Wal-Mart Gets Home in Order in Time to Make Gains

(MoneyWatch)  Wal-Mart's investment in its home departments appears to be paying off, Wal-Mart vice chairman Eduardo Castro-Wright indicated in a conference call last week, with results for the department exceeding that of competing retailers.

Even as grocery sales weaken under competitive and deflationary pressure, Wal-Mart is touting home as a positive, which is a victory long coming. Wal-Mart realized for years that it needed to upgrade its narrow and cluttered home goods sections. Problem was that the home furnishings sector was in serious decline by the time Wal-Mart decided to pull the trigger with manufacturers going into bankruptcy and even liquidation. The support the company could usually count on to help it reconfigure and upgrade display just wasn't available.

So, when it developed its new Project Impact stores, the company repositioned home on its own to better showcase both national brands and, particularly in the case of household furnishings, private label products including new lines designed to focus on demographics that might not have been shopping the home department at Wal-Mart.

In the company's second quarter conference call, Castro-Wright seemed happy with home when he said:

Our positioning efforts, along with the merchandising transformation initiatives, have strengthened the sales momentum in this business. Sales of our proprietary brands, including Better Homes & Gardens, Canopy and Mainstays, as well as our new teen line ?€" Your Zone ?€" continue to grow ahead of comps reported by leading competitors. Our sales in kitchen, dining and food preparation products continue to be strong. In fact, when we compare our monthly home performance to what other retailers are reporting, we believe we continue to gain significant share in this business.

The observation on food-related products is interesting. Certainly, Wal-Mart has seen increasing customer traffic in its food sections in the recession as consumers eat out less and entertain themselves and others at home more. It seems as if not only food but also product categories involved in preparing and serving it have benefited from the trend.