Wal-Mart to review advertising

Retailer seeks more upscale customers

May 05, 2006|By NEW YORK TIMES NEWS SERVICE

Wal-Mart Stores Inc. is sending its strongest signal yet that it no longer intends to do business as usual, placing its advertising account in review.

Word of the review, Wal-Mart's first in more than 30 years, comes after months of significant changes to the retailer's longtime marketing approaches. The move underscores Wal-Mart's eagerness to find ways to broaden its appeal to new upscale shoppers as the chain's revenue growth has lagged its smaller and hipper rival, Target Corp.

Given the size of Wal-Mart's marketing budget, $578 million last year, the move is likely to set off a scramble among agencies. But finding new agencies could prove tricky because shops with retail backgrounds may already work for competitors.

The review puts a spotlight on the two agencies on which Wal-Mart has relied for many years, Bernstein-Rein Advertising in Kansas City, Mo., and GSD&M in Austin, Texas, owned by the Omnicom Group.

Both agencies, which helped Wal-Mart during its many years of drastic growth by marketing its low-cost image, said they would take part in the review.

Wal-Mart is hoping new ad campaigns will help it reach higher-income customers who will stay in the stores to buy more than just staples. The discount retailer is also pushing into urban markets and wants to attract sophisticated city shoppers.

The company has introduced more stylish merchandise under brand names like Exsto and Metro 7, added more expensive television sets to the consumer electronics departments, and spruced up the interiors of its stores.

Wal-Mart's chief marketing officer, John Fleming, has been searching for a distinct, unified voice for the company's advertising since he was promoted to his post in March 2005 after leading the Wal-Mart online division.

Under Fleming, the smiley-faced character that has symbolized Wal-Mart's commitment to low prices, which was created by Bernstein-Rein, has virtually disappeared from mainstream ads. He has also played down campaigns that were centered on actual Wal-Mart customers and employees talking about low prices, convenience and how much fun it is to shop at Wal-Mart.

Wal-Mart is looking for an agency or agencies that can provide "great creativity and an understanding of the customer," said Gail Lavielle, a spokeswoman for Wal-Mart in Bentonville, Ark. She confirmed a report of the review that appeared Wednesday on the Web site of the trade publication Advertising Age.

The review is also intended to "make sure all of our messages are consistent across all media we use," Lavielle said.

The review, Lavielle said, will be led by Julie Roehm, a former senior marketing executive at the Chrysler Group unit of DaimlerChrysler whom Fleming hired in January. Roehm was hired as senior vice president for marketing communications at the Wal-Mart Stores USA division.

Although Wal-Mart remains the nation's largest retailer - dwarfing competitors like Sears, Roebuck; Kmart; Kohl's; and Target - revenue growth at Target has been far more robust than Wal-Mart's.

Analysts credit much of those gains to the ability of Target to appeal to more affluent shoppers with upbeat campaigns focused on "cheap chic," which are created by agencies that include Peterson Milla Hooks in Minneapolis. Higher-income shoppers are less affected by economic factors like rising energy prices than are low-income and middle-income consumers who are the Wal-Mart mainstays.

Fleming's goal has been to persuade upscale customers who rely on Wal-Mart for detergent, cereal and soda to also visit the aisles that stock pricier items like household furnishings, clothing and home electronics.

"The challenge is to sell more stuff to shoppers with household incomes of more than $100,000," said Candace Corlett, a principal at WSL Strategic Retail in New York, a retail consultant. "Wal-Mart has to get them to put more into their carts."

At the same time, she said, Wal-Mart must not "make the lower- and middle-income shoppers who are very possessive about Wal-Mart feel like they're not at home anymore."

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.