Mark Ritson on Branding: Wal-Mart is deaf to its best advisers

In many ways Wal-Mart is a massive success story - especially in the US, where the retailer started. Two-thirds of Americans visit a Wal-Mart on a monthly basis; more than 138m visit its stores in an average week. As its chief marketing officer, John Fleming, succinctly put it: 'Wal-Mart is the only retailer in the world without a traffic problem.'

Look beyond such mind-boggling figures, though, and a very different picture emerges. A sorry share price and missed profit targets suggest all is not well. Until recently, this has been mostly conjecture, but last week a leaked internal-positioning report laid bare the sorry state of the Wal-Mart brand and the challenges it must overcome.

The report, prepared last year for the retailer's senior managers by its ad agency, GSD&M, lays out a company with big brand issues. It concludes that Wal-Mart's obsessive emphasis on lowering prices has led it to forget its original brand values and left it as little more than a commodity business. 'Shopping at Wal-Mart used to mean saving money and being patriotic, being a member of the community, being part of the "American Dream",' said the report. 'Today, it just means saving money. All value - no values.' It confirms this by referring to brand-tracking data showing a gradual decline in consumers' trust and respect for Wal-Mart.

The report also spells out the difficult competitive environment in which Wal-Mart operates. The store is 'not the smart choice in categories where saving money and time are not the be-all, end-all drivers'. Its value position is preventing it from succeeding in the higher-margin categories such as electronics, apparel, grocery and pharmacy, where specialists including Best Buy and Kohls are deemed superior. Wal-Mart is also threatened in its own category by Target, which, the report concludes, has been 'incredibly successful at re-setting the bar of what people expect from a discount store'.

A rapidly commodifying brand that has lost touch with its heritage, facing apparently superior competition on all sides - it is a chief executive's nightmare. But the report also details the results of market research and goes on to recommend a 10-step plan to revitalise Wal-Mart.

It's possibly the most ambitious and important marketing plan of the past 20 years, a textbook piece of marketing strategy, the kind of work we rarely see in the UK, but have come to expect from top-tier US marketers, who are - how can I say this? - generally better than their UK peers.

First, there is research that includes both ethnographic and projective work, leading to a major quantitative study of 2700 shoppers and their buying process, purchase drivers and trigger points. Next, behavioural segmentation that presents rigorous but also actionable segments, and reviews each in light of their different aspirations and buying behaviours.

Finally there is a clear and concise call to arms with strategies to reconnect with these segments, reposition the Wal-Mart brand with its core values, and address the threat posed by Target in particular. 'If Target is about design and style - ultimately superficial attributes - Wal Mart can be about meaning and substance,' the report says. 'Rather than objectifying our products and putting them on pedestals, Wal-Mart can celebrate our products in the context of people's lives.'

There are only two things wrong with the report. First, it has been leaked to the media, which is why I am writing about it and why you and, presumably, Wal-Mart competitors are reading about it. Second, Wal-Mart was so impressed with the report that it fired GSD&M at the end of 2006, ending a 20-year relationship.


- Wal-Mart's former ad agency GSD&M conducted a report on the retailer last year as it sought to retain its business.

- The agency, based in Austin, Texas, conducted consumer interviews across the US and took some of the respondents shopping.

- Among the problems the agency listed in the report was the 'hillbilly' stereotype of the US retailer's shoppers.

- It also cited Wal-Mart's public relations troubles, including a class-action lawsuit filed on behalf of 1.6m existing and former female employees who allege discrimination in terms of pay and promotion because of their gender.

- The report also claims that as the retailer branches out into electronics and clothing, its 'one-stop shopping format becomes a time-consuming irrelevant obstacle'. It continues: 'People don't buy electronics, home decor and apparel in zero time.'


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