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  1. #1
    Atomic Punk
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    Default Walmart's Project Impact: A Move to Crush Competition

    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."

    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.

    "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?"

    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.
    "Watch what people are cynical about, and one can often discover what they lack.” -- Gen. George S. Patton

  2. #2
    Atomic Punk
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    well...the things they talk about improving are things I think they need to improve on. I go to walmart a few times a month when I absolutely have to. This past week The Wife and I went to Target and I enjoyed the shopping experience a great deal more. I probably spent about 15-20 dollars more over all but I think it's worth it.

    As for them going after the competition and wanting to be the last man standing...well, that's exactly what a successful company does and what their shareholders expect and what capitalism is all about.

    Are they noble and compassionate to their vendors? No. Could they give their employees more money and better benefits? Yes. (What employer couldn't do that?) I hate Walmart for a lot of reasons but business is business and they are doing what they need to do to ensure that they are the biggest baddest dog in the yard...and eventually the only dog in the yard.

    There in lies the problem with capitalism...it really ends up being the same as socialism in that once a company wipes out all the competition, there is no choice, there is no competition left.

    Will walmart become the company store for the entire United States or the world? Maybe.
    Stay out of it, dude.


    I am Van Halen.

  3. #3
    Eruption lacy_vious's Avatar
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    Quote Originally Posted by broken9500 View Post
    well...the things they talk about improving are things I think they need to improve on. I go to walmart a few times a month when I absolutely have to. This past week The Wife and I went to Target and I enjoyed the shopping experience a great deal more. I probably spent about 15-20 dollars more over all but I think it's worth it.

    As for them going after the competition and wanting to be the last man standing...well, that's exactly what a successful company does and what their shareholders expect and what capitalism is all about.

    Are they noble and compassionate to their vendors? No. Could they give their employees more money and better benefits? Yes. (What employer couldn't do that?) I hate Walmart for a lot of reasons but business is business and they are doing what they need to do to ensure that they are the biggest baddest dog in the yard...and eventually the only dog in the yard.

    There in lies the problem with capitalism...it really ends up being the same as socialism in that once a company wipes out all the competition, there is no choice, there is no competition left.

    Will walmart become the company store for the entire United States or the world? Maybe.
    I thought about our lovely shopping experience at Target when I saw this article as well.

    LV

  4. #4
    Atomic Punk
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    Quote Originally Posted by lacy_vious View Post
    I thought about our lovely shopping experience at Target when I saw this article as well.

    LV
    yeah, that trip really reminded of me why I've always preferred Target. I think I'd like to do a round of groceries there and compare the bill to kroger and HEB because I love their food selection. Their bakery, meat and produce are great. they don't have quite the selection of a Kroger or HEB in any category but their private label brand is the best of the bunch everything is always really fresh.
    Stay out of it, dude.


    I am Van Halen.

  5. #5
    Eruption lacy_vious's Avatar
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    Quote Originally Posted by broken9500 View Post
    yeah, that trip really reminded of me why I've always preferred Target. I think I'd like to do a round of groceries there and compare the bill to kroger and HEB because I love their food selection. Their bakery, meat and produce are great. they don't have quite the selection of a Kroger or HEB in any category but their private label brand is the best of the bunch everything is always really fresh.
    Target is actually the biggest reason I am ok with finding a house in your parent's neighborhood.

    LV

  6. #6
    Atomic Punk
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    12.11.17 @ 04:37 PM
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    "Walmart investors have clamored for this push."

    Any of which have most likely NEVER have set foot in any store location because it would be beneath them...
    "Watch what people are cynical about, and one can often discover what they lack.” -- Gen. George S. Patton

  7. #7
    Forum Frontman It's Mike's Avatar
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    Quote Originally Posted by voivod View Post
    "Walmart investors have clamored for this push."

    Any of which have most likely NEVER have set foot in any store location because it would be beneath them...
    i imagine that most Walmart investors shop at Walmart.

  8. #8
    Atomic Punk lovemachine97(Version 2)'s Avatar
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    I don't get the hate for Wal Mart, I really don't. The real question is, "Why does Wal Mart exist?"

    It exists because a large portion of America finds it to be the most suitable, convenient, cost-effective place to find goods and services. A big business doesn't necessarily mean other businesses will die. What it forces other businesses to do is do what they do better, or risk dying.

    Before Supermarkets, groceries were specialized, not self-serve, and locally owned. Things weren't packaged individually, and the employees had to measure out what you bought. This made shopping for groceries a very slow process, and quite labor-intensive.

    Piggly Wiggly came along and made stores self-serve, eliminating the cost of labor by stocking the shelves with pre-packaged materials the night before. Soon, Kroger came along with the supermarkets, putting all grocery in a one-stop shop that was self-service.

    Still, people were scared that these supermarkets would put all the mom and pop stores out of business, right?

    Nope. On every street corner on America is a mom and pop owned grocery store, only they sell convenience, not price or selection. Need a couple things? It may cost more, but you're in and out fast. Local butchers with high quality product still exist. Trader Joe's has found a niche.

    Supermarkets and Wal Marts have actually given us more choices and better options. Now Wal Mart's trying to get even better. Good. It is better for us.

  9. #9
    Atomic Punk
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    the lower the accepted prices at high profit margins from the sales of large quantities, the lower the accepted salaries become...

    it is its own machine...

    "Hey I can work for only $26,000 a year because I can get by, by shopping at Wal-Mart"...
    "Watch what people are cynical about, and one can often discover what they lack.” -- Gen. George S. Patton

  10. #10
    Atomic Punk
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    Quote Originally Posted by It's Mike View Post
    i imagine that most Walmart investors shop at Walmart.
    Nice imagination...
    "Watch what people are cynical about, and one can often discover what they lack.” -- Gen. George S. Patton

  11. #11
    Atomic Punk lovemachine97(Version 2)'s Avatar
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    Quote Originally Posted by voivod View Post
    the lower the accepted prices at high profit margins from the sales of large quantities, the lower the accepted salaries become...

    it is its own machine...

    "Hey I can work for only $26,000 a year because I can get by, by shopping at Wal-Mart"...
    Well, that's someone's personal choice, isn't it?

  12. #12
    Atomic Punk Wruff_ajax's Avatar
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    Quote Originally Posted by It's Mike View Post
    i imagine that most Walmart investors shop at Walmart.
    LOL!
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