By Tonya Garcia, MarketWatch
With its focus on the target Sam’s Club member, efforts in online grocery, and a new premium online partnership, Wal-Mart Stores Inc. is making a pitch for higher-end customers like Amazon’s.
In prepared remarks to accompany its fiscal third-quarter earnings, Wal-Mart /zigman2/quotes/207374728/composite WMT +0.48% Chief Executive Doug McMillon described the Sam’s Club target member as someone with “a larger family with a higher income, probably in the suburbs.” This person owns their home, a car or two and possibly a small restaurant, he said.
“By narrowing the focus on this member, we believe we can earn a greater share of their wallet,” he said. “We’re already making good progress in areas where we want to win, including fresh food and with our Member’s Mark private brand.”
Brett Biggs, Wal-Mart’s chief financial officer, said on an early Thursday media call that merchandising and other factors also came into play for Sam’s Club, which reported a 2.8% increase in same-store sales excluding fuel and sales of $14.86 billion, up 4.4% year-over-year.
10 'unexpected' bargains at Costco
There's a reason people are obsessed with Costco, and it's not just from those huge slices of pizza and those free samples.
Greg Foran, Walmart U.S. chief executive, said he didn’t see a “meaningful difference” in stores, but he has some idea of what could attract this higher-end demographic.
“Online grocery is the thing helping most to get the higher-end customer,” something he said he’s seeing and hearing anecdotally. “I still think there’s an opportunity in front of us in terms of stores.”
The retailer continues to expand pickup options and now has online grocery in more than 1,100 stores, according to McMillon. It will add another 1,000 next year.
In addition to a string of acquisitions including Jet.com, Bonobos, ModCloth and others, Wal-Mart just announced an online partnership with Hudson’s Bay Co. chain Lord & Taylor, bringing premium fashion brands to the Wal-Mart site.
Wal-Mart shares closed at a record on Thursday up 10.9% after the retail giant reported profit and sales that beat expectations.
“Wal-Mart has made a tremendous effort to expand into the higher-end segment,” said Matt Sargent, senior vice president of retail at consulting firm Magid Associates. Sargent has also talked about Wal-Mart’s efforts in voice commerce as a way to reach this demographic.
According to data provided by Sargent, a national average of 36% of consumers earn more than $75,000. At Wal-Mart, excluding Jet.com and Sam’s Club, 30% of shoppers reach that income threshold. At Sam’s Club, it’s 42%, and 41% of Jet.com customers make that much, which is in line with Amazon.com Inc. /zigman2/quotes/210331248/composite AMZN -1.78% .