MARCH 01, 2002 -- When asked about micromarketing, most retailers will readily discuss obvious areas like Mexican food and hair care. Wal-Mart's efforts have gone a lot further. It is successfully micromarketing apparel, an area that often baffles competitors. And its expertise goes well beyond knowing not to offer parkas in South Florida.
Wal-Mart uses an increasingly sophisticated combination of human effort and advanced technologies to finetune apparel assortments by store. In every apparel area, Wal-Mart makes sure each store has the right sizes, colors and styles. It tailors each department's size to meet that store's needs. In addition, it makes sure that it ships the right amount of product so that it stays on the retail floor for a length of time that fits a particular community's requirements.
Wal-Mart has learned to effectively deal with some of the special challenges inherent to micromarketing in apparel, says Jennifer Beckett, director of sales and marketing, for Vendor Managed Technologies/Velocity, a technology supplier for vendor/retailer data in Grand Rapids, MI. Unlike other areas, apparel is seasonal and encompasses an intensive number of skus with relation to its multitude of sizes and colors. "Apparel data is definitely different than other product categories."
Beckett, who deals with many of Wal-Mart's apparel suppliers, is familiar with their challenges. While the men's and women's areas can be pretty formidable, children's may take the cake for sku intensity and complexity. She says one Wal-Mart children's supplier handles about 100,000 skus at any given time. "He has 13 different sizes in shoes alone. But they are really only one style."
While Wal-Mart has micromarketed products for years, observers say the retailer is getting better every day. Fiscal 2001 was no exception. During that period, Wal-Mart rolled out its Store of the Community program. This store model allows store, general and department managers to submit yearly surveys that include such information on when, for example, hunting season begins and ends in a community. Start and end dates of programs-say, men's thermal underwear-are determined by the needs of customers and not by a store's geographic zone. "The one size fits all concept simply doesn't work anymore in the retail industry," says Tom Coughlin, president and ceo of Wal-Mart Stores division. "Customers tell us what they want and it is our responsibility to meet those needs."
Just My Size has partnered with Wal-Mart on this new initiative. As Wal-Mart's largest nationally branded plus size apparel supplier, the company recognizes that plus size consumers are not all alike. "This is more than category management and is a very big initiative for Wal-Mart," says Amy Wilder, senior brand manager for branded apparel-megabrand marketing at Sara Lee, maker of Just My Size.
Wal-Mart's pinpointed accuracy is also attributable to its ongoing use and enhancement of Retail Link, a proprietary, Web-based technology that calls out merchandise needs by store. Retail Link is tied into Velocity, a nonproprietary technology used by vendors. Velocity drills down into and analyzes Retail Link data for Wal-Mart's private label and nationally branded vendors. Beckett, who also deals with other retailers in apparel, says the process provides more detailed data to suppliers than they receive from other major chains.
At VF Corp., which is often cited as being on the forefront of technology itself, Angelo Lagrega, president of VF Jeanswear, mass market, gives Wal-Mart high marks. "On a technology front, there is no question Wal-Mart has a significant advantage over competition. They basically want to make sure your space is very productive."
Vendors and analysts concede that Retail Link and Velocity are not brand new technologies for Wal-Mart and its suppliers. Retail Link was developed in the early 1990s, but the intricacies it has begun to bring to what was largely a hit-or-miss apparel category are unrivaled. This is important from a turn and profit standpoint, since apparel is one of Wal-Mart's higher margin categories.
Jon Ragsdale, vp of marketing at Dickies, says his business with Wal-Mart keeps growing. Technology has revealed some "real fluctuations" as to which sizes and colors are popular in which markets. "Before Retail Link, we were using pretty much a cookie cutter approach to stores."
Wal-Mart's micromarketing can yield surprises. Katy O'Kennedy, manager brand creative for Sara Lee Casualwear, says she was urprised by the demand for plus size, five-pocket jeans in the 40-plus age bracket.
Lagrega says VF has even been willing to introduce products that would have been too risky without pinpointed targets. This is the case with polyester jeans. While popular among certain Hispanics, "they may only be meaningful in 75 stores."
Another Southeastern supplier that has been using the technologies for nine years says he has gone from using two to 41 planograms. Many feature new, niche items. "But to work, items have to be put in the right stores." The two companies are also testing a certain package size in 100 hand-picked stores. "Retail Link has been such a complete evolution that we couldn't live without it."
Ragsdale says Retail Link also allows suppliers to receive data in real time. With other retailers, data received covers products' performance from the month before. Month-old data is not immediately usable in most apparel areas. Dickies has benefited so much from the technology that it now employs its own analysts to deal with the data. Dickies worked as a Wal-Mart technology partner for five years. Recently, it was named Wal-Mart's best vendor user of Retail Link, says Ragsdale.
Wal-Mart's key competitors are also employing proprietary technologies with some similar capabilities, namely Workbench (Kmart), and Partners Online (Target). But it was only when Wal-Mart started mandating certain technology applications in apparel that other retailers attempted to follow. And Wal-Mart keeps on improving. "It keeps adding new elements. It is also teaching people to better utilize it," says Lagrega.
But Wal-Mart was already ahead of the curve before the use of micromarketing-related technologies became widespread. Since its humble beginnings in the 1960s, Wal-Mart has communicated with store managers about which products did or did not work in particular stores.
Competitors began to implement technology and then started micromarketing. This created somewhat of a reverse scenario. "Wal-Mart was ahead of the bell curve on this one," says a private label ladies' apparel supplier. But Kmart grew its stores first. "Wal-Mart played this card as they went," he adds. |
