In an reflection of just how pervasive the Wal-Mart business model is, United Airlines CEO Glen Tilton told the Chicago Sun-Times that as he attempts to transform his company and take it out of bankruptcy, he is using the Arkansas retailer as his archetype.
How? Tilton told that paper that just as Wal-Mart evolved from being a rural discount store to being the biggest retailer in the world, offering a variety of formats and services to match the needs of varying demographics, United needs to offer a broader range of services for a wider range of customers.
So, just as Wal-Mart offers discount stores, supercenters and neighborhood food markets, United will offer its traditional international service, expand its regional carrier operation, and develop a new low-fare carrier that could compete with the likes of JetBlue and Southwest Airlines.
“This is not remarkable stuff,” said Tilton. “All I'm doing is resegmenting my market.”
How? Tilton told that paper that just as Wal-Mart evolved from being a rural discount store to being the biggest retailer in the world, offering a variety of formats and services to match the needs of varying demographics, United needs to offer a broader range of services for a wider range of customers.
So, just as Wal-Mart offers discount stores, supercenters and neighborhood food markets, United will offer its traditional international service, expand its regional carrier operation, and develop a new low-fare carrier that could compete with the likes of JetBlue and Southwest Airlines.
“This is not remarkable stuff,” said Tilton. “All I'm doing is resegmenting my market.”
- KC's View:
-
Maybe it isn’t a remarkable goal, but achieving it will take an enormous amount of work, not to mention a large dose of concessions from the unions.
We’re not sure we entirely buy the Wal-Mart metaphor, but we see where Tilton is going with this. It is, in fact, what more retailers probably should be doing. Segmenting the market as well as the offerings made to those various markets.
Think about it for a minute, While Wal-Mart has the reputation of being the most mass-oriented of the mass retailers, maybe that’s not entirely accurate. Sure, it sells to everybody…but more and more, it is creating different kinds of stores for different kinds of markets. And perhaps it is fair to suggest that as it rolls out more and more Neighborhood Markets, and expands its urban strategy, this will become even more true.
To compete with Wal-Mart, then, maybe it is equally critical for other retailers to segment their stores…to come up with new formats for different geographic and demographic markets.
If the biggest retailer in the world is a mass retailer, maybe the only way to compete is to be a niche retailer…even if it means creating a series of niches that, when added together, creates mass.
This isn’t a fully formed theory yet. It’s more a “it’s-five-in-the-morning-and-we’ve-already-had-four-cups-of-coffee” hypothesis.
But we’re working on it.
Postscript: We were taking a United flight yesterday and mentioned the Wal-Mart segmentation metaphor to one of the flight attendants, who said he was confident of United’s ability to survive, noting that he’d worked for the airline for 11 years and they’d been the best years of his life. His reaction: “They probably should have done it years ago.”
But when we joked that we weren’t sure we wanted to fly “Wal-Mart Air,” he agreed. “I don’t want to work for Wal-Mart Air,” he said. “We’ll have to see what happens.”
