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Project Impact - Walmart's Move to Crush the Competition

Discussion in 'BBS Hangout' started by Lil Pun, Sep 9, 2009.

  1. Lil Pun

    Lil Pun Contributing Member

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    http://news.yahoo.com/s/time/20090909/us_time/08599192069800

    Walmart loves to shock and awe. City-size stores, absurdly low prices ($8 jeans!) and everything from milk to Matchbox toys on its shelves. And with the recession forcing legions of stores into bankruptcy, the world's largest retailer now apparently wants to take out the remaining survivors.

    Thus, the company is in the beginning stages of a massive store and strategy remodeling effort, which it has dubbed Project Impact. One goal of Project Impact is cleaner, less cluttered stores that will improve the shopping experience. Another is friendlier customer service. A third: home in on categories where the competition can be killed. "They've got Kmart ready to take a standing eight-count next year," says retail consultant Burt Flickinger III, managing director for Strategic Resources Group and a veteran Walmart watcher. "Same with Rite Aid. They've knocked out four of the top five toy retailers, and are now going after the last one standing, Toys "R" Us. Project Impact will be the catalyst to wipe out a second round of national and regional retailers." (See 10 things to buy during the recession.)

    Though that's bad news for many smaller businesses that can't compete, Walmart investors have clamored for this push. Despite the company's consistently strong financial performance, Wall Street hasn't cheered Walmart's growth rates. During the 1990s, the company's stock price jumped 1,173%. In this decade, it's down around 24% (Walmart's stock closed at $51.74 per share on Sept. 3). "Walmart is under excruciating pressure from employees and frustrated institutional investors to get the stock up," says Flickinger.

    Many analysts believe that the store-operations background of new CEO Mike Duke will keep investors quite happy. Though the recession finally caught up to Walmart last quarter, when the company reported a 1.2% drop in U.S. same-store sales, Walmart was a consistent winner during the worst days of the financial crisis, as frugal consumers traded down. While most retailers are shutting down stores, Walmart has opened 52 Supercenters since Feb. 1. Joseph Feldman, retail analyst at Telsey Advisory Group, estimates that each store costs Walmart between $25 and $30 million. In order to continue the momentum that it has picked up during the retail recession, over the next five years the company plans to remodel 70% of its approximately 3,600 U.S. stores.

    So what does a Project Impact store look like? One recent weekday afternoon I toured a brand new, 210,000-sq.-ft. Walmart in West Deptford, N.J., with Lance De La Rosa, the company's Northeast general manager. "We've listened to our customers, and they want an easier shopping experience," says De La Rosa. "We've brightened up the stores and opened things up to make it more navigable." One of the most noticeable changes is that Project Impact stores reshape Action Alley, the aisles where promotional items were pulled off the shelves and prominently displayed for shoppers. Those stacks both crowded the aisles and cut off sight lines. Now, the aisles are all clear, and you can see most sections of the store from any vantage point. For example, standing on the corner intersection of the auto-care and crafts areas, you can look straight ahead and see where shoes, pet care, groceries, the pharmacy and other areas are located. And the discount price tags are still at eye level, so the value message doesn't get lost. (See how Americans are spending now.)

    "They are like roads," De La Rosa says proudly. "And look around, the customers are using them. We've already gotten feedback about the wider, more breathable aisles. Our shoppers love them."

    The layout is also smarter. "You can kind of guess where everything is going to be," says Sharon Tilotta, 73, a shopper in the West Deptford store. The pharmacy, pet foods, cosmetics and health and beauty sections are now adjacent to the groceries. In the past, groceries and these other sections were often at opposite ends of the store, which made it more difficult for someone looking to pick up some quick consumables to get in and out of Walmart. "Under Project Impact, Walmart is providing more of a full supermarket experience within its walls," says Feldman. "The biggest complaint against them has always been that it takes a long time to get through everything. This definitely improves efficiency." De La Rosa also points out the party-supply section. Favors, wedding decorations, cards and scrapbooks are all in one area. "In the past, these products would be in three different places," he says.

    And although Walmart won't admit to targeting specific competitors - "We're just listening to what our customers want," De La Rosa says - it's clear that, under Project Impact, Walmart will make major plays in winnable categories. The pharmacy, for example, has been pulled into the middle of the store, and its $4-prescriptions program has generated healthy buzz. With Circuit City out of business, the electronics section has been beefed up. Walmart is also expanding its presence in crafts. Sales at Michael's Stores, the country's largest specialty arts-and-crafts retailers, have sagged, and Walmart sees an opportunity. Stores are chock-full of scrapbooking material, baskets and yarns. "Look, they're selling the stuff that accounts for 80% of Michael's business, at 20% of the space," says Flickinger. "It's very hard for any company to compete with that."

    Apparel, one of Target's traditional strengths, gets a prominent position at the center. The color palettes of the shirts and dresses are brighter and more appealing than they've been in the past. "Walmart has figured out fashion for the first time in 47 years," Flickinger says. "They've gone from a D to an A-minus." Briefs and underwear have been shuttled to the back. "That's a smart move," Flickinger says. "People know to come to Walmart for the commodity clothing. Now, they have to walk past the higher margin, more fashionable merchandise to get what they need."

    Of course, Project Impact isn't perfect. You'd think that if Walmart was going to open a massive new store with a cutting-edge layout, the company would at least put a sign up. In West Deptford, it's easy to miss the entrance to the Walmart - which is buried in the back of a parking lot - while driving along a main thoroughfare. And of course, customers will always nitpick. One elderly shopper complained about a shortage of benches in the store (she needed a rest). Another had a more esoteric, yet legitimate, gripe. "Their meat is leaky," says Jeff Winter, 30, a West Deptford shopper. "And instead of giving you a wet wipe to clean it off, they give you a dry towel. How's that going to prevent E. coli or whatever?" (See which businesses are bucking the recession.)

    What analysts really want to see from Project Impact, however, is a faster pace of implementation. "The biggest hurdle facing Walmart is the speed with which they can roll this out," says Feldman. As more Project Impact stores pop up, the existing stores appear worse by comparison. For example, while the merchandise at the Project Impact store outside of Philadelphia really speaks to that particular market - there's tons of Eagles and Phillies gear - at one regular discount store outside New York City, Minnesota Twins and Seattle Mariners pajama pants wasted away on the racks. There were plenty of associates staffing the electronics section at the Project Impact store; at the discount store, five frustrated shoppers waited in line for help from a customer-service rep. Soon, it was closer to 10.

    What about the friendly service? In West Deptford, the associates were sunny and bright. At the New York–area discount store, not so much. "You'll notice we've been in the store for two hours, and no one has even said hello to us," Flickinger says after he and I toured that store. He's right, we weren't feeling any love. But if Project Impact keeps picking up momentum, many more Walmart salespeople, and shareholders, should be smiling.
     
  2. juicystream

    juicystream Contributing Member

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    They can't really do anything to provide better customer service. The employees will become lazy over time. Wal-Mart already has the 10ft rule in which you are supposed to greet everyone you come withing 10ft of. Almost nobody does that.
     
  3. Supermac34

    Supermac34 President, Von Wafer Fan Club

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    I actually don't really like the newly designed stores that much.
     
  4. lpbman

    lpbman Member

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    Store managers could give out 100 dollar bonuses for excellence in this regard. They could pay more and terminate for the smallest slight or rude comment.. They will do none of this, as they currently see that the lowest price and passable customer service brings in more business/profit.
     
  5. moestavern19

    moestavern19 Member

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    Walmart is the great satan.
     
  6. The_Yoyo

    The_Yoyo Contributing Member

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    I have shopped at walmart i dont particularly like too though

    i've noticed it in my own home town a lot of the mom and pop stores i went to as a kid that I loved are all gone now its all walmarts, staples, best buy, albertsons etc


    my parents personally like the new stores cuz of their size and prices, but i miss the feel of walking into the store and having the store owner know me by name and asking me how things were and who my new teachers was etc.
     
  7. Jayou

    Jayou Member

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  8. juicystream

    juicystream Contributing Member

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    You get an award for excellent customer service. I don't know anyone that ever got a complaint from a customer while working there. And of course we did get bonuses based on store sales. I'm just thinking they shouldn't raise wages more. Wal-Mart pays more than minimum wage, but they get minimum wage effort. I'm not sure how Chick-fil-a does it.
     
  9. juicystream

    juicystream Contributing Member

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    There was shops before Wal-Mart? :eek:

    Seriously you are only 3.5 years older than me, but I don't think I ever experienced that at a store. Everyone including myself goes to Wal-Mart and what is now numerous major national chains.

    What I miss are small banks. I still walk into my bank. I don't use the drive-thru or ATM. My Grandma was a bank manager of a branch that had no ATM or anything, so you had to go inside. Everyone that came in my Grandma knew. She had dealt with them since day 1. I miss that.
     
  10. LANIMIRC

    LANIMIRC Member

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    The majority of people that work at Walmarts are a lazy bunch of people who do not want to work. Improving customer service is gonna be a tough one. If they can pull it off good for them.

    I prefer Targets and only go to Walmarts for ammo and chicken.

    Chick-fil-a works because most of the Chick-fil-as I've been to cater to better neighborhoods. I rarely see Chick-fil-a in "bad" neighborhoods but if there was one, they would staff the lazy, welfare check grabbing, rather not work group of people...like the McDonalds that are in bad neighborhoods.
     
  11. REEKO_HTOWN

    REEKO_HTOWN I'm Rich Biiiiaaatch!

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    I haven't been inside a Walmart in almost a year. The people who they are targeting are people with morals and dignity who CHOOSE not to shop in their Trough style shop. I ain't rich but when I go to Target at least I feel like a human being.
     
  12. Ziggy

    Ziggy QUEEN ANON

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    I think I am in the minority in that I love the big chains. I do not care to make small talk with people I don't care about and Id prefer getting in and out. Usually its the 70yr old women who like to mingle where they shop. More importantly, one of my fav parts about America, is the big boys give you the best deal and thats absolutely all that matters. Service and personality are pre-internet terms so sorry Little Johnny Shoe Shop. Adios.
     
  13. SwoLy-D

    SwoLy-D Contributing Member

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    LOL @ all the haters. :D Jealousy will get you nowhere. Why are they thriving? Because the economy is going down and you can't stop it. :p
    Ah, yes... :( I remember when I was lonely, too... and I could only talk to old mom-n-pop owners of stores... ;)
     
  14. rocketsjudoka

    rocketsjudoka Contributing Member
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    If people don't like Walmart vote with your dollars and shop somewhere else.
     
  15. Kojirou

    Kojirou Member

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    .......So the people who do shop at Walmart lack morals and dignity? Thanks for letting me know that you're an arrogant jerk.

    This college students pretty much heads to Walmart for everything he needs and has no real regrets over it - while the workers aren't going to chat with you and aren't too friendly, they'll help you get what you need without significant fuss, and that's what matters. I don't go to stores to chat with people, after all.
     
  16. SirCharlesFan

    SirCharlesFan Contributing Member

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    I live about 30 miles from the Wal-Mart HQ and it seems like we always get the newest Wal-Mart re-designs and projects first. They way they've remodeled one of the local Wal-Marts in the past year is amazing. I use to be alot more apt to go to target for non-food items, but I do find myself shopping at Wal-Mart a lot more because I like the way they've redesigned this store. They also seem to be carrying a higher quality of product than they use to in a lot of areas.
     
  17. aghast

    aghast Member

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    [​IMG]
     
  18. Fyreball

    Fyreball Contributing Member

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    Where did you grow up? Green Acres?? Unless it's at the Indian grocery store, I never had shop owners asking me about school.

    Personally, I don't really mind things either way. Small mom-pop shops are good because you can usually find things there that you really can't find anywhere else, since they're more willing to bring things in from independent manufacturers, but I also like being able to walk into a store and not be hassled or anything. Plus, the deals you get at places like Wal-Mart and Target can't be beat.
     
  19. DonnyMost

    DonnyMost not wrong
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    The future....

    <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/Z8zNsUTWsOc&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/Z8zNsUTWsOc&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
     
  20. JeopardE

    JeopardE Contributing Member

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    Is this the new store design they have at the Kirkwood/Westheimer store? I was pleasantly surprised when I walked in there recently. Very nice.
     

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