Wal-Mart expanding upscale strategy

ROGERS, Ark. – Under pressure to boost growth, Wal-Mart Stores Inc. is retooling its strategy to lure wealthier, more style-conscious customers by offering a broader array of fashionable goods.

Wal-Mart Stores USA CEO Eduardo Castro-Wright said Tuesday that the world’s largest retailer will unveil an array of higher-priced lawn chairs and fluffy towels, as well as trendier clothing, including a new hip-hop brand called Exsto aimed at young men.

The goal with Exsto, which will be on store shelves in July, is to mimic the success of Metro 7, which has scored well among young women since its launch last year.

Other moves outlined by Castro-Wright, who spoke to about 70 journalists on the first of a two-day media conference, include reducing inventory to reduce clutter and relocating regional executives to the areas for which they are responsible in order to better tailor stores to their communities.

Wal-Mart held its first media conference in April 2005 under the twin pressures of sluggish sales growth and bad publicity. A year later, Wal-Mart is still struggling to regain the growth rates of past years. The company remains beset by organized critics, including labor unions.

But the company is hoping that a raft of initiatives, such as those outlined Tuesday, will revive consumer interest and refurbish its image, boosting sales and its stock price. On Tuesday, shares of Wal-Mart rose 58 cents to $46.40 on the New York Stock Exchange, in the middle of its 52-week range of $42.33-$50.87.

So far this fiscal year, Wal-Mart has averaged a modest 3.1 percent in same-store sales growth, or sales at stores opened at least a year. Same-store sales are considered the best indicator of a retailer’s health.

Today, company executives are expected to discuss hot-button labor issues such as employee health care. Chief executive Lee Scott will close the proceedings with a speech titled “Change, Growth and Success for Wal-Mart and the Working Families We Serve.”

On Tuesday, company executives said they were trying to understand their customer even better and have segmented them into three different groups – the loyalist, the selective shopper and the skeptic.

The loyalist shops at Wal-Mart stores 63 times a year, and the skeptic much less so. But the company’s biggest focus is the selective shopper, who shops 46 times a year and buys only basic goods, according to John Fleming, executive vice president of marketing.

As part of its merchandising efforts, Wal-Mart is improving the baby department, offering organic cotton baby clothes under its store brand George.

In January, the company re-launched its furniture departments to offer more compelling merchandise.

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