Stephen Quinn, photo credit Business InsiderWalmart’s assortments of thousands of well-priced items, offered across thousands of stores, each with thousands of square feet, have historically been in alignment with its unwavering claims to customer centricity. The message was “you want it, we got it.” Up until very recently, Walmart has represented the ultimate merchandising machine, while its founder, Sam Walton, was portrayed as the über-merchant. As such, evoking Walton’s leadership as the company’s true north continued to feel fitting even as the company grew on a massive global scale.
These days, the Sam-centric vibe that still permeates Walmart executive presentations and interviews can seem a bit contrarian as other retailers minimize their histories, but it actually makes perfect sense. After all, Sam Walton was a huge success not because he was better at running a store than anyone else but because he developed a completely new and innovative retail strategy that is uniquely designed to evolve with the needs of its customers.
Walmart CMO Stephen Quinn kicked off his recent presentation to the Bentonville Bella Vista Chamber’s WalStreet supplier group with acknowledgements of Mr. Walton’s leadership and went on to highlight the counter-intuitive marketing strategies that Walmart is employing as it tackles the intricacies and opportunities of modern retail.
Quinn’s seven-year stint as Walmart’s CMO stands out, particularly given the multi-faceted, mold-breaking changes that the company has embarked upon during his tenure and the shiftsthat are uniquely impacting CMO roles across all of retail. Walmart’s walk-the-talk leadership role in sustainability has transformed and influenced the industry to a degree that few would have imagined, and its next-stage advances in technology, data analytics, and social shopping, as well as its newfound willingness to acquire innovation rather than grow it, are raising the bar for everyone else. By carrying out a slew of technology-focused initiatives and acquisitions, Walmart has taken its already-massive physical and digital scale to new levels, while adding layers of complexity to its business model.
According to Quinn, Walmart’s customers are also in an interesting spot these days. For most, a personal recession marches on even as others see improvement. At the same time, customers are embracing technology and leveraging it as a tool for researching deals and making ends meet. Addressing this dichotomy between consumer stagnation and technological progress would present a challenge for any retailer, but Walmart’s size and commitment to multi-touch-point customer engagement makes mastering the situation an even more complex proposition.
GOING BEYOND COMPARISON
Quinn showed several video clips during his presentation, including a few versions of the now-ubiquitous “see for yourself” ads, which highlight Walmart’s low price guarantee and ad match programs.
This simple, grassroots campaign has not only enjoyed months-long staying power, but has allowed Walmart to reduce advertising costs by 90 percent, by engaging local videographers to shoot in real stores. According to Quinn, the ads have also generated a positive change in shopper price perception. Although it would be easy to assume that the inspiration for the ads’ budget approach stemmed from Walmart’s relentless cost-cutting sensibility, the advertising savings appear to have been more of a happy accident. Walmart began viewing scripted ads as out of place in a world of reality television and low-production-value marketing, and decided to give a YouTube-like angle a try, with terrific results.
One thing that surprised me about Walmart’s recent ads was that private brands have been conspicuously absent, with national brands the exclusive focus as far as I can tell. Later in the presentation, an attendee posed a question on the role of private brands at Walmart and Quinn gave what I believe the audience perceived as a surprising answer when he said that private brands are “taking a back seat” to national brands. He went so far as to encourage suppliers to think of ways to keep categories growing, so that Walmart won’t be forced to consider private brands. That sentiment comports with those expressed by Walmart’s former SVP of private brands, Andrea Thomas, as far back as 2009, when she explained that Walmart loves it when national brands succeed. Clearly, it pays to look at retailer brand strategies individually rather than buying into the hype over private brand encroachment, particularly since retailer strategies vary considerably.
Private brands are a hedge against the realities of smartphone- and Internet-enabled price transparency and showrooming, so it’s no wonder that a renewed focus on private brands figures in Best Buy’s next-stage transformation. For Walmart, however, national brands are a natural focus, as the company can fearlessly meet any challenges involved with price match guarantees. National brands make for a nice, clean comparison that easily registers with shoppers and in that regard, national brands become yet another way that Walmart is embracing simplicity. This is something that many suppliers can celebrate.
HERE’S THE BEEF
The same formula that drives the “see for yourself” ads is very much at work in Walmart’s “steak-over” comparison campaign: shoot locally, engage real people, inject an element of surprise, gather from-the-horse’s-mouth testimonials, then lather, rinse, and repeat.
Quinn noted that one of the reasons that digital communities have become so important to consumers in weighing up purchasing decisions is because digital media have allowed for the creation of scams that make consumers warier than ever before. Consumers’ walls are going up even as they reach out to friends and connections for advice in unprecedented numbers through social media. Walmart is meeting this heightened level of skepticism head-on and taking ownership of the ways that it manifests in specific categories. Walmart’s Achilles heel is shoppers’ perceptions of its breadth of assortment and its quality. The company has addressed the former through its ongoing and much-publicized produce re-stocking and assortment expansion initiatives, and has chosen a surprisingly mundane category in which to take on perceptions of quality problems. In May of this year, Walmart introduced a range of USDA Choice meats backed by a 100% money-back guarantee. Proving that quality perception in many cases has little basis in reality, Walmart went on to collaborate with iconic local steakhouses, providing Walmart steaks to unsuspecting diners and receiving gushing reviews, before surprising them with the actual product reveal. Quinn cited Folger’s years-old coffee switch commercials as the inspiration for the campaign, and a viewing of the Folger’s ads on YouTube will make it clear just how unambiguous the knock-off was. The steak-over switcheroo spots were the cornerstone of a full-blown event marketing program that incorporated cook-off contests, in-store sampling programs, and Facebook promotions. By using an iconic cut of meat to tell its quality story, Walmart created a “halo effect” that has driven phenomenal sales increases across its entire meat program.
Quinn explained that Walmart’s overarching goal is to become the realest and most authentic brand in America, and its deceptively simple marketing tactics pack quite a punch, covering localization, community affiliation, authenticity, and engagement all at once.
Localization, in particular, continues to be a major focus for Walmart and one that goes far beyond tweaking a small percentage of individual store assortments in order to resonate with specific communities. Walmart’s pursuit of local sourcing and support of local farmers, for example, addresses community-building, quality, and nutritional concerns at the same time.
In Part II, Carol covers the reasons behind Walmart’s choice of its go-to social media partner and why suppliers would be wise to hook up with Walmart’s powerful ecosystem rather than going it alone.
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