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American Morning
Wal-Mart Looking to Tap Upscale Market
Aired February 26, 2002 - 09:37 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JACK CAFFERTY, CNN ANCHOR: "Wall Street Journal's" annual shareholder rankings this week say those who held consumer-oriented companies, like retailers, saw the best returns in their portfolios last year. Wal-Mart, the discount retailer, riding the crest of that wave, the nation's biggest store this year. And now, there is news the chain is looking to go upscale.
CNN's Gary Tuchman reports on what some analysts say could be risky business.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: Welcome to Wal-Mart.
GARY TUCHMAN, CNN CORRESPONDENT (voice-over): You know what to expect at Wal-Mart. It's dependable, predictable. Honey nut-flavored Cheerios might be the most exotic item in your cart. Ask this shopping expert for the "Atlanta Journal Constitution" to compare Wal- Mart with a competitor.
JILL SABULIS, "ATLANTA JOURNAL CONSTITUTION": Wal-Mart is more for the convenience and the expense, where Target is trying to appeal to a little higher, more upscale demographic.
TUCHMAN: But Wal-Mart wants a piece of that demographic.
MATT CORLEY (ph), MANAGER, ALPHARETTA WAL-MART: That's where the push is, is to really find the ideal Wal-Mart for each community.
TUCHMAN: Matt Corley (ph) is the store manager of a new Wal-Mart in Alpharetta, Georgia, an affluent suburb of Atlanta.
CORLEY: This is a 14.96, desk organizer.
TUCHMAN (on camera): How much is a traditional one at Wal-Mart?
CORLEY: About 2.97 to 3.97.
TUCHMAN: So, this is five or six times more money. Are you selling a lot of them?
CORLEY: Yes, selling them as fast as we can get them.
TUCHMAN (voice-over): At Wal-Marts in wealthier communities, customers are being given the opportunity to part with more of their money.
UNIDENTIFIED MALE: $125.68.
TUCHMAN: Higher-quality clothing is now being sold at some Wal- Marts, more big-screen televisions are on the floor.
UNIDENTIFIED FEMALE: That's pretty, yeah.
TUCHMAN: Gruen watches are now being sold in some higher-income locales. Keepsake diamonds will soon be in stock.
UNIDENTIFIED FEMALE: Good for this area.
TUCHMAN: At this Target store in the well-to-do Buckhead neighborhood in Atlanta, shopping carts ride the escalators with the customers who are used to the higher-end discount store experience. Kelly Rock (ph) is this Target's manager.
(on camera): Does it surprise you that Wal-Mart is doing this?
KELLY ROCK (ph), MANAGER, TARGET: No. If I were Wal-Mart, I'd try it.
TUCHMAN (voice-over): And, indeed, Wal-Mart is trying it, confident that wealthy customers will want to buy new, different, and more expensive Wal-Mart products.
UNIDENTIFIED FEMALE: If it's the same exact product, then I probably would. But, I probably wouldn't come here just to shop for jewelry or clothes.
TUCHMAN: So we asked the jewelry saleswoman.
(on camera): When you think Wal-Mart, do you think of Gruen and Keepsake?
UNIDENTIFIED FEMALE: Not yet, but hopefully people will think that when they look for any piece of jewelry, they'll think Wal-Mart first.
TUCHMAN (voice-over): Maybe, maybe not, but the store that rolls back, will continue to roll out this new strategy.
(END VIDEOTAPE)
TUCHMAN: Wal-Mart calls its new strategy "Store of the Community," and says it has nothing to do with Target, or Target as it is popularly known. But here at this Target in Sandy Springs, Georgia, and about 1,000 others across the United States, there's little doubt about what Wal-Mart is saying, and Target officials say they will fight for each and every more affluent customer -- Jack, back to you.
CAFFERTY: Interesting strategy. I suppose if Target and, perhaps, Costco and some of those others are looking for evidence of what Wal-Mart is capable of, they might call up the guys over at Kmart.
TUCHMAN: Well, that's a good point. As you see in the story we just did, we did not mention Kmart, and that is because neither Wal- Mart nor Target are trying to emulate Kmart.
CAFFERTY: Kmart, of course, filing for bankruptcy, so wouldn't want to emulate them, right?
TUCHMAN: Right.
CAFFERTY: I'll talk to you later. Gary, thanks. Gary Tuchman.
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