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September 2006

Comments

Tom Asacker

Scott, the reference was to fashion, not "high" fashion. Style, not haute couture. What are you thoughts/predictions on this piece of news?

Wal-Mart Stores signed an exclusive deal with celebrity designer Colin Cowie as part of its effort to attract more affluent and urban shoppers by offering more stylish merchandise. The holiday housewares line will be available October through late December.

Scott Miller

Tom wrote: >>> Wal-Mart is not a "fashion" brand. It is a "cut costs to the bone through efficiencies and volume purchasing" brand. <<<

Consumers do not think of Wal-Mart in this way. They simply think of Wal-Mart as the best place to go to get everyday items at the lowest cost. As Laura said, "always low prices" is the mindset Wal-Mart owns. All of the incredible distribution and efficiencies is unimportant to Wal-Mart consumers. People don't care why Wal-Mart has the lowest prices, only that they do.

Low price and high fashion are two concepts that mix like oil and water. Wal-Mart can try to mix the two, but they are water and will always sink to the bottom.

Tom Asacker

I agree Laura. And stay tuned! ;)

Best,

Tom

Laura

Thanks Tom. Wal-Mart stands for always low prices on brand named goods like like Tide, Crest, and Kleenex. When they go into the fashion area it is with their own brand. Yes, they give them new names in some cases, but everyone knows it is the Wal-Mart brand. And this is where they lack credibility.

Costco is a different situation. Costco sells for less, but they stand for upscale, cool and trendy in the mind. Buying fashion, wine or anything at Costco is not shameful.

If Wal-Mart were selling leading brands for less that would be one thing. But Wal-Mart house brands don't have the credibility as fashion leaders.

Tom Asacker

With all due respect Laura - and I really mean that - I think that you are missing it. Wal-Mart is not a "fashion" brand. It is a "cut costs to the bone through efficiencies and volume purchasing" brand. It certainly behooves the brands who choose to do business with Wal-Mart to consider Wal-Mart's pricing strategy on their brands. But if people can find their preferred brand at Wal-Mart AND at a substantial saving, they'll buy it. That is, until everyone in middle America starts buying it, and then those same customers will drop that brand and trade up to a different brand.

In that regard, Wal-Mart isn't much different than Costco, Buy.com, and other brand name discounters. The brand problem isn't Wal-Mart's. It's the brands which choose to sell through Wal-Mart.

P.S. Great blog. Thanks.

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Laura

Thanks for the comments. And for posting the NYT article it brings up some good points I would like to make. Of course, I do read the New York Times, it comes to my house everyday along with The Wall Street Journal, USA Today and countless magazines.

What the Times' story reported was what a Citigroup analysis had to say about their opinion of the effect of Wal-Mart's new advertising campaign and fashion lines.

However, I think the analysis missed something every important. It is very difficult to change a brand as strong as Wal-Mart's. Wal-Mart is not a brand associated with fashion in the least bit. I would say it is the opposite of fashion. And changing it will be difficult if not impossible. A few ads and some cute skirts are unlikely to be enough.

It really doesn't matter what the product is Wal-Mart is selling. Having the better product doesn't mean you will win. You win by having the better brand. And I think Target has the better "Cheap Chic" brand in the mind of the consumer.

New Coke won all the blind taste tests. It beat Classic Coke and Pepsi. But in the mind, Coke is the better brand and in the end Coke was the winner. It doesn't really matter what it tastes like.

I think in the end consumers will reject fashion from Wal-Mart just like they rejected fashion from Sears years ago. I'm sure some analysis praised the softer side of Sears initially too.

Amber

Maybe all of you need to read the news more. Wal-Mart was lauded for there new collection and yes... Elle was a sponsor. Maybe instead of pretending you are some sort of elitist you should understand what the company is trying to do. Also... if you read the NY times which i doubt any of you do...they had 2 pages also about how "wonderful" the collection was and why they want to bring fashion to all not just the elites.

Update -- Fashion Heats Up Wal-Mart Shares
Greg Levine, 09.08.06, 6:40 PM ET

Citigroup is giving Wal-Mart a "buy" rating, citing an "increasing focus on affordable fashion."

The world's No. 1 retailer may be said to be following discount rival Target (nyse: TGT - news - people ) in using affordable but stylish apparel to woo customers. But Wal-Mart (nyse: WMT - news - people ) is using its vast pockets to grow that aspect of its offerings, according to Citigroup analyst Deborah Weinswig.

"As the company continues to increase its advertising presence, we believe Wal-Mart will be able to improve its brand image with new and existing customers," the analyst said.

"We attended a fashion show hosted by Wal-Mart in conjunction with Elle Magazine on Thursday, Sept. 7 in Times Square," Weinswig said. "The show included the introduction of the new George ME by Mark Eisen line and new Fall looks from Metro7 and No Boundaries."

She praises one line for its "feminine yet sophisticated flair" and "classically styled outfits for work and on the town."

She lauds the discount giant's savvy and good timing in introducing "key silhouettes for the season" such as skinny jeans and cropped jackets.

Citigroup has a target price of $60 for Wal-Mart. The retailer's shares on Friday gained 2.59%, or $1.18, closing trade at $46.72.

Dave

Doesn't Wal-Mart's brand just over power Elle's? If a product is in Wal-Mart, isn't it assumed to be low-priced? Are the majority of Wal-Mart shoppers even aware of Elle?

Unless Wal-Mart inundates their shelves with high-fashion, high-priced products, products like Elle will be but a grain of sand in the Sahara.

Now, the degradation incurred by the Elle brand hanging out at Wal-Mart is an entirely different subject...

Tim Sunderland

This is only one of many things Wal-Mart has been doing to upgrade their image. They are remodeling stores, adjusting inventories to match the demographics of the store, and even making overtures to the gay community (you can read about some of this at www.gonzoblogging.com) and at the same time reinforcing their low-price image. I am one of their boosters, but I have to admit they are trying to be all things to all people right now and not consistently walking the walk (as evidenced by that piece of fashion in Elle magazine). The ultimate question is strategic: where do they want to go, how are they going to get there, and do they have the stomach to tough it out for the long haul? Most companies fail at image changes because they quit after a little bit of tough going. It's like sales: it takes an average of nine calls to make a sale, but most salespeople quit after four or five calls.

Will Wal-Mart tough it out? Time and perseverance will tell. Read more about it at Gonzoblogging.com in the next few days.

Laura Ries

Thanks for the comments.

CK you are right, I forgot to mention the impact this has for the Elle brand. It totally undermines that brand's fashion credibility to carry advertising from Wal-Mart.

CK

Wal-Mart has been going through an identity crisis (and a PR one) for some time. But what bothers me more is Elle's brand. Sure, they're probably having revenue issues, but by placing this ad, they're sinking their own brand in the process.

Great post. Thanks for keeping us focused :-).

Steve Liberati

yeah what a joke!...I guess they have so much money now they don't know what to do with it.

Perhaps, one of the Walton wives started this project just to give herself something to do during the day? You can only spend soo much $ before you run out of things to buy....(not like us will ever have that problem lol)

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