Walmart Rolls Out "Project Impact"

Time had an article this week on Walmart's new initiative, Project Impact. Much of the article described the intent of the project in terms of making the store cleaner and more inviting – "Action Alley" has been cleared out, leaving more room for shoppers and clearer sight lines through the store. Departments have been moved to make them more intuitive to shoppers – cosmetics, health & beauty, and pet food are next to groceries, mimicking the layout of a supermarket.

But the layout and the emphasis on certain departments also leads to speculation about whether Walmart is targeting certain competitors:

With Circuit City out of business, the electronics section has been beefed up. Walmart is also expanding its presence in crafts. Sales at Michael's Stores, the country's largest specialty arts-and-crafts retailers, have sagged, and Walmart sees an opportunity. Stores are chock-full of scrapbooking material, baskets and yarns.

Retail industry observer Burt Flickinger is quoted as saying:

"They've got Kmart ready to take a standing eight-count next year," says retail consultant Burt Flickinger III, managing director for Strategic Resources Group and a veteran Walmart watcher. "Same with Rite Aid. They've knocked out four of the top five toy retailers, and are now going after the last one standing, Toys "R" Us. Project Impact will be the catalyst to wipe out a second round of national and regional retailers."

As a consumer and as a marketer, I have very ambivalent feelings about Walmart. Like most folks, I hate bullies, which is how I perceive Walmart, and love underdogs, which is how I perceive anybody battling with Walmart. At the same time, I greatly admire Walmart's efficiency and innovation. We may not like a team that always wins, but we still have to acknowledge their excellence.

For competitors, the idea that Walmart is preparing to take things up a notch has to be chilling. For suppliers, the idea that Project Impact may lead to another slew of closures of key accounts, should also be scary. However much they may have slipped in recent years, Kmart still represents a significant piece of business for many suppliers. Rite Aid, Michaels, Toy R Us – does Project Impact really represent a fatal blow to these huge players?

I'll be looking forward to checking out the new stores as they're rolled out, to see if they are the competition-crusher some seem to think. Which raises the cautionary note with which the Time article ends: How quickly can this new model be implemented?

What analysts really want to see from Project Impact, however, is a faster pace of implementation. "The biggest hurdle facing Walmart is the speed with which they can roll this out," says Feldman. As more Project Impact stores pop up, the existing stores appear worse by comparison.