Warren Buffett is known for his affinity for strong, basic businesses available at a bargain price. At first glance, that might explain why the Oracle of Omaha nearly doubled his stake in Wal-Mart Stores Inc. (NYSE:WMT) in the third quarter, according to regulatory filings.
The bargain price element is there. Wal-Mart shares have barely budged in the market rally since last March. But Wal-Mart's offerings are looking less basic these days.
Under a remodeling effort called "Project Impact," the discount retailer of everything from groceries to tires is climbing upscale a notch or two and redoubling its assault on specialty areas left open by the wave of retail bankruptcies. The revamped brick and mortar behemoths now boast cleaner aisles;
expanded electronics sections lined with 60% more flat-screen TVs;
celebrity cookware from Southern chef Paula Deen; and more fashionable duds by designer Max Azria.
Following in Best Buy Co.'s (NYSE:BBY) footsteps, Wal-Mart has also begun to provide home installation and consultation services for electronics, giving it a leg-up on competitors like Kohl's Corp. (NYSE:KSS) and Target Corp. (NYSE:TGT).
At the same time, Wal-Mart has also benefited from consumers trading down in the throes of the recession. Despite a rough second quarter, over the past year Wal-Mart has been able to double its cash position to $13 billion, and between February and September it opened 52 so-called Supercenters, Time magazine reports.
Now, as consumer confidence inches back, Wal-Mart isn't being left in the discount bin. Instead, it is
targeting Target's throne as the go-to cheap chic retailer. In the third quarter, traffic at Wal-Mart stores rose 1.3% from a year earlier while Target's traffic fell 2.6%, according to The Boston Globe.
This is only year one of Project Impact's five-year implementation plan.What analysts seem to complain about most is that Wal-Mart can't seem to implement Project Impact to all of its locations fast enough, which makes its unaltered stores look shabby in comparison. - Sara Behunek
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i love this redesign, especially the new great value brand. it will considered the best redesign in history.
i like the septic look. it feels so european. i seek out great value items now even though i could afford better. theres no point in wasting money on marketing. bravo to walmart for tapping into this.