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What Happened to Wal-Mart?

Walmart_logo2 Sluggish Sales May Be a Lesson in Marketing Mistakes

Today, Wal-Mart released sales figures for November 2006.  The world's largest retailer said that "same store sales" at the 300 billion dollar giant fell 0.1% from the same period for 2005.  (Wal-Mart measures sales from stores that have existed for more than one year.)  This would mark the first "same store sales" decline since 1996.  The final report, which is due on Thursday, may be brighter however leading indicators like this usually mean the company is preparing Wall Street for a negative report.

Big deal?  You bet.  What happened?  We're not going to suggest to you that the staff here at Insight Advertising, Marketing and Communications have any ability to read financial "tea leaves" but we have a strong suspicion we may have part of the answer.  It's called Core Market Amnesia Syndrome or CMAS.  (OK, we made that up...)  In plain talk, we think Wal-Mart made an attempt at upgrading their stores and image and that move created a back-lash among their core demographic.  If you are advertising and selling products this may be an important read on.

Three years ago I wrote Wal-Mart Corporate a letter.  I was a regular Wal-Mart customer that, by my records, accounted for nearly $3,000 a year in annual purchases.  My letter centered on the lousy physical condition of many of the stores, the indifference of employee attitudes and what I perceived as a general malaise of employee ability.  This after one memorable negative visit to a Wal-Mart in Des Moines.  I politely wrote, "I have finally had it.  I believe my business means nothing to you and you have finally (for reasons specified) driven me away.  I'll be spending my money at Target."  I received no response.  Not even the customary "We regret we have caused any inconvenience..." weak, boiler plate, corporate letter.  Nothing.  Then I found out why:

Three months after my letter I was in an advertising and marketing workshop (yep, we continue to learn) and the speaker was the VP of Marketing for Wal-Mart.  I picked a good seat.  As this fellow went through his Power Point it became clear to me that I was nowhere on the Wal-Mart customer radar screen.  In fact, one of his slides focused on The Ideal Wal-Mart Customer:

  • Female
  • 18 - 34 Years Old
  • Single
  • Two or more children
  • Annual Income of less than $28,000

Fast forward to 2006.  Over the past year Wal-Mart made, we believe, made a  major decision brought on by a severe case of CMAS (see above).  You too have noticed the change. The TV ads got "slicker", the print pieces became more "trendy", even many stores went through a "make-over" all intended to move Wal-Mart out of the arena of the Core Consumer and into a new, more modern, more educated, more urban customer focus.  We think the real core consumer group simply rebelled or no longer felt welcome in the new style Wal-Mart with higher priced clothing and designer appeal.

So, what does this mean for your business?  First, KNOW YOUR CORE CONSUMER!  Really know who makes up this critical demographic.  Don't guess.  Spend some quality time learning and understanding their buying habits and lifestyle issues. Second, if you are going to attempt to move into another market segment do so without alienating your core.  (Don't do the Cinderella Make Over.)  Third, just because it sounds like a good idea make sure  you go outside your organization to get some feedback and sometimes an opposite opinion.

0.1% may not seem like a large number...but it is when you are talking real money like this.  Just think what you could do by adding 0.1% to your sales on top of what you're already doing.  If we can help...give us a call.