Pinch Me -- Is That a Wal-Mart?

What they require, designers say, are risky forays into fashion, the kind that could alienate Wal-Mart's core customer.

To inject designer cachet into its merchandise, Target recruited architect Michael Graves and designers Todd Oldham and Isaac Mizrahi to create clothes and home furnishings exclusive to the chain; hip Swedish retailer H&M has snagged designer Karl Lagerfeld to do the same.

The movement that these retailers have triggered goes by many names -- the democratization of fashion, the dawn of cheap chic -- but the motivation is simple: A globalized generation of consumers, reared on the endlessly self-improving and consuming message of "Queer Eye" and "What Not to Wear," is eager to buy into the next trend, even if that skirt or sofa or sneaker lasts them only one season.

"This is the trend that keeps on giving," said Marshal Cohen, chief analyst at market research NPD Group, who spends hundreds of hours a year interviewing consumers about their shopping habits.

NPD has found that a typical appliance consumer would rather buy five or six hip-looking blenders for $19.99 over the next 10 years than a single sturdy one for $89. "Sure, they know they are getting one that may break down in a few years," Cohen said, "but they will be able to keep getting the latest."

So why is Wal-Mart just discovering this? Until now, the discounter's growth has relied on a steady schedule of new store openings -- about one a day this year. But as Wal-Mart runs out of new places to plop down its mammoth stores, investors are focusing on the chain's lackluster same-store sales, a closely watched figure measuring purchases at stores open for at least a year.

On that score, Wal-Mart consistently trails Target according to Deutsche Bank Securities Inc. Wal-Mart executives blame the sluggish same-store sales on their decision to build new stores close to older ones, which temporarily dampens sales at the older store but ultimately, they say, creates more Wal-Mart shoppers. But veteran Wal-Mart watcher Bill Dreher of Deutsche Bank isn't buying it.

"Cannibalization is a factor, but not the only or the dominant one in Target's much stronger performance," he said.

One culprit, analysts speculate, is Wal-Mart's shoppers, who consistently seek clothing and home decor outside the chain -- namely at J.C. Penney, Kohl's and Target (in that order, studies show). One hundred million consumers shop at Wal-Mart every week, but only 34 percent buy apparel there, according to a study by STS Market Research.

"Kind of old-fashioned," is how Janice Fitzgerald described the apparel and home decor at a Wal-Mart in Alexandria. She skips those departments and heads straight for household staples such as razors, toilet paper and contact lens supplies. When buying clothes for herself, she shops at Kohl's and Target; her three children gravitate toward Aeropostale, Abercrombie & Fitch and H&M.

Hence the Trend Office in New York, which is trying to ensure that Wal-Mart stocks the must-haves for the Fitzgeralds of the world. The office is small -- 10 people, most of them freelance consultants. All are veteran trend spotters: Fran Yoshioka, a former trend and design director at Sears; Claudia Rahn, a former design director at West Elm, the contemporary home furnishing company; Bryan Norris, formerly a design director for men's clothing at Nautica; and Lynn Neulander, who has designed home lines for Jonathan Adler and Tracy Porter and apparel for Levi Strauss and Van Heusen.

Inside the office, the walls are covered with product samples -- a sheer tunic studded with beads from Paris, a silky camisole from London -- that will serve as inspiration for the chain's in-house brands. Wal-Mart's store brands are designed with a specific consumer in mind: Puritan (for the frugal, traditional man), White Stag (for the frugal, traditional woman) and George (for the preppy working man or woman).