Wal-Mart Stores Inc is to reduce the number of shops that sell its fashion line by designer Mark Eisen in a bid to clear out stocks of unsold clothing.

While Wal-Mart hasn't revealed how widespread the latest reductions will be, they lend support to its admission last October that it was going to refocus on basics - after a costly and high profile foray into high fashion.

The world's largest retailer brought in award-winning sportswear designer Eisen last May as part of ongoing efforts to upgrade the quality and fashion focus of its apparel lines. He was responsible for a high-end capsule collection under the George brand - called George ME (em-ee) by Mark Eisen - which launched in mid-August.

At the time it was hoping to emulate the success of the George branded apparel range at Wal-Mart's Asda subsidiary in the UK, and opened a New York office to help identify fashion trends emerging around the world and integrate them into its apparel ranges.

However, the first signs that all were not well with its fashion focus came last year when the retailer trimmed its Metro 7 women's wear line to 1,000 stores instead of the 1,500 planned initially.

At the time Wal-Mart said Metro 7 was "too successful" and that "demand was outweighing supply."

Price-conscious fashions
Wal-Mart has been keen to offer more fashion for price-conscious shoppers to compete with rivals like Target Corp, JC Penney and Kohl's, as well as trying to lure more affluent customers who could be persuaded to pay a little bit more for trendy designs.

But in October it admitted that it had been too ambitious in its plans. Higher-priced fashions are "not where the money is going to be made," said chief executive H Lee Scott Jr.

Wal-Mart's apparel problems - including a 3.5% decline in the company's same-store sales during April - can be partially blamed on a softer economy, rising oil and gas prices which are reining in consumers' spending power, and even unseasonable weather conditions throughout the US.

But some of the slowdown in sales is also of the retailer's own making.

The company's strategy to design and market more expensive and fashionable clothing has veered from the ultra-trendy Metro 7 line, which intimidated regular customers who were more comfortable with its fashion basics like jeans and T-shirts, to the hiring of Eisen whose name would have had little meaning for Wal-Mart shoppers.

Presentation setbacks
Paul Charron, chairman emeritus of Liz Claiborne and first vice chairman of the board of the National Retail Federation, also believes Wal-Mart's fashion ranges have been held back by poor presentation and buyer mentality.

"Wal-Mart is struggling to sell apparel to women of affluence [$75k+ income]," he told the audience at the Prime Source Forum in Hong Kong last month.

"I believe this is due to its inability to devote space for appropriate fashion apparel, and to show customers how to pull a look together. Also, it has a generation of merchandising management who have been brought up to buy on price, and if space is not productive on profit per square foot they give this space to something else.

"Until Wal-Mart reaches out to this consumer it won't ever be able to sell apparel."

Quoted in just-style.com's forthcoming 'Global market review of discount apparel retailing - forecasts to 2012,' Patricia S Pao, chief executive officer of Pao Principle, a New York City-based retail consultancy, explains that customers go to the store that they feel meets their wants and needs.

However, disaster happens when the retailer deviates from this path. "The Wal-Mart customer wants traditional fashion in her size (the average Wal-Mart customer is 5ft 2ins and size 14)," she explains.

"Wal-Mart's launch of Metro 7 is a clear case of the product not meeting its core customer needs. It didn't sell because it didn't appeal to, nor fit, its core customer and Wal-Mart could not provide the desired customer experience of the new customer attracted to Metro 7."

It's a sentiment that the company seems to have taken on board. "We need to remember who we are," Scott told analysts last year - and it may well be that by forgetting its roots the retailer has simply ended up alienating and confusing its core customers.

By Leonie Barrie.