiency requirements? Can you handle the pressures of working with their strict pricing models? Do you have the support infrastructure to handle the rapid increase in sales volume? Often companies see a contract for Wal-Mart as a blessing, but that is not always the way it plays out. Sometimes it is best to say "no" to Wal-Mart and lose a large volume of sales than to say "yes" and lose your entire business.

- Lincoln