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Wednesday, June 14, 2006

Wal-Mart to Customize Stores via Demographics

Until recently, Wal-Mart could enjoy growth and prosperity simply by offering a wide variety of goods at rock-bottom prices in its stores throughout the country.  But even Wal-Mart faces competitive pressure... and to that end the retail giant is seeking to customize its offerings based on demographic differences.

Wal-Mart has always been conscious of geographic differences (selling, for instance, more beach gear and storm supplies in Florida, and more snowblowers in Minnesota).  But now, Wal-Mart is using its wealth of sales and inventory data to segment based on demographics, allowing it to market to specific age, ethnicity and income brackets.

Stores in which the majority of shoppers are African-American, for instance, sell more entertainment products and fewer sporting goods; those with a Latino base feature lots of fresh produce and "farmers' market" events on weekends.  Some pilot stores that cater to high-income ($75,000+) customers have done well selling gourmet and organic foods, housewares and high-end electronics.  Stores that focus on older shoppers (age 45+) sell more pet supplies and fewer baby items and toys. 

Wal-Mart, however, isn't forgetting its roots in catering to lower- to middle-income consumers, many of them rural.  For these stores, Wal-Mart will continue to emphasize the "community social setting" aspect, in which the store serves as a hub for the community, with restaurants and other meeting places.

The challenge for Wal-Mart will come when the demographics in these stores overlap.  What, for instance, will high-income, older customers demand, or rural African-American shoppers?

Source:  CNN/Money