Revitalising beats Re-Positioning at Wal-Mart

Mark Ritson's latest column in Marketing covers Wal-Mart's remarkable success in bucking the credit-crunch blues. The US retailer recently announced an impressive 7.5% increase in sales for the first three quarters of 2008.

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This is some turnaround. Only a year ago most people were saying that Wal-Mart was in trouble, after several years of stagnant sales, and a so-so share price that lagged low-priced competitors such as Target (Wal-Mart is the lowest line on the chart on the right; Target is the turquoise one towards the top).

See here for a typical article from 2007, called "5 ways to fix Wal-Mart". Mark himself wrote about Wal-Mart's woes.

The risk with re-positioning

One problem Wal-Mart had was the flurry of negative press stories relating to working conditions. But  Wal-Mart's was also making a flawed attempt to re-position the away from low prices and make itself more aspirational. The brand signed endorsement deals with Destiny's Child and country
singer Garth Brooks, ran an eight-page ad
campaign in US Vogue and even had a runway show
at New York Fashion Week. They also started selling $500 bottles of wine and expensive jewelry.

In trying to make the brand more aspirational, Wal-Mart had forgotten what made it famous. Perhaps the company had even started believing the negative press, and lost confidence in the brand. Therefore, the re-positioning lacked credibility. It was a good example of "putting a mini-skirt on your grandma".

Revitalisation as a route to growth

As Mark reports, Wal-Mart's leadership changed approach last year. They focused on revitalising the brand, rather than trying to re-invent it. As covered in an earlier post on the James Bond brand, this involves:

– Looking back: what made the brand famous? When was it hot?

– Looking forward: what changes in society and competitive landscape do we need to react to?

The result is a positioning based on the idea of "Save money, live better". This builds on the brand's heritage of offering low prices (sausage). It adds some emotional appeal (sizzle) by talking about the end-benfit of being able to spend the savings to live better. This positioning goes right back to the roots of the brand, and the philosphy of founder Sam Walton:
“If we work together, we’ll lower
the cost of living for everyone…we’ll give the world an opportunity to
see what it’s like to save and have a better life.”

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This direction has a better chance of working for Wal-Mart. It was also perfectly timed to position the company as we headed into the doom and gloom of 2008. Middle and upper class shoppers are discovering the benefits of being savvy savers. 

And what about that Wal-Mart (blue) share price against the more aspirational Target (red)? The picture below is indeed worth a thousand words…

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