To win consumers, Walmart gets more personal

A lot more than six miles of roadway separates the Seffner Walmart from its companion Walmart in Brandon.

Among the Seffner offerings prominently on display: 5-gallon jugs of "Big John's" pickled sausages, $3 camouflage baseball hats and $8 ladies housedresses. A 3,000-square-foot section of the store sells yarn, craft supplies and fabric by the yard.

Just down the road in Brandon, however, the Walmart Supercenter proudly displays a row of $1,500 HDTVs, hip college clothing, and not a single bolt of fabric.

That stark difference between rural and urbane is exactly what Walmart executives want now from their stores. The world's largest retailer is on a mission to become a neighborhood-style store.

Even more, it wants to get into the minds of the local shopper, even at the most subtle levels to make shoppers feel like they're visiting a store meant for them.

For instance, toward the end of each month, grocery managers at a Walmart in the Egypt Lake area of Tampa move less-expensive food items from the back shelves out onto the end-cap displays.

"We know people may be facing a tighter budget in the second half of the month," said Joaquín González Varela, vice president and regional general manager for Wal-Mart Stores, Central and South Florida. And even doing something as simple as stocking Gator sports gear in Gainesville and not Tallahassee represents a big step towards flexibility for Wal-Mart, he said.

Expect more of that flexibility from other big retailers, experts say, because their future depends on it.

Going local

In past years, even the most detailed retail decisions at Walmart were made at corporate headquarters in Bentonville, Ark. Store managers basically sold whatever arrived on the trucks each night, said Doug Stephens, a retail consultant and founder of Toronto-based Retail Prophet Consulting.

That strategy worked while Walmart and other stores could count on a few solid laws of retailing: Robust consumer demand allowed retailers to deal in vast quantities, homogeneous preferences let retailers keep deep inventory stocks across a narrow range of items, and relatively static consumer tastes let retailers rotate many items only once a year.

"Now, the days of buying containers of stuff and loading it into stores with the goal of selling it through over a year are over," Stephens said.

The recession killed off consumer demand. Baby boomers are being replaced by vastly more diverse groups (single parents, married with no kids, multi-generation households, female head of household etc.) And growth across the nation is limited to only a few areas in the North, South and West.

That means retailers now must be far more agile, local and flexible to find new revenue, Stephens said. A Walmart or Target in North Tampa can't look like the same store in West Tampa or St. Petersburg. "Walmart is going to have to start acting more like a team of spider monkeys than the 800-pound Gorilla they've been up to now," Stephens said.

Boutiques

Increasingly, Walmart also plays subtle retail mind games on its customers.

At newly remodeled stores (especially in more affluent areas), shoppers at the entrance can see all the way through the store to the back to where electronics and huge HDTVs are on display. In year's past, Walmart might have just three notebook computers, and kept them in a box under lock-and-key. Now, newer Walmart stores can stock a dozen or more models, available for customers to try.

Scientific studies found that when shoppers see big shiny toys at the entrance, they actually feel a jolt of adrenaline in their bloodstream that makes them want to buy things, Stephens said. Warehouse-style retailer Costco built such sight lines into all their stores.

On the way toward those shiny TVs, shoppers will encounter whole sections of the store arranged by theme. Walmart might still stock fans elsewhere in the store, but in the back-to-college area, there are fans, power strips, dorm chairs, video games and lots of other things a student could want.

Rivals

Rivals like Target and Macy's have similar plans.

In college towns like Tampa or Austin, Texas, Target opens up more space for back-to-college areas with dorm-sized refrigerators, towels, sheets, lamps, and dorm mirrors, said spokeswoman Jennifer Glass. In urban areas, she notes, Target is more likely now to carry a wider variety of items for smaller living spaces - storage units, pillows, airbeds and sleeping bags.

Mass merchant Macy's Inc. this month specifically called out their localizing efforts called "My Macy's" for helping financial performance. Rather than one national organization, Macy's created eight regions and 49 new districts. (Tampa is run from an office in Miami.)

The company added what it called "human intelligence," including new district merchants and planners to tailor inventory and the "shopping experience" by each location.

In an open letter to new employees, Macy's chief of merchandise planning Julie Greiner wrote, "What this means, market by market, and store by store, is ultimately up to you."

Finite

More than ever, Walmart in particular could use some success from their localizing plans. Shoppers who are still low on cash aren't as responsive to deep discounting anymore, Wall Street analysts said. And shoppers feeling a bit more confident are shifting their shopping to stores a peg or two up from Walmart on the perception scale, including Target for homegoods, and Publix for groceries.

Breaking with years of relentless growth, Walmart recently said same-store sales fell for a fifth quarter in a row. And perhaps one problem may be that the shopping landscape where Walmart has grown for decades simply isn't infinite, wrote Paula Rosenblum, managing partner at RSR Research in a note on the topic.

"I am beginning to think the core problem is not so exotic," she wrote. "I believe the company has saturated its target market. Its existing customer has no more money to put in the marketbasket and no matter how the advertising plays, a $400 billion dollar company can't really reinvent its brand."