So many businesses are trying so hard to be all things to all people these days. Do we just need to decide who we’re trying to serve? What would happen if we could confidently, and happily focus on one market segment? Could we be happy there if we did? Would our customers be happy if we did?This is not a small business problem. Large businesses do the same thing. The pull of Wall Street on growth and profit causes them to take their eye off their ball leading them to make decisions they shouldn’t have made. Take Walmart for example. Several years ago when our economy was booming they got greedy and went after the affluent customer they thought they wanted. Turns out they already had them and all they had to do was be satisfied if they came to buy their toilet paper, paper towels, milk, and eggs. and whatever they happened to graze upon along the way. But no, they had to go change the whole store around and lose the favor of their core customer – the masses that earn less than $70k household income per year. It seemed like such a good idea, and to some degree it was. Did they just take it too far? Time will tell as they backtrack stuffing their stores with lots more cheap stuff, a dizzying store environment and focus on everyday low prices just like their core customer found in the rapidly expanding dollar store format.
In short, Walmart realized that its core customers – those Americans with household incomes between $30,000 and $70,000 a year – liked the feel of stores so full of attractively priced merchandise that it could barely be contained on the shelves. A couple of years ago, under Project Impact, Walmart had stripped selection and focused on a clean-store look in an effort to attract upscale shoppers. But that group proved a fickle lot.
So where did the fickle lot of higher income folks go? Did their spending play out with the economy as they made do with fewer luxuries? Are they attracted back where they shopped previously as they escape frugal fatigue? Are upscale businesses ready for them to come back, or are they out chasing after a slice of great big Walmart pie with low prices?
Everyone wants a bigger slice of a bigger pie. A bigger slice of a smaller pie is often all we can handle.