Wal-Mart: Fashioning a New Growth Track

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But Wal-Mart hasn't been willing to invest heavily in such a marketing effort, especially since apparel is much harder to position in the market than staples like Tide or Bounty. Patricia Edwards, managing director and portfolio manager at Seattle money manager Wentworth Hauser & Volich, which has $7.9 billion in assets, says: "Wal-Mart executives are very good at the science of retailing but fall short when it comes to the art of retail." At Target, for instance, there is a laser focus on marketing an image, to the point where even the chain's topmost executives, including the CEO, get involved in what goes into Target advertising. By contrast, Wal-Mart CEO H. Lee Scott famously told BusinessWeek editors last March: "I'm not a big fan of marketing." (BusinessWeek.com, 3/30/07).

In fact, retail experts agree that Target's snazzy advertising is what makes the discount retailer look like an über-cool destination. Customers have learned they can find the latest trends in everything, such as home goods (a teapot designed by Michael Graves) or clothing from some of the edgiest designers like Proenza Schouler of New York and Luella Bartley of London. And while Target's ads have been relentless for almost two decades now, Wal-Mart's apparel-focused ad campaign was a flash in the pan whose few pages in Vogue and a handful of other women's magazines barely lasted a few months before being pulled. "Wal-Mart is full of penurious people who want a quick fix, and an apparel strategy cannot be achieved overnight," says Flickinger.

The behemoth's ability to deliver in this key area is central to its domestic growth strategy, but everyone agrees this is the toughest challenge for the retailer to crack. "It's similar to a strategy where Hyundai starts producing a luxury car—would people believe in that brand? I don't think so," says Robert Passikoff, president of New York brand consulting firm Brand Keys. Wal-Mart has changed its advertising tagline from "Always low prices" to "Save Money. Live Better." The problem is, people are still going in there to "save money" on basics, but going elsewhere for the "live better" part of the equation.

Gogoi is a contributing writer for BusinessWeek.com.