Assorted Afflatuses

The Wall Street Journal ran a very interesting piece on its front page today detailing the decline of Wal-Mart's puissance in the retail industry and in the American economy as a whole. It was an interesting analysis of Wal-Mart's current struggle to continue its success in a market that has, in many respects, moved to become less homogenous and more quality-centric. I found one statistic particularly interesting: according to the article, Wal-Mart has scaled back its plans for expansion in the United States, "because its new stores were stealing too much revenue from existing ones."

I have the sense that Wal-Mart has caught Affluenza — the highly contagious retail virus that possesses retailers to move up-market — from some of its other low-price competitors. Admittedly, Affluenza does not necessarily condemn the infected company to a slow painful death by share price decline. With the right treatment, it can be — and has been — a boon, not a bust for the infected company.

Target, for one, has been enormously successful in its quest to seduce more affluent consumers. Their clever advertising campaigns have won countless awards and high-praise, and partnerships with well-known designers, like Michael Graves and Isaac Mizrahi, have imbibed the brand with a more hip, design-centric aura. People now associate products at Target with relatively high-quality, low prices and thoughtful design. Target has also gone to great lengths to promote their philanthropic efforts, which helps lend a façade of kindness to their ruthless corporate efficiency.

Wal-Mart has fared less well, due in large part to their insane obsession with ultra-low prices.

They have made attempts to change their corporate identity. In January 2007 alone they worked with — and later fired — three advertising agencies. Wal-Mart also tried to lend their image a touch of class by piloting a program to outfit employees in navy blue polo shirts, rather than navy blue vests. But neither the ad campaigns nor the more polished uniform resonated with more affluent consumers because Wal-Mart did not back up their claims.

I cannot name a single notable designer whose products grace the hallowed shelves of the Supercenter, nor can I name a single product available exclusively at Wal-Mart that has sparked interest among the aesthetically-concerned. Instead, I think of low-priced, low-quality merchandise manufactured in China by underpaid employees in a factory that wreaks havoc on the environment.

The age of Wal-Mart may be drawing to a close. My inner-investor hopes that Wal-Mart will put its act together and improve. But the good neighbor and environmentally-conscious consumer in me hopes that Wal-Mart will finally stop overtaking the now-dead American Main Street.