Wal-Mart Appeal: Insights Into Successful Mass-Market Selling

The U.S. retail landscape has experienced a sea-change over the past five years, thanks in part to the growth and influence of one key player: Wal-Mart. Constantly redefining the rules of the retail game, Wal-Mart pressures its competitors to play catch-up and respond to changing marketplace dynamics created by its ever-evolving retail strategies.

Part of Wal-Mart’s success is due to factors such as its brand strategies, product offerings, pricing, store locations, and the chain’s sheer size – more than 3,500 store locations.

But what other factors drive nearly 60 percent of U.S. consumers to shop at Wal-Mart each month?

To answer this question, important to manufacturers and retailers in nearly every channel and industry, NPD developed a Shopper Segmentation Study focusing on consumer lifestyles, beliefs and store attribute preferences. The January 2005 pilot study surveyed 5,000 adult consumers to explore these issues.

Here, we share four key preliminary findings from the study to help your organization better understand who is shopping at Wal-Mart and why.

1. Wal-Mart serves more customers than any other retailer.

Each month, Wal-Mart is visited by a larger population (59% of U.S. adults) than any other store, surpassing other merchants by at least a factor of two. The next closest competitors are Target (25%) and Kmart (17%).

The study indicates that shoppers are driven to Wal-Mart for the basic necessities; the chain’s product mix, prices and brands keep them coming back. Nearly 60 percent of Wal-Mart’s shoppers purchase food and groceries, 25 percent buy basic apparel items, and 24 percent buy beauty products at the store in a typical month.

2. Many Wal-Mart customers strongly agree that prayer in public schools should be encouraged.

Among many attitudinal statements provided to respondents, “I believe that the government should encourage prayer in public schools” was the strongest predictor of whether or not a consumer shops at Wal-Mart. Among those who “Strongly Agree” with the statement, 72% (index 122) shopped at Wal-Mart in the past month. Only 41% (index 69) of those who “Strongly Disagree” shopped at the retailer. Agreement with this statement was associated with Wal-Mart shopping in all regions, urban and rural, except for the Eastern Census Division where no relationship was observed.

Other findings from the attitudinal statements included:

• Among those who strongly agreed "I go shopping often" 74% (index 125) shopped at Wal-Mart,
• Among those who strongly agreed with the statement "I prefer stores where prices are low" 71% (index 120) shopped at Wal-Mart,
• Among those who strongly agreed "I never seem to have enough money" 67% (index 114) shopped at Wal-Mart.

3. Wal-Mart does not appeal to all consumers equally.

To more fully understand Wal-Mart’s customer set, NPD segmented the national consumer population into five groups, each with shared beliefs and demographics, as
follows:

Wal-Mart draws customers from each population segment but at very different rates. "Blue Collar Southerners" are most likely to shop at Wal-Mart (73%, index 124) followed by three other segments at or around 60%. "Older Urban Sophisticates" evidence the lowest attraction to the retailer (38%, index 64).

4. Wal-Mart customers are driven by the same criteria that characterize most successful retail endeavors: value, customer service, loyalty programs and promotions.

Among all consumers, the top three claimed drivers for choosing a retailer are:

• Best value for dollar
• High customer service
• Loyalty programs and promotions

As NPD compared responses to each of these preferences and consumers’ retailer choices, it became apparent that Wal-Mart has done a good job of adapting its model to these primary consumer drivers. Its current advertising tagline, "Always Low prices, Always," underscores the top consumer-rated attribute.

A closing thought:
As we studied these data, we began to wonder: Is Wal-Mart adapting to consumers’ beliefs, preferences and basic needs, or is Wal-Mart indeed influencing or reinforcing these beliefs and preferences among consumers through its marketing and product strategies?

Methodology: Results from The NPD Group’s Shopper Segmentation initiative included in this article are based on a nationally representative sample of 5,000 respondents who were interviewed in January 2005. The questionnaire identified which stores each respondent visited, along with a battery of more than 125 belief statements, personality statements and store preferences statements. The collected data underwent a series of statistical data reduction techniques, including Factor, Cluster and Regression to segment the Wal-Mart Shoppers.

Interested in exclusive, food-specific Wal-Mart insights? Contact Peter Chung at 847-692-1768 peter_chung@npd.com for details about a new NPD Foodworld report.