Turning Points 2008: Walmart Stays on Message
Commentary by George
Anderson
Editor’s
note: In what we plan to make an annual end-of-year tradition, RetailWire
has compiled a list of the most significant retail industry "Turning
Points" of 2008. (See our news release…) What follows is
the ninth in a series of discussions based on the list.
It could be us, but it
seems that we don’t hear Walmart being accused of being the evil empire
quite as much these days.
We thought of a few reasons
that might help explain why the retailer seems to be given the benefit
of the doubt more today than in the past.
- The economy is in seriously
bad shape and people are worried about making ends meet. Consumers’ self-interest
has overridden reservations about shopping at Walmart. The retailer says
its mission is "saving people money so they can live better." When
a consumer finds they can, in fact, save quite a bit of money and in
the process live a little better, they’re more likely to see the Walmart
debate in shades of gray rather than the black or white view painted
by Wal-Mart Watch and other critics. - The mood of the country has
changed. It’s not that the world’s largest retailer no longer has critics
or even that they don’t sometimes make good points. It’s just that in
today’s world, where many have bought into the premise that they do not
live in red or blue America but the United States of America, people
are interested in negotiations not accusations. - Walmart has changed and taken
sides on issues that once would have been thought unlikely if not impossible.
For example, just as many of its core consumers have come over the years
to embrace environmental issues (see the Creation Care movement), the
retailer has promoted itself as a leader on green issues. It didn’t do
this because it gained it points with critics (that was just an add-on
benefit), but because it made business sense. Going green enabled Walmart
to find ways to cut further costs out of its operation, which enabled
it to keep "saving people money so …" - Walmart understands how to
shape public opinion. The company may have the best public relations
organization in the business. Virtually all messaging comes back to the
company taking steps that it believes will ultimately help people to
"live better."
Discussion Questions:
Do you think that Walmart’s image has changed for the better in recent
years? What factor or factors do you think are most responsible for this?
Are there any other changes you expect to see the company make in the
future that will surprise critics?
I know of a person whose significant other is a senior executive at a leading national chain selling high priced organic foods and they purchased their new electronic gizmo at Walmart on Black Friday because of the huge price differential. Need I say more?
Needs must, as the saying goes. Quite a lot of us, when we can afford it, can be selective. When money is tight, priorities have to change and sometimes principles get pushed aside no matter how depressing that may be. I don’t necessarily think that Walmart has improved but I do think a lot of people are taking their PR at face value because they are hoping to get real value by shopping there. And, as others have already said, the real test will come whenever the economy improves and people can start feeling more comfortable making choices in line with their preferences.
Interesting interview on all this from Andy Bond, CEO of Asda, in today’s Daily Telegraph in the UK.
For many, Walmart once had a very mystifying personality. Walmart’s image has changed all for the good because their culture has progressed to become a better fit for the national marketplace that it serves. As a consultant, supplier, and vendor-partner I view Walmart today as one of the most friendly and non-egotistical partners in the industry. The rules are simple: every day low pricing. And they sincerely adhere to that with suppliers and also consumers every day, all year long. Their message works because it’s real.
Walmart’s image enhancement campaign has paid off. But in a back-to-basics era, customers care about how well a retailer can deliver value. I was astonished last week to find my online Walmart order delivered to my home only two days after placement. Outstanding.
I think Walmart’s image has certainly changed. And, the image change has been a direct result of changes at top. The poor image that Walmart engendered was an attitude of everything be damned, we are Walmart and we will play by our own rules. That included employment practices (including health insurance) and going into communities where they initially weren’t wanted.
They learned along the way that better employment practices lead to better performance. They learned that health care was an important part of a contract with an employee. They learned how to become a citizen of the community they entered.
From a commercial point of view, I found Walmart to be among my best customers. They provided our company with all the information we needed to service their stores to our benefit. They ordered frequently. They stuck by the deal they made with you. And, they paid promptly. Dialogue between my people and Walmart was always respectful and directed to mutual solutions.
In every sense of the word, Walmart is the best retailer in the U.S. and may be the best in the world. They will stay at that spot as they continue to be customer- and supplier-centric.
It’s a combination of issues; a lot of intelligent moves by the retailer have led to a positive perception.
Of particular note, in my social and professional circles, the comments most often heard is how smart of a retailer Walmart has proven to be during this economic climate–like Susan wrote in the very first comment, “at least they are not asking for a bailout.”
Walmart has a clear message and they are focused. They also are a great fit for this current poor economic environment. And they recently seem to have put a lot into trying to tweak their image for improvement and seem to have succeeded fairly well.
The core systems they have are so efficient and excellent for inventory management–they are simply doing what they do and doing it well–as they usually do. They deserve credit for their performance and their performance also speaks to their abilities and logistics.
Although there will always be anti-Walmart voices, Walmart’s overall reputation has improved for the often-noted reasons (great tag line, consistent messaging, green leadership, return to the core) and a few others that I believe Walmart doesn’t get enough credit for:
1. Becoming a less insular company; everything from opening up more to the media, to embracing outside resources/wisdom (a big factor in the greening of Walmart; they knew they didn’t have all of the answers so they went to the best and brightest for guidance), and taking a “buy it” vs. “grow it” approach to everything from brand development to hiring in order to become faster and more nimble.
2. Acknowledging that execution and operations alone can’t sustain long-term growth. The company’s renewed appreciation for the power of marketing, merchandising, branding, and value (not just volume) have made all of the difference.
3. Improved aesthetics, from tidying up the home office to renovating the stores, to cleaning up the logo and the tag line. All of this sends the message that Walmart is on the move and cares about more than one “environment.”
4. Engaging in dialog with consumers, employees and naysayers rather than forcing a one-way conversation. Walmart’s social media plays have gone way past tokenism and they’ve managed to stay the course and respectfully disagree with detractors.
Staying on message is the core of Walmart’s strength, of course. But when you think about it–about 99% of what their critics were complaining about has not changed.
What has changed is the labor environment–in conjunction with the economy–and that has refocused people’s attention. The voices which are loudest when prosperity affords us the luxury of demanding concessions and change, are often the first silenced by adversity.
Another thing that has changed is that “change” won the election. The free market majority has left the Beltway and Hope is on the way–or so we believe for now. Big business is out of the gun sights, replaced by the financial industry and billionaire bilkers.
This too shall pass.
I went into my local Walmart last week and they had my size in almost all pants, and it’s kind of a strange size. I have been very impressed with their merchandise in-stocks. If you are OK with self service and can find stuff yourself, Walmart isn’t a bad way to go for a lot of things.
The answer is a definite yes. Are there things they could still do better? Yes. Were they really as bad as some critics pointed them out to be? NO.
I think the one thing they did best that most of us seem to never learn is they took all of the criticism as free consulting; looked at the criticisms that may have had some merit and then they’ve done something about them.
I think a bad image for Walmart is good for Walmart. They did not get to be the world’s biggest company by having a good image. The bottom line is everyone knows their prices are low and all other retailers are running around in circles trying to come up with clever ways to compete other than on price, and for many, it’s not working out very well right now. Most people still couldn’t care less about green, other than the green in their pockets they are saving at Walmart. Walmart could probably have a big smokestack coming out of every store and still be successful. People who like Walmart are good customers. People who hate Walmart are even better customers and spend more. A perfect recipe for success.
I think Richard hit the critical points here and as several people have pointed out, Walmart has kept its message focused and consistently delivered its brand promise which, because of the economy is awfully attractive right now.
To give them credit, Walmart began walking away from their core customer a few years back when they tried to bring in sushi and champagne and go high end. Even before the economy tanked, they had the sense to realize this strategy was alienating their core customer and retreated before it became an unmitigated brand disaster. I give them enormous credit for being able to switch mid-stream. Most large organizations can’t get out of their own way quickly enough to stop the large scale damage from occurring.
I will be interested to see how much they continue to push their green initiatives now that it’s not the first thing on consumers’ minds. My hope is that Walmart can lead the charge on being green as good business–smaller packs, more efficient supply chain, fewer trucks idling. As long as they can connect those initiatives to a lower cost to serve, I think we’ll see Walmart out in front on green issues for the foreseeable future–and if they deliver on that, then they’re just not that evil in anyone’s mind.
Walmart has been working hard to improve its image and it appears to be working. I believe the reasons mentioned have all contributed and expect that their image will continue to improve or at worst, stay the same until the economy improves dramatically. The image has improved so much that I’m no longer afraid to say the name Walmart in front of a strong union family member.
Their image is obviously much better than it’s ever been. Give Lee Scott credit and lots of it for not only doing the green initiatives for whatever motive, he was also right at the right time. Even appearances on Meet the Press to continue to lower the veil around the company, explaining their Chicago entry not in terms of lower costs, or giving shoppers options, but in something at the very base–contributing $10 million to the tax fund.
When people like Jim Cramer on his show talks about the merits of Walmart over Target as a shopping experience and not a stock has to be a clear indication that things have changed.
Hopefully, new management will continue to focus on building a better brand going forward.
I think Walmart’s image has improved for a few reasons this year:
1. They have stayed consistent with a message (“Save money, live better”) that resonates today, not only among penny-pinchers but also among optimists;
2. Their execution is better than a few years ago, in terms of improved in-stocks and a better shopping experience;
3. They have decided to be better corporate citizens, and appear ready to be on the “right side” of the healthcare and “green” discussions.
Whether this last point is simply PR or a true recognition that Walmart has something to contribute to the national well-being–we’ll see what happens in 2009.
Walmart’s image has definitely been burnished for all the reasons cited. But I think it’s the down economy that has had the most impact, especially among those consumers who were–prior to 2008–infrequent shoppers or those who passed by the chain in favor of what they perceived as more upscale, aspirational brands. Walmart saves consumers money, and in 2008, that means plenty.
Regarding the future, one key issue Walmart will face is what happens when the economy improves and consumers once again feel confident about spending? Will these new Walmart shoppers stick with the brand or will they return to their former shopping haunts? Keeping these new shoppers will likely involve more of the other issues cited, e.g., environmental initiatives, PR skills and fresh ideas like the Canopy Living line, the Marketside concept, the Mas Club store, the Sam’s Club membership for college students, the Dell partnership and perhaps grocery shopping online.
At least they’re not asking for a bailout! I don’t think their image has changed much but the public opinion may have changed.
Walmart is staying the course, buying regional farm-grown merchandise, offering good buys for the consumer, trying to operate a business of this size and scale on values. I don’t think the critics have gone away but they’ve taken their eye off of Walmart for a while.
Walmart has been most successful in delivering their promise to save money–live better. There are also many occasional shoppers at Walmart who are increasing the frequency of their shops.
Under Lee Scott, the company made a significant effort to reach into the community, aligning stores and selections to reflect the neighborhood and the people they serve. Further, Walmart has lead a major effort in sustainable packaging across all the their suppliers as well as strong support for packaging that is more efficient. They consistently say sustainability is the way they do business–better for people, the planet and ROI.
There is still a long road ahead, but many shoppers believe that things are changing for the better.