Wal-Mart Gets It Right This Time

The New York Times reports today that Wal-Mart is laying off dozens of executives at its headquarters as it closes two divisions as it revamps its strategy.

Wal-Mart shifted its focus in the apparel area to a "back to basics" strategy last year, after coming to terms with the fact that shoppers were not interested in buying upscale fashion the same place they bought economy-sized groceries and discounted appliances.

Over the previous two years, trendy offerings had been eating up shelf space at Wal-Mart as the company tried to weasel its way into what seemed like a lucrative market at the time. Alas, the discounter failed to secure the high-profile designer collaborations that were so successful Target, H&M, and Kmart, and threw in the towel in early 2007.

Six months after replacing top apparel executive Claire Watts, Wal-Mart's latest move seems to suggest that the discount retailer isn't as much rethinking its apparel strategy as it's looking to abandon it.

Bravo to that. Wal-Mart couldn't have picked a better time to get out of the apparel game (unless it was this time last year). With "recession" as the buzzword on everyone's lips, clothing retailers are posting some of the steepest losses across the glum retail landscape, while discounters are among the few businesses actually profiting from the economic downturn.

That means Wal-Mart should stop wasting energy and resources on plowing into new businesses and fixing broken strategies for the time being. Focusing full-steam ahead on selling the essentials—categories like grocery, pharmacy, and electronics, in which they already excel—will pay dividends as the economy continues to sour.

by Liz Gunnison