View Full Version : Wal-Mart to Begin Unprecedented Ad Campaign

10-25-2005, 10:49 PM
This is cool news, looks like we will be seeing Garth all over the place :p


Wal-Mart tells rivals ready for holidays
By Jennifer Waters, MarketWatch
Last Update: 7:26 PM ET Oct. 25, 2005

CHICAGO (MarketWatch) -- Still stinging from last year's holiday sales wallop immediately after Thanksgiving, Wal-Mart Stores Inc. said Tuesday that it will roll out an "unprecedented" Christmas advertising campaign Nov. 1.

In what John Fleming, chief marketing officer, called the "earliest and most aggressive holiday launch in our history," Wal-Mart will begin papering newspapers, magazines, catalogs, circulars and Internet sites with a flurry of ads through a "Home for the Holidays" campaign. The weeks ahead of Thanksgiving also will carry music-laden broadcast advertising featuring popular singers such as Destiny's Child and Garth Brooks.

"We know from talking to our customers that many people don't wait until Thanksgiving to start their holiday shopping," Fleming told analysts and investors at the retailer's 12th annual confab in Bentonville, Ark.

"And we know from last year that our competitors aren't waiting until after Thanksgiving to drop prices," he added.

Wal-Mart was stunned last year with sluggish sales during the critical post-Thanksgiving weekend, the traditional launch of the holiday shopping season. The world's largest retailer - which touts the "always low prices" mantra - was choosy in its pricing last year and lost sales to deep discounting at other competitors beginning Black Friday.

As a result, sales at stores open longer than a year - an important industry measure known as same-store sales - barely inched up 0.7% in November. That compared quite unfavorably with the prior year in which same-store sales climbed 3.9%, according to Thomson First Call.

Wal-Mart immediately shifted gears with big markdowns and sales subsequently improved. But the company has reeled the entire year from the misstep and has said repeatedly that it would not make that mistake again.

Chief Executive Lee Scott sounded an unusually optimistic bell to the holiday season later during the conference. Noting that high prices at the pump, escalating heating bills and "all those things" will affect consumer spending this year, he's not worried.

"The impact will be the difference between a great Christmas and a good Christmas...not the difference between a good Christmas and a terrible Christmas," he said.

"People have the capacity to purchase if you put the right items out there," he said.

Among those right items is a 6-ft. inflatable snow globe that sells for $129 and sold out quickly at stores in Florida and Puerto Rico, for example. "We're seeing that when you put the merchandise in the stores, the customer is willing to buy it.

"In the past we would never have put a $129 inflatable snow globe in our stores - the price point would have been too high," he said.

That underscored the theme of Tuesday's meeting in which executives talked extensively about change at the behemoth that rang up $287.98 billion in sales last year and its ability to be quick on its feet.

"Some of you see our size as a liability," said John Menzer, vice chairman for Wal-Mart's U.S. business. "The notion is that we're not quick to change...we've become too predictable.

"We're very nimble and we will become very different Wal-Mart than the Wal-Mart you know," he said.

Among the changes is Wal-Mart stronger focus on fashion and higher priced items, such as women's apparel and boots, and 400-thread-count sheets - an item that was mentioned often throughout the four-hour meeting.

Taking a page out of Best Buy Cos. customer-centric approach to retailing, Wal-Mart has identified five categories of its consumers: Norma, Carla, Susan, Gracie and Jen.

The names represent customer types, according to Claire Watts, Wal-Mart's executive vice president of apparel and home, and came about after the retailer conducted its first major research study of its customers.

As a result, Wal-Mart has created a new brand strategy based on consumer insights, Watts said.

Norma's the pragmatic, core customer who is not too keen on fashion, but shops for basics. She represents 20% of the overall population and 30% of Wal-Mart's loyal customers.

Carla is the time-starved mom who likes fashion but wants it to be easy. Susan is who Watts called the "classicist," the woman who looks polished and stays in style year-after-year. Gracie is the young, hip style-seeker who wants to buy as much as she can on her budget. And Jen is the "proverbial badge wearer" that Watts conceded is "not on our radar screen yet."

The strategy now targets these specific groups with apparel, home furnishings - and the 400-threadcount sheets - while rearranging the stores to better markets those products.

Wal-Mart is hoping to duplicate the success it has had with the George line of apparel and accessories in the United Kingdom in the U.S. with better presentation and marketing and hipper fashions.

Watts said the company also will launch a Baby George line this spring, featuring Wal-Mart's own brand of organically grown cotton products.

01-07-2006, 10:55 PM
Holiday Figures Show Target With Strong Results; Gap Falters, Sears Slips
January 05, 2006
By Mya Frazier
COLUMBUS, Ohio (AdAge.com) -- With dozens of retailers reporting December sales results today, the holiday retail story is one of consumers spending big at high-end luxury retailers (Nordstrom and Neiman Marcus) and trendy niche apparel brands (Abercrombie & Fitch, American Eagle, Aeropostale and New York & Co.). And at Wal-Mart’s cheap-chic rival, Target, rather than at Wal-Mart.

Holiday sales results represented a reversal of fortune compared to Wal-Mart’s strong showing in November, when door-busting sales helped the chain best rival Target for the first time in 18 months.

Reversal of fortune
Indeed, it was a reversal of fortune compared to Wal-Mart’s strong showing in November, when door-busting sales helped the chain best its rival for the first time in 18 months. December results vindicated Target, though, with the discount retailer reporting comparable-store sales of 4.7% on sales of $8.4 billion, compared to Wal-Mart’s weak showing of 2.2% on sales of $40.8 billion.

Analysts pointed to macroeconomic influences such as high-energy costs and consumer debt loads when making sense of the riddle behind the stream of holiday sales results. In addition to macroeconomic influences, some analysts blamed Wal-Mart’s upscale, celebrity branding push in a series of “Home for the Holidays” spots for retailer's worst holiday showing since 2000.

Wal-Mart ads faulted
“A commercial with a mom talking about getting bargains at Wal-Mart and making ends meet probably would have worked better than seeing Beyonce Knowles open a present,” said Ken Perkins, a research analyst with Retail Metrics. “Wal-Mart wants to go upscale and capture more of Target’s market, but Target is fairly well entrenched.”

As the first holiday campaign orchestrated by new Chief Marketing Officer John Fleming, it began earlier than ever -- on Nov. 1 -- and five days earlier than Target’s ad push. Spots featured celebrities like Beyonce Knowles opening gifts at home with family and Queen Latifah shopping for gift cards with her mother.

“Wal-Mart's lack of an aggressive advertising campaign after Black Friday likely impacted traffic and ticket, as competitors were very promotional,” wrote Citigroup’s retail analyst, Deborah Weinswig.

“It all suggests that the low-income consumer is feeling the most stress,” said Steve Spiwak, an economist at Columbus-based research firm Retail Forward. “Target’s core customer is more immune to macroeconomic pressures.”

Comparable-store sales
Today’s steady stream of December sales results definitely back this view. After all, if you take Wal-Mart out of the picture all together, overall comp-store sales rose a robust 4.3% during the month, according to a Retail Metrics index of 65 publicly traded retailers. Put Wal-Mart back in the mix and overall retail comparable-store sales rose just 2.2%.

Mr. Perkins of Retail Metrics said in addition to targeting the struggling working class instead of high-end shoppers, Wal-Mart might have fared better offering door-busters throughout December, instead of limiting the strategy only to Black Friday. Still, Mr. Perkins added: “Many of those are loss leaders and it’s difficult to do day in and day out.”

So what does it all mean if the world’s biggest retailer is stumbling, even as it mimics the upscale strategy of its successful rival?

Ironically, while the upscale move might be hurting Wal-Mart in the short term, it highlights why it must remain Wal-Mart’s long-term strategy, said Joseph Beaulieu, a retail analyst with Morningstar. “The advertising is just way ahead of the in-store changes,” said Mr. Beaulieu, noting that he recently visited a Wal-Mart next-generation prototype store in Bentonville, Ark., which differed dramatically from the typical Wal-Mart in-store experience, from an expansive electronics department to an alluring women’s apparel section.

Years of store upgrades
“They are trying to both improve their image and the actual reality, and it takes money to do that and time. A large store base works against them. It’s going to take years of dedicated effort in both branding and merchandising and store upgrades to change consumer’s minds.”

As Wal-Mart slowly shifts course, Mr. Spiwak of Retail Forward said, it’s important to note billions are still being spent at the world’s largest retailer and the entire retail sector remains surprisingly healthy.

“Today’s results really only call into question whether those ads resonated with their customer base,” Mr. Spiwak said, adding that it's critical other retailers grab and cement market share as Wal-Mart transitions. “Consumers are getting picky about where they shop and may only spend money at their favorite retailer,” Mr. Spiwak added.