Walmart Proves the Power of Paring Down

In a presentation last week, Stephen Quinn, Walmart’s CMO, illustrated how a return to simplicity and authenticity is now moving the needle for the world’s largest retailer.The company’s recent localized marketing campaigns offer brand marketers lessons on the power of paring things down and letting basic strengths tell the story.

Seeing is Believing

Walmart’s more than one-year-old ad match program was designed to give its low-price promise some teeth. Now, its series of ubiquitous “see for yourself” advertisements are breathing new life into the program. Each ad features a peppy spokesperson trailing a real shopper through a store and calling out bargains as they go, and ends with a big reveal of the ticket total, accompanied by the shoppers’ credibility-boosting exclamations which make it clear that they were not loyal Walmart shoppers in the past. The details that make the ads so authentic and compelling also drive their cost-effectiveness. By using local videographers and shooting within real communities, Walmart has reduced its ad costs by a whopping 90%, while at the same time, according to Quinn, generating a positive change in shopper price perception that proved elusive in the past, despite Walmart’s ongoing value messaging.

Quinn openly admitted that, as a marketer, he couldn’t have imagined the ads having such a strong impact, much less staying relevant for months at a time when content has a shorter lifespan than ever before. The ads also fly in the face of brand marketers’ traditional approach of crafting stories and then pushing them out to consumers, adding oomph with high production values. He speculated that the emergence of unscripted reality television and low production-value media such as YouTube has increased consumer receptivity to simpler and more authentic marketing approaches.

All Steak, Low Sizzle

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.

Walmart’s success in marrying tried-and-true testimonial tactics with new media message deployment proves that sometimes the best marketing results come from keeping things simple.

The New Big Data Mandate: Consider the Source

In the period from the beginning of recorded time until 2003, humans created 5 billion gigabytes of data. In 2011, the same amount was created every two days, and by next year, that time is predicted to shrink to 10 minutes.

These eye-popping statistics come courtesy of IBM, whose head of supercomputer development, David Turek, recently penned an article for Bloomberg Businessweek entitled “The Case against Digital Sprawl.” In it, Turek argues that companies need to get ahead of the extreme data density being driven by socially networked customers, tweeting employees, YouTube-loving marketers, and what he called “an Internet of data-savvy and data-spewing objects.”

In multiple presentations this year, I addressed what the “Big Data” phenomenon means for brand marketers and how it begs for new collaborative approaches between retailers and brand partners. Retailers are determined to harvest and leverage the explosion of wildly diverse data, because it enables them to evolve from the transaction-based POS-world approach of looking at what people have already bought, and into understanding intentions, interests, and connections – dynamics that are a much better predictor of what people will actually buy in the future.

Up to this point, most of the conversation regarding Big Data has centered on management and utilization opportunities, in terms of what to do with information once it arrives. The next development in the Big Data scene comes in the form of a challenge: how it is obtained in the first place. Privacy issues are nothing new in retail as concerns regarding credit card transaction data, smart phone-enabled geo-location tracking and other obvious sources of personal information loom large with consumers. Now, growing controversy over stealthier data tracking methods promises to elevate perceived threat levels even as those methods bring game-changing results to brand marketers. Websites and mobile devices use a variety of software to determine a user’s browsing habits, for example, and marketers can then use that data to target “behavioral ads” designed with people’s habits in mind. In some cases, electronic tags can predict if a consumer is price-sensitive, allowing sellers to accordingly charge more or less for a product or service. As various social platforms such as Facebook and major browser platforms such as Google and Yahoo become more proficient at combining insights into users’ viewing, browsing, purchasing, sharing, and movement habits, the “single view of the customer” that is so desired by marketers may come to look like a highly-intrusive X-ray.

Public awareness and resistance is growing, even as negotiations over “do not track” (DNT) legislation are at a standstill in Washington. The Federal Trade Commission first proposed adding a DNT button for the web in 2010 as a follow on to its popular “do not call” list. Advertising Age has reported that Consumer Reports recently sent its members an email warning that they may be being tracked by advertising companies against their will, but noted that Consumer Reports’ own website is loaded with the very advertising-tracking technologies that it claims to reject.

In February of this year, all of the major web browsers promised to offer a DNT feature, and the Digital Advertising Alliance, a coalition of advertising trade groups, promised to stop displaying targeted ads to users who selected the feature by year-end. Microsoft was given kudos in June when it announced that it would make DNT the default seeing on its newest version of Internet Explorer. These self-regulating steps were undermined last month, when the Digital Advertising Alliance advised its members to ignore DNT signals from Internet Explorer users, arguing that DNT requests don’t necessarily reflect the user’s intent if they are set by default. Advertisers have further complicated matters by insisting on exceptions to DNT policies for market research, product development, system management, and other self-defined purposes.

All of these developments mean that realizing the opportunities presented by Big Data involves big controversy.

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This article originally ran on the International Licensing Industry Merchandisers' Association (LIMA) website.

Clicks to Bricks: Retailers Building Scale by Changing Channels

E-commerce is clearly still in its infancy as a volume-driving “channel,” but the establishment of digital flagships, often in lieu of physical ones, is driving a host of additional benefits for retailers. The “bricks-to-clicks” model of the past is beginning to be turned on its head, and a new wave of retail competition is transforming the landscape without laying a single brick.

Global Gateways

Japan-based, fast-basics retailer Uniqlo has set its sights on generating $10 billion in the U.S., with 20% of that originating online. This may seem like an ambitious goal, given that its U.S. presence is currently limited to three stores in New York and its next physical flagship opening, in San Francisco, isn’t due until October. In the meantime, the company is said to be on the hunt for an agency that will build out a U.S. digital flagship for its brand. Uniqlo’s e-commerce platform will definitely get its volume engine cranking, but it will also prime the pump in markets slated for future stores, while driving global brand awareness in a way that its spotty physical footprint can’t just yet. Uniqlo’s agency RFP included a stipulation that the e-commerce infrastructure “provide a universal foundation for future expansion in other global markets.”

Virtual Virtuosity

Often referred to as its country’s equivalent to Nike, and marketed in the U.S. as “the biggest brand you’ve never heard of,” Chinese challenger brand Li-Ning is also determined to make its mark in the U.S., but its first lob over the fence wasn’t to open a Manhattan mega-store or even a couple of pop-ups. In fact, while the $1.23 billion company expects the U.S. to account for 10% of its international sales by 2018, it has no imminent plans to hang anything but virtual shingles here. With the premise of enabling consumers to “feel the personality of the brand” as if they were in a physical store, Digital Li-Ning debuted in March and has garnered a 425 percent increase in unique monthly web visitors. The brand has since created a robust virtual ecosystem that incorporates Facebook, Twitter, Pandora, YouTube, and the blogosphere into its digital mix. Clearly, Amazon isn’t the only e-commerce pure player intent on shaking things up.

Digital Default

Although Burberry’s bleeding edge drives into digital stand out as an impressive exception, the rest of the luxury market has largely resisted the rush to e-commerce, and instead relied heavily on carefully-curated physical flagships situated in major markets. Amazon’s just-announced foray into fashion will provide a much-needed margin boost to its portfolio but its determination to sign on brands such as Michael Kors, Vivienne Westwood, and others also portends of it transforming into the digital flagship of choice for many luxury brands.

Store-less and Stellar

Watching Walmart television ads while in Manhattan has always felt dissonant to me. After all, getting to a Walmart from Manhattan requires a tedious trek off-the-island to Secaucus, NJ. Did they flunk hyper-localization 101 or is something else at work? Thanks to the magic of its endless online aisles, Walmart actually counts Manhattan as a top market, and one that isn’t reliant on New York bargain hunters making hikes to neighboring states or succumbing to its ongoing store-building overtures. Any future ribbon-cuttings in the Big Apple are bound to grab headlines, but for Walmart, they will signify the achievement of a multi-channel milestone.

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This article originally ran on the International Licensing Industry Merchandisers' Association (LIMA) site.