More on Wal-Mart's Store Strategy Changes

As I mentioned in my previous post, Wal-Mart is overhauling its single-store format, in favor of six ethnic-income segmented styles of stores.

At the same time, the head of US store operations, Eduardo Castro-Wright, is relocating regional executives to their regions, from Bentonville. This, by itself, is not such a big deal, one would think.

However, read the comment in the WSJ article from Todd Libbra, responsible for 132 stores in Illinois,

"By reading the newspapers, watching the TV stations and being part of the community, I have a better flavor for what's going on."

In Chicago, perhaps. I happen to be from Illinois- downstate Illinois. He isn't getting a clue as to what is happening outside of the Cook County environs while he's nestled up there near the Windy City.

And, by the way, Todd, ever hear of newspapers online? A little thing you can get via something called the "internet?" I'm sure Todd could have been subscribing to numerous Illinois city and town newspapers via the internet, or his staff could have covered this base. Is this manager a good example of the caliber of executive at, and general awareness level of the world outside, Wal-Mart? exec and getting the tribune

Regarding the ethnic basis of segmentation, lots of companies cater to ethnic tastes, but none that I know of trumpet this as a segmentation lever. What are these guys thinking? Didn't they have even racial trouble last year and this already?

Perhaps the largely white senior executives in Bentonville, starting with CEO Lee Scott, think that by having a Mexican chief of US stores they will deflect further charges of racism. Instead, I wonder if they risk having a truly primitive segmentation strategy, imported from a less-sophisticated consumer society ,Mexico, derail their firm.

And what about the 'other' ethnic groups? Is this an opportunity for Target to welcome them with open arms?

My guess is that a really good segmentation strategy focused on differentiating store types would have resulted in something like three types of stores: rural, ex-urban middle class, and ex-urban on the fringes of upper class locales. Assortments of goods could easily be changed more granularly than merely with store type.

As it is, I wonder if Wal-Mart's historically in-bred management isn't totally fumbling its new segmentation and store-type strategy. They have been successful and well-regarded for doing one thing well throughout America and much of the world- leveraging tremendous purchasing power to offer large assortments of goods to mostly, though not exclusively, lower-income individuals, at very low prices. And, apparently, they have had some success attracting upper-income individuals to the stores to buy basic, low-priced goods for which the source of the product is unimportant.

I just don't see their new move into this complicated, multi-store approach taking full advantage of Wal-Mart's historic strength in low-cost sourcing of supply, while it seems to put them squarely opposite some more savvy retailing competitors in what is, for Wal-Mart, an entirely new product/market space.