• The New York Times, Wednesday, May 30, 2007 11:15 AM

A confidential report written by Wal-Mart's ad agency from 1974 until last year, GSDM, says that the retailer's cherished strengths--its reputation for discounts, its all-in-one shopping format and its enormous selection--"work against us" as it tries to move upscale. The chain "is not seen as a smart choice" for clothing, home décor, electronics, prescriptions and groceries, the report says.

It contends, for example, that "our low prices actually suggest low quality" for products like HD televisions. And it says that Target, with its designer-inspired clothing and furniture, feels "like the 'new and improved,' while Wal-Mart often feels like the 'old and outdated.' "

The 55-page document was prepared in October 2006 and was based on interviews with scores of consumers. Wal-Mart spokesman Nick Agarwal responds that the 7-month-old report is "out of date and, in some areas, it is just plain wrong." Sales in the chain's pharmacy, electronics and grocery departments, for instance, are very strong, he says.

Read the whole story at The New York Times »