Case study: Wal-Mart and its Communications Strategy

From the beginning, the Wal-Mart retail firm and its founder, Sam Walton, have been
enormously successful. Sam Walton opened his first Wal-Mart discount store in 196,the
company became a public company in 19!", S#M$s%lubs &ere rolled out in the19'"s and
became super-centers in the 199"s. (oday, Wal-Mart is the largest retailerin the &orld and
easily topped the latest Fortune )"" list of the &orld largest corporationsin ""*.
Wal-Mart$s success and its e+emplary gro&th first and foremost &ithin the ,Smar-et has been
attributed to the large si.e of the ,S mar-et, founder Sam Walton$s inspirational leadership, an
associate-focused organi.ational culture, a capacity for reinventionand innovation, lo& cost
operations, vendor partnering, an efficient logisticssystem, e+tensive internal communications,
continuous merchandising, a customerservice orientation and competitor inattention. /ut, one
important and previouslyoverloo-ed cause for Wal-Mart$s phenomenal gro&th seems to be its
communications strategy, &hich is lin-ed to its corporate mission and identity of serving
customers and the communities in &hich the company operates, and also enables it to reach its
mar-et ob0ectives and to cancel out opposition to its aggressive lo& coststrategy.
Wal-Mart is e+emplary of the lo&-cost competitive strategy and it has fine-tuned the lo& margin,
high inventory turnover, and volume selling practice that comes &ith it.1olume buying enables
lo&er costs of goods, and the -ey, according to Sam Walton,2is to identify the items that can
e+plode into big volume and big profits if you aresmart enough to identify them and ta-e the
trouble to promote them$. Wal-Martdemands vendors forgo all other amenities and 3uote the
lo&est price. #nd its retails trategy for capturing mar-et share involves an aggressive carpet
bombing campaignin &hich an area is chosen and competitors are challenged and eventually
driven out by its lo& cost strategy.
(he mega-retailer$s lo& cost strategy is, according to (homas 4aucha, president ofthe 5ational
6rocers #ssociation in the ,S, alarming enough to call 2saturationbombing$. 4aucha e+plains
that 2they 7Wal-Mart8 have the ability to come into amar-et &ith their super-centers, &ith their
5eighborhood mar-ets, &ith their traditionalWal-Marts, and &ith the %lubs. 9 thin- there is a
gro&ing concern that not only do&e have the potential for concentration, &e have the real
possibility of 7monopoly8po&er$. 2(hey are re-structuring the industry$, according to :avid
;ogers, a mar-etconsultant< 2When you put that amount of store space in, you have to ta-e an
e3uivalentamount of floor space, and that is going to happen through store closings, isn$tit=
(hat$s the brutal truth$. (he latest industry surveys in the ,S indicate that of allrecent
ban-ruptcies of supermar-et chains, eight out of nine &ere heavily influencedby Wal-Mart$s
e+pansion strategy.
>f course, &ith such an aggressive lo& cost mar-et strategy, one &ould e+pectthe Wal-Mart
corporation to run into fierce opposition from citi.ens, communities,the industry and the ,S
government. /ut the retail giant has not, because of itssophisticated communications strategy
that connects the retailer symbolically to thedominant ideologies of #merican life. (hrough the
imagery of frugality, family,religion, neighborhood, community and patriotism, Wal-Mart locates
itself centrallyon Main Street of a nostalgic hometo&n. (his symbolism and imagery,
carriedthrough in all its advertising, in-store promotions and staff communications, not
onlypositively disposes shoppers but it also 2decouples$ Wal-Mart from unfavorable outcomesof
its lo& cost strategy and its mar-et success. (hese conse3uences includelocal retailers being
forced out of business, small to&n opposition, accusations ofpredatory pricing and allegations
about products being sourced from overseas s&eatshopsuppliers. 9t is noticeable in this regard
that Wal-Mart, a hard-hitting lo& costfirm, has received fairly little public opposition and shuns
the limelight in recentanti-globali.ation demonstrations ?that have instead targeted such
companies$ asStarbuc-s and Shell@.
9n other &ords, Wal-Mart is able to couch its lo& cost mar-et strategy in terms thatnot only fit
&ith its o&n customer-focused corporate identity, but also are acceptableto consumers and the
general ,S public A &ith language such as 2>ur aim is to lo&erthe &orld$s cost of living$, 2>ur
pledge B to save you more$, 2>ur commitment B tosatisfy all your shopping needs$ A and that
appease opposition to it. (his is done, asmentioned, by referring to retail symbolism of saving,
family, #merica and patriotism,and community and hometo&n. #dvertising flyers, for instance,
present 2plain fol-s$?as opposed to professional models@, apparently ordinary people including
Wal-Mart2associates$, spouses, children, parents, pets, suppliers and customers, and devote
aninordinate amount of space to community-oriented and patriotic topics, delving inplaces into
philosophical monologues about #merican enterprise, friendly customer
service and other topics. (he general public that is e+posed to such flyers is, becauseof its
nostalgia and patriotism, li-ely to be favourably predisposed to them.Stephen #rnold, a
professor at Cueens School of /usiness ?%anada@ and hiscolleagues observed that the
symbolic presentation of Wal-Mart might be differentfrom the ob0ective reality. (hat is, Wal-Mart
pro0ects an innocent, homespun imageof a happy community involving vendor 2partners$,
associates and customers. (hee+tremely rich &eave of cultural-moral symbols upon &hich this
interpretation isbased, ho&ever, may have as much to do &ith Wal-Mart$s communications
strategyand its 3uest for legitimacy as it does &ith a true and profound community spirit.
Fore+ample, in lieu of the 2vendor-partner$ persona, aspiring Wal-Mart suppliers &aitlong periods
before meeting a buyer and are then s3uee.ed aggressively for the lo&estprices. #nd many
goods, apparel in particular, do not display a 2Made in the ,S#$label and 2/uy #merican$ signs
are found situated embarrassingly on rac-s ofimported products. Furthermore, some have
alleged that the goods are sourced atoverseas s&eatshops and that the lo& prices are a
conse3uence of child labour.5e&sgroups and &ebsites have sprung up for disgruntled former
Wal-Mart associatesto vent their unhappiness ?e.g. httpDEE&&&.&almart&or-erslv.com,
httpDEE&&&.&almartsuc-.com@. Wal-Mart is regarded by some as a &olf in sheep$s clothing,and
its communications strategy, &hich is closely lin-ed to its corporate mission andhas also
successfully supported its lo& cost mar-et strategy, may in such a vie& havebeen the
instrument for constructing and legitimi.ing the sheep$s costume.
Questions for reflection
1. What communications strategy has Wal-Mart follo&ed= Would an alternativestrategy have
been more successful=
. Why has Wal-Mart been so successful on this account, &hile other large firms&ith aggressive
lo& cost mar-et strategies have been sub0ect to public scrutinyand outrage=