Wal-Mart continues focus on emotional, local connection with shoppers

Emotion sells. It drives the financial markets and consumer impulse buying which is why Wal-Mart is trying to harness this power through its marketing campaign this holiday season and throughout the year, according to Stephen Quinn, chief marketing officer for Walmart U.S.

Quinn recently spoke on the emotional connections Wal-Mart is trying to make with its 140 million weekly shoppers in its U.S. business.

“Ten years ago there were a lot of Wal-Mart haters out there. In 2005, we set out to define who we were on our own terms,” Quinn said. “ Sometimes it means we have to build a store in their community to win them over.”

Quinn said the recession that followed has largely turned into a lost decade for many in terms of income gains. However, he said, it was the 2008 recession and the new frugality mindset that has helped Wal-Mart connect with more customers facing tough economic choices beginning in 2008 and continuing today.

“We went with the ‘Save Money, Live Better’ message in response to this frugal shopper mindset that began to takeover in 2008. We sought to simplify our ad process with the basket challenge campaign in recent years and more recently have looked for opportunities to insert ourselves in areas that matter most to our customers,” Quinn said.

He said Wal-Mart has worked to make key emotional connections with its shopper base through advocacy campaigns like “Made in America,” hiring veterans, women’s empowerment and sustainability. That alone is not enough. Quinn said the stores themselves must do a better job expanding on connection points with shoppers.

“We continue to give shoppers different formats in which to shop, but the stores also must provide solution centers and elevate the overall in-store experience which is a work in progress,” Quinn said.

BEING RELEVANT, TRUSTWORTHY
Wal-Mart said it must also connect on relevance, because consumers trust a retailer that is relevant. Quinn said the retailer’s link to Weather FX is one recent breakthrough to relevance. The tool allows stores to be ready for weather-related events and have the products shoppers need. He said the return of the Store of the Community in conjunction with their own Facebook pages also helps with the relevance connection. Each store can easily communicate with their shopper base through its own Facebook page which is also used promote new items as they arrive.

Quinn said Wal-Mart began trying to emotionally connect with its shoppers through stories last year, pushing itself into the “David” position of a bigger message — such as promoting a return of American manufacturing jobs. He said they continue to air commercials related to this initiative and around the dignity that comes from work and they are connecting with more consumers on a different level through these campaigns.

The retailer recently set out to erase the distrust shoppers voiced among Wal-Mart’s meat quality and produce freshness. But rather than tell the story themselves, Wal-Mart sought out third-party participants to tell their makeover story for them. Television celebrity Adam Richman hosted the Wal-Mart Steakover challenge and farmers are helping to tell the freshness story for produce.

OTHER IMPROVEMENTS
That said, the retailer has made only modest progress in these two categories in the eyes of consumers. Walmart U.S. CEO Greg Foran said it’s not enough and has vowed to do better.

Quinn said a “utility” connection which gives consumers tools to enhance their shopping experience is another way the retailer hopes to win favor and loyalty. The Savings Catcher is that kind of utility connection with more than 33 million receipts scanned as of early October and more than $2 million returned to customers using the app since it was rolled out nationwide in August, the company reports.

Marketing can only do so much for a company if the underlying fundamentals are not aligned. Likened to putting lipstick on a pig, the marketing campaigns can dress up the brand, but if the brand disappoints consumers there’s not enough lipstick in the world to make it attractive to shoppers, Quinn explained.

Foran didn’t mince words during the company’s recent analysts conference (Oct. 15), saying that the supercenter stores need work despite being cash cows with lots of potential. He laid out a plan to shape up the U.S. business and drive more sales by boosting store labor, curbing inventory overruns, doing a better job with fresh produce and meats, expanding private label selections and improving meat quality.

Quinn said loyal Wal-Mart shoppers make an average of 80 trips to their local stores per year and that’s a strong base from which the retailer has sought to build brand equity. But, there’s still work to be done. He said Walmart gift cards are the most wanted of all gift cards, but they are also a card shoppers are the most apprehensive about giving.

“Wal-Mart is working on that,” Quinn said.

EXPECTED EARNINGS
Wall Street will be watching Thursday (Nov. 13) when Wal-Mart reports its third quarter financial results, which have already been guided downward as the year has progressed.

Analysts are mixed on how well the retail giant will rebound or retrench given weakened guidance among the entire retail sector. Some believe Wal-Mart will benefit from lower gasoline prices as their shoppers will have more money to spend. Others say the heightened promotions by Wal-Mart and retail in general are eroding their gross margins which will have a drag on earnings.

Analysts expect Wal-Mart to report $1.12 per share on revenue of $119 billion. Wal-Mart has a history of reporting very close to the street consensus.