So you think you know all there is to know about your biggest competitors or customers? Think again.
Some of the big retailers ran Sunday FSIs on the weekend before Father’s Day — not a particularly big holiday for the home textiles industry. Nevertheless, the ads offered the opportunity for some interesting side-by-side comparisons of how these companies position themselves in the marketplace. They might challenge some notions of what they are doing even as they confirm others, and I decided to test some of my observations.
As if to prove that I really don’t have a life, I actually sat down with a spreadsheet —this on a Sunday, mind you — and charted their price points, all 1,141 of them.
So let’s play: Know Your Retailers! Mass merchants: Kmart, Target and Wal-Mart. Here’s the toss up:
• Which one had the lowest average price point? (This should be a no brainer and it’s my gift to you. Everyone is a winner in Know Your Retailers!)
• Which one had the highest average price point? (You have a 50/50 chance of being right, assuming you didn’t botch Question No. 1.)
• Which retailer had the lowest percentage of items in the FSI with a price point under $25?
• And, finally, in the lightning round: Which one had the highest percentage of items priced $500 or more?
Wal-Mart, Kmart or Target? Go ahead, ponder, then take your best shot if you dare. If you’re right, you win the adulation of your colleagues, and the fear and loathing of your competitors. The answers will come later.
But first…
Wal-Mart is being paid back nicely for its so-called return to its opening price point roots and even CEO Lee Scott recently quipped to analysts that it might have saved his job in light of the current economic downturn. If you can only get that gas-guzzling F-150 out to go shopping once a week, where else are you going to go? This is a classic Wal-Mart economy — or so they say.
Just the same, I continue to argue that Wal-Mart never actually changed its segmentation strategy. It is still on the march upmarket, albeit more selectively, more intelligently and much more discreetly. That it is hammering low prices and increasingly its value proposition is what it’s always done best. And it is simply an example of what good advertising and marketing are supposed to do: tailor your message.
Reality is little more than an occasional perk in that conversation. Some observers still can’t quite get their heads around the idea that WMT can push upmarket and remain the opening price point champion on critical items.
But remember, after he moved to Beverly Hills it was central to that old TV show that we knew Jed was the same good ol’ boy we always loved even after he moved upmarket. And Ellie Mae — well, Ellie Mae… But I digress.
Has Wal-Mart course corrected? You bet. Has it evolved and even retrenched a bit in its merchandising? No question about it. Has it all but abandoned the push to higher price points and better quality goods? Please! Come in from that ledge and take this bottle of B-12.
As further evidence, consider this: If you were the author of a failed, change-us-to-the-core strategy in your company, where would you expect to be once that failure was seen and acknowledged by your bosses and colleagues? (Your current office is not a choice.) Where is John Fleming today?
Wal-Mart's segmentation strategy has a long way to go before it can be called successful. If it happens, we'll likely recognize it long after the fact, in much the same way we acknowledge economic recessions. Yet, Wal-Mart has learned one thing above all else in this process: It needed to go slower and lower in its upmarket ambitions. But as we’re seeing, in most instances not by very much.
Tune in tomorrow for the answers to "Know Your Retailers!"
