Wal-Mart’s win, play, show strategy

Interesting story  that touches on Wal-Mart’s “Win, Play, Show” strategy for product selection:

• Win — items where Wal-Mart can beat rivals with low prices on hot products, like flat-screen TVs
• Play — items like apparel where Wal-Mart can play but is unlikely to dominate
• Show — items that are one-stop shopping essentials like hardware, to compete with Lowe’s and Home Depot.

Note that “show” is different from a traditional “loss-leader” approach.  For a “loss-leader” item, the retailer promotes a very low price on everyday items — think milk for a grocery store.  The loss-leaders draw people into the store where they then buy other higher margin items.

A “show” strategy is more of a defensive approach designed to support the customer’s buying experience.  Limited selection, but provides most of the basics which prevent the buyer from having to go elsewhere.

One company I’ve worked with recently has a similar approach.  They have two major product segments.  One is very high margin, the other lower margin.  So why not exit the lower margin product segment?   Two main reasons. First, their customers’ needs span both segments.  Sometimes they need both types of products, and it is better to support all of their needs.  Second, by staying in the lower margin segment, they do generate decent throughput and also achieve enough purchasing volume to get preferred pricing from their suppliers.

These stories are instructive because they run counter to much strategic advice about focusing.  If you just focus on a high margin product segment, you may ignore other customer needs.  Providing a more complete product selection may meet customer needs and get you to scale.   In addition, much of this strategy supports a defensive approach vs. an offensive approach.

Question for you:  does a win, play, show approach apply to your business?  How so?  What do you need to do about it?