It's been a while since I wrote about Wal-Mart, mostly because they haven't hosted any fake blogs, started any fake community sites, or fired any marketing chiefs and then been sued and countersued. Still, this New York Times article is too good to pass up. Leaked to the Times, it is the report of the former ad agency, not chosen for the account in the latest round, and looks at the challenges the retailer faces as it tries to move more upscale. It notes:
The document, prepared in October 2006 by the company’s former advertising agency and based on interviews with scores of consumers, offers a candid, wide-ranging explanation for why Wal-Mart, the No. 1 seller of everything from laundry detergent to underwear, has stumbled badly when it comes to higher-end merchandise like silk camisoles and shag accent rugs.
The report contends, for example, that “our low prices actually suggest low quality” for products like high-definition 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clothing and furniture, feels “like the ‘new and improved,’ while Wal-Mart often feels like the ‘old and outdated.’ ”
A copy of the 55-page report, written by GSD&M Advertising, was provided to The New York Times by WakeUpWalMart.com, a union-financed group highly critical of the retailer. The group said that a person outside of Wal-Mart gave it the report.
The article provokes tons of thoughts. It notes that the ad agency said that the image hits the company was taking would start to affect sales. (the company denies this is the case). In a great soundbite, Wakeupwalmart.com said:
Chris Kofinis, director of communications at WakeUpWalMart.com, said, “Wal-Mart needs to realize that improving its public image and its business reputation demands they stop ignoring the fact that the American people care about values, not just value.”
I look at the challenge that Wal-Mart faces here in the same way I look at Dell. When price is all you have, you don't have a super sustainable business model -- the race to the bottom ends at, uh, the bottom. Add value, show you understand customers at a level beyond price and you do.
Finally, don't overestimate the power of PR. For Wal-Mart, they seem to have decided that if people just knew what they were doing, they'd feel better about the company. It wasn't a business problem, it was a communications issue. Turns out that just maybe, people DID know about the company, and more PR won't help. Sometimes, the best PR is identifying the business issue that is going to result in negative impressions for the company, and to urge change. Kinda like the (old) ad agency for Wal-Mart did.