Wal-Mart: can an old dog learn new tricks?

What is missing in all these articles is an analysis of whether or not Wal-Mart can or should change. I've written in the past that once a brand has established itself in the value or price category, it is almost impossible to go up market and attract a group of customers that are already going for fancier brands. Wal-Mart is a mass merchandiser that clearly is all about "always low prices."

That's why people shop there.

And their culture, store layouts and advertising push price for all it's worth. Retailers such as Ames or regional price players such as Caldor's tried to compete on price but are long deceased.

Target played it perfectly. Rather than go head-to-head with Godzilla, they decided to offer mass with class, or department store type merchandise for less. They used unique designs and nicer store layouts to attract those folks that were a bit more up-market and tended to look down on the down-market, Wal-Mart shopper. Remember, when you walk into a Wal-Mart, you are telling the world you are a price shopper. When you walk into Target, you are telling the world you have a little more taste than a price buyer. When you walk into Neiman Marcus you are telling the world that you have a lot of money and a great deal of taste.

Like everything else in this very competitive world, trying to be everything for everybody just doesn't work. You are what you are in the minds of your customers and prospects, and leaving that position tends to generate confusion. Higher prices in a low-price store just suggests to your customers that you might be ripping them off.

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Good analysys. I agree with the assessment of Target an Wal-Mart's current position. The one thing I will add is Wal-Mart is totally inept at responding to its critics. Its failed attempts have hurt itself; all they have done is give creditibility to the critics and that will hurt them in making other moves. For example, Wal-Mart is trying to implement scheduling software and more flexible schedules to match staffing to customer demand. Because if their inept responses to complaints about worker wage and benefits; this will be more difficult. Wal-Mart is already 3 years behind Target in this area, and cannot afford the delays.

Finally, it is a lot easier to be agile when you are smaller.