If there are two things that you should know about Wal-Mart’s future strategy it’s that regional marketing is more important then ever and that the world’s largest retailer will be unveiling new smaller formats beginning next year.
Delivering that message was hank Mullany, president of the retailer’s North division and executive VP of the corporation. The former Genuardi’s president, who has been overseeing a large part of Wal-Mart’s business since 2006, to addressed approximately 100 vendors late last month at an Association of Manufacturers’ Representatives (AMR) meeting in King of Prussia, PA, adding that his company is poised for significantly greater growth in the near future despite the ongoing challenges of the economy.
Mullany asserted that local flexibility has never been greater at the Bentonville, AR retailer and he and his team is seeking input and opportunities from local suppliers on how to expand their business.
“Bentonville is still controlling 85 percent of what is being purchased, but we’ve all come to realize that other 15 percent is a big difference maker,” he stated. “We are trying to become more local in many ways, including our product mix.”
He added that for the first time, Wal-Mart is deploying local buyers in the field who are attuned to regional nuances and store managers now have more input on how to merchandise their individual stores.
As for the future, Mullany noted that his large region (1,307 stores – 911 SuperCenters, 385 discount units and 11 Neighborhood Markets that cover 19 states) is targeted for heavy growth in 2011 with 81 new projects on the docket. Most of those will be expansions into SuperCenters but there will be 18 net new stores and 18 other relocations, many of them SuperCenters.
Also on the agenda is a new view towards other formats, including new stores that could fall in the 10,000-20,000 square foot range. Wal-Mart is expected to reveal more about its “small format” initiative at an analysts’ conference on October 13.
Mullany acknowledged that the new smaller format initiative would give the company greater flexibility in urban areas in the Northeast where it is difficult to find locations to build stores the typical size of a “division one” unit or SuperCenter. And the Temple University graduate added that Baltimore, Washington, Philadelphia, Boston, New York, Chicago and Detroit are currently underserved by Wal-Mart and will be getting a lot of attention in the near term.
Also addressing the group in King of Prussia was Marc Lieberman, senior director of merchandise execution for the North region. Lieberman amplified Mullany’s points about target marketing and local flexibility, noting that Wal-Mart’s core customer is comprised of working families (many of whom are multi-cultural) who earn $20,000-$50,000 annually.
Lieberman stated that food and consumables are driving the business and he urged manufacturers to bring the company more local grown and locally manufactured items. With Wal-Mart’s recent reorganization, the company has regained much of its promotional sharpness including the restoration of “Action Alley” and the opportunity to provide decision making down to individual store managers.
“We are bringing the store managers back in the game as merchants,” Lieberman said.