Wal-Mart’s “Project Impact” Has The Wrong Kind Of Impact

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The market impact of Wal-Mart is almost unimaginable. The world’s largest retailer operates more than 4,300 stores in the US and more than 4,000 additional stores in 15 markets worldwide. The company employs more than 2 million people worldwide and had $405 billion in sales for the fiscal year ending January 31, 2010.

So when Wal-Mart makes a change – any change – it, too, can have a giant impact, and not always for the better. This is the case with Wal-Mart’s Project Impact, a strategy the company began implementing in 2008. Project Impact was intended to reduce clutter, make the jammed aisles easier to navigate, and improve the look of the stores. Bill Simon, the COO of Wal-Mart US, tells Daily Finance, “The net effect is you open up the customer space, you improve the shopping experience, you provide access and visibility to departments in the store that were previously difficult to shop, like apparel.” Underlying the cleaner store strategy was Wal-Mart’s desire to appeal to higher-income shoppers.[more]

Sounds like a great idea. But when Wal-Mart implemented Project Impact at 600 US stores, it had an unintended impact – sales suddenly declined. Part of the reason for the decline was thought to be the company’s decision to remove an area of the store called “Action Alley,” which features some of Wal-Mart’s biggest selling items. Simon admitted that Project Impact was “responsible for some of the traffic and some of the sales decline as well.”

Wal-Mart originally had in mind implementing Project Impact system-wide this year. While the company doggedly says it is still committed to the strategy, one has to wonder if changing the Wal-Mart formula is a good long-term move. It reminds us of the old adage: If it ain’t broke, don’t fix it.

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