Tommy Hilfiger Meets Walmart

Introduction:

In 2000, Target Corporation purchased Mossimo clothing line to distribute in its retail outlets. This investment proved extremely successful by increasing men and women's apparel sales. For the fiscal year of 1999, before the acquisition, Target reported $2.6 billion in sales, $78 million or 3% of that was clothing sales. By 2001, they reported their fiscal year sales to be $3.3 billion, $231 million or 7% was in clothing sales. Over that two year span, their clothing sales increased by 297%, and represented 4% more of the corporation's total sales.

In addition to helping spike sales, the designer products have been crucial to Target's image, which has evolved into something quite different from its competitors, Wal-Mart and Kmart (the No. 1 and 2 discounters). When asked of his opinion regarding Target's strategy, Marshal Cohen, president of NPD Fashion world, a market research company specializing in fashion retail said, "Even if designers do not sell a lot of product, they're able to escalate the image of Target to attract customers who wouldn't normally shop at a place like that." According to Cohen's expertise, "If you can have 25% of your collection sell well, that's a great season."

With this transition, Target created a new category of retailer by offering upscale designer products to regular people at reasonable prices. So far, the strategy has spelled success. Marian Salzman, chief strategic officer for the marketing communications firm Euro RSCG Worldwide has commented, "What Target is doing is translating high design for the real world. They have made a designer of world-class stature really accessible to the average Joe or Jane; it's very clear it's working for them."

This has succeeded in diversifying Target from its competitors in the clothing department. It also raised its quality of apparel, and widened its market to include a younger demographic.

Explanation of Problem:

Wal-Mart wants to incorporate a high-end department store clothing image into its well-established Superstore. This scenario creates a public relations challenge of appealing to the younger demographic that is associated with a designer name brand. Wal-Mart's ultimate goal is to successfully launch a designer name brand clothing line, and raise retail clothing sales.

Research:

Wal-Mart Stores Inc., founded in 1962, is the largest retailer and the largest company in the world based on revenue. For the fiscal year ending January 31, 2005, they reported sales revenue of $285 billion in the U.S., $14.25 billion or 5% of that was clothing sales. For the first quarter, ending May 31, 2005, they reported $70.9 billion in sales, $54.5 million or 5% in clothing sales. There are approximately 1300 Wal-Mart retail stores in the U.S. that average $2.7 million per quarter, $900,000 per month, in clothing sales.

They are the largest private employer with 1.3 million employees in the U.S., Mexico, and Canada. More than eight dollars of every $100 spent in the U.S. retail stores is at Wal-Mart. Even with these impressive figures, this corporation continuously strives to surpass its competitors and broaden its market of patrons. Stories in the media show Wal-Mart is aware of its need to appeal to younger, fashion chic patrons as well as bargain hunters.

They recently purchased a big-name clothing line to be exclusively sold in their retail outlets, namely Tommy Hilfiger. This acquisition prompts the necessity for a concise and innovative marketing campaign, specifically targeting the 18-25 year-old demographic that Hilfiger sales primarily consist of, specifically college students. Before their buyout, Hilfiger had already devised and began production of a new label for their apparel. It was their intent to reshape its company and product image due to negative publicity that had plagued them in the past. It is Wal-Mart's intention to utilize this "new look" for the introduction of Hilfiger apparel and merchandise through its well-established Supercenters.

Preliminary research was conducted via marketing questionnaires that were distributed and collected at 20 U.S. college campuses, spanning different race and economic demographics. Over 1,000 questionnaires were collected from each campus, which provided much needed insight for the campaign direction. The questionnaires contained the following questions:

1. How many times in a month do you frequent a Wal-Mart Supercenter?

2. What are your most common purchases when you go? (food, health and beauty, sporting goods, clothing, electronics, house wares, etc.)

3. What is your ideal cost for a pair of jeans? ($10-$20, $20-$30, $40+)

4. If a high-end fashion label introduced a line of discount clothing exclusively at Wal-Mart, would you: A. Be excited, eager to check out the deals, B. Be interested, would probably check it out next time in the store, C. Be indifferent, money not an issue, or D. Be skeptical, wonder if same quality of high-end name brand would still apply?

5. If you could purchase high-end fashion (i.e. Tommy Hilfiger) at below retail prices, how much would you extend your clothing budget to make those purchases? ( before $15 now $25, before $20 now $30, before $30 now $40)

The questionnaire also requested they identify themselves as either male or female.

The purpose of this polling devise was to clearly identify an audience most interested in bargain price clothing, how often they shopped and for what, their ideal price range of clothing, and to identify any concerns regarding product quality. Even though men frequented the stores less often than women, both sexes were in a general agreement: 62% averaged a minimum of 2-3 visits per month, 87% only shopped for food and health and beauty products, 72% said an ideal cost for a pair of jeans was $20, 54% said they would be interested but skeptical, and 68% said they would raise clothing budget to $25-$30 for a pair of jeans.

This research showed that the primary focuses of the campaign should be to better associate the Wal-Mart name with desired clothing, to ensure quality along with bargains, and to price jeans around $25-$30.

Action Planning:

In order for this proposal to be successful, Wal-Mart needs to build bridges with the media, creating the ability to interact specifically with its target audience. I believe the younger demographic (18-25) should be the primary target audience not only because they are proven to be the most