Case Study II: Walmart Strategy On May 17, Walmart released its lackluster quarterly earnings. Thanks to inflation, prices have hit new highs, and customers nationwide have been opting to spend on food or experiences rather than bigticket, profit-driving items. But while the pressure is now on Walmart to get numbers up, surging prices could actually be opportune for Walmart, Robby Ohmes, retail analyst for Bank of America, told CNBC. The pilot store, which is in Northwest Arkansas, has a different strategy for product layout. Aisles in the clothing section are wider and packed with fewer racks, making it easier for customers to browse. National brands like Reebok have their own space, as do Walmart's individual fashion brands and home brands, CNBC reported. Brands that speak to the younger crowd also get more space with this model, the outlet said. Don't expect to see those large "Everyday Low Price" and "Rollback" signs we're all so used to seeingWalmart is moving away from that approach. At the Arkansas store, smaller price signs accompany both big-brand clothing items and Walmart's "elevated clothing brands," CNBC reported. "We're selling apparel in a grocery store, however that doesn't mean we have to sell apparel like it's grocery," Alvis Washington, vice president of marketing, store design, innovation, and experience for Walmart, said (via CNBC). "Apparel is a discretionary category. It's emotional. You want them to fall in love with the fashion." Rather than letting the low price be the selling point, Walmart is allowing "the product to be hero," Washington said. At the Arkansas store, for example, that's exemplified by a larger selection of wines, including those that are pricier, and a millennial-friendly craft beer section. Loyal Walmart customers don't have to worry about increasing prices, thankfully, as Walmart execs confirmed they are keeping those "entry-level price points" for those on a budget, CNBC reported. But the retailer does want to have customers coming to them for higher-margin clothes and household amenities instead of just food items - particularly as people become "more value-conscious," Redfield said. Question 1: Discuss some predictions for the retail shopping industry based on principles of price changes (5Points). Question 2: Companies need to manage customer equity carefully, in terms of profitability, investment, and loyalty. Evaluate the types of customers at Walmart and how they are building the right relationship (5Points).

Analyzing the retail shopping industry and Walmart's approach to customer equity, this discussion highlights predictions regarding price changes and the significance of brand value. Additionally, it explores how Walmart manages its relationship with different customer segments, emphasizing strategies to attract both budget-conscious shoppers and those willing to spend more.

1. Predictions for the retail shopping industry based on principles of price changes are as follows:

The impact of inflation on prices - Retailers may feel more pressure due to inflation and price increases. However, higher prices can also be an opportunity for companies that want to increase profitability.

The significance of brand value - Walmart's move towards higher-margin clothing and home items signals a shift in its business model. This indicates that companies can use brand value to attract customers, rather than just price.

Craft beers and wine selections may become increasingly important - Alvis Washington stated that customers are becoming "more value-conscious." As a result, retailers may begin to prioritize high-margin items, such as specialty beers and wines, to draw in consumers with higher budgets.

2. Walmart caters to a variety of customers, including those who are budget-conscious and those who are willing to spend more. The company needs to manage customer equity carefully in terms of profitability, investment, and loyalty to maintain and improve its relationship with each customer type. Walmart has a dedicated group of price-conscious shoppers who are unlikely to purchase high-margin items. These customers are looking for the best possible deal and are drawn to Walmart's "entry-level price points.

"As a result, Walmart execs have confirmed that they will keep these price points despite the inflation and price increases. To attract higher-budget customers, Walmart is introducing new product layouts, such as wider aisles and fewer racks, that cater to younger customers. Additionally, the retailer is emphasizing brand value and product quality over low prices. Walmart wants to create an emotional connection between customers and its products and create a sense of loyalty among its customers by giving them more variety in the items they purchase. This is a way to build customer equity by investing in its relationship with higher-budget customers.

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Qwseed Qwseed · Answer 2 · 2023-09-28T11:51:40-04:00

Final answer:

The retail shopping industry may see changes in customer spending habits due to price changes. Walmart has different types of customers and builds relationships by offering diverse products and an enjoyable shopping experience.

Explanation:

Question 1: Predictions for the retail shopping industry based on principles of price changes:

The increase in prices may lead customers to prioritize spending on essential items and experiences rather than luxury or big-ticket items.
Walmart may face pressure to improve its financial performance as customers shift their spending habits.
Surging prices could create an opportunity for Walmart, as customers may seek more affordable options and value-conscious shopping.

Question 2: Types of customers at Walmart and building the right relationship:

Walmart caters to a diverse customer base, including budget-conscious shoppers, millennials, and those looking for higher-margin clothing and household amenities.
The company aims to build relationships with customers by offering entry-level price points for budget shoppers, a larger selection of products to appeal to different demographics, and a focus on providing an emotional and enjoyable shopping experience.
By understanding the needs and preferences of different customer segments, Walmart can tailor its offerings and marketing strategies to attract and retain loyal customers.