Wal-Mart Watch

Reading this morning’s news about Wal-Mart’s latest merchandising reorg, I can’t help thinking back to the mid-90s, when McDonald’s was going through its identity crisis. An editorial in the trade mag Supermarket News pointed out that what drove McDonald’s business was Happy Meals with cheap toys, and the editorialist suggested that instead of experimenting with other foods and its image, McDonald’s might be better off concentrating on producing the most compelling Happy Meals with the most exciting cheap toys it could come up with. 

The fact that any retailer wants to refine its merchandising is all to the good. Of course. But Wal-Mart is mucking with a long-established and well-defined image: low prices. What makes Wal-Mart exciting is that giant box of cereal for $2.47 or a jumbo pack of light bulbs for $13.66. I remain skeptical about its ability to sell pricier fashion (pricey being a relative concept.) Heck, even Target discovered there’s a ceiling beyond which its customers won’t go in soft home. 

I gotta admit, as retail sport, it’s fascinating to watch. What’s worrying, however, is the growing itchiness among Wall Street types, as evidenced in Fortune’s recent piece “The Unending Woes of Lee Scott” as well as a suggestion by a Merryl Lynch analyst just prior to the holidays that the company’s break-up value might be worth more than the aggregate entity. 

Are the long knives coming out?