Wal-Mart’s Biggest Challenge: Reputation

In an internal Wal-Mart document released today, advertising agency GSD&M cites Wal-Mart’s reputational issues as one of the largest obstacles facing the company. That is to say, even though Wal-Mart is facing the largest class action lawsuit in history, has exhausted their growth potential in North America and has recently reported the lowest sales figures in the company’s history of public trading, GSD&M is saying that the company’s reputation is what they need to deal with. Go figure.

Ad Agency: Wal-Mart Lacking Respect [Associated Press via New York Times]

An advertising agency fighting to keep Wal-Mart’s business last year told the world’s largest retailer that while it was a ‘’positive force’’ because low prices helped shoppers lead better lives, the company suffered a lack of respect that could drive away shoppers.

The marketing report by GSD&M was obtained by a union-funded group critical of the retailer, WakeUpWalMart.com, and provided to The Associated Press. It warned Wal-Mart was being portrayed in the media as a ‘’bad corporate citizen who doesn’t treat employees well and isn’t acting as a good citizen of the planet.’’

GSD&M had handled Wal-Mart’s advertising for 19 years until the retailer hired a new group during the winter. For its 55-page document, ‘’Wal-Mart: Positioning Report,’’ GSD&M conducted in-home interviews with 24 groups of consumers and 20 individuals nationwide and took some of them shopping.

Wal-Mart, based at Bentonville, Ark., acknowledged the report was genuine but played down its significance. Spokesman Nick Agarwal said the company receives many marketing studies from consultants.

‘’I’m afraid this particular piece of work is not very useful, not least because it’s now completely out of date and in some areas just plain wrong,’’ Agarwal said.

Agarwal disputed GSD&M’s claims that Wal-Mart’s reputation has declined in recent years. He said Wal-Mart does not believe it is losing business because of negative headlines.

Austin, Texas-based GSD&M confirmed the report was part of its unsuccessful pitch. Wal-Mart in January dropped Omnicom Group Inc.’s GSD&M and another longtime agency, Bernstein-Rein of Kansas City, Mo. It hired Interpublic Group of Co.’s Martin Agency and Publicis Groupe SA’s MediaVest.

WakeUpWalMart.com spokesman Chris Kofinis said the study backs his group’s arguments that Wal-Mart must change, including paying its workers more and improving health benefits.

‘’From day one we told Wal-Mart that the American people cared about values, not just value, and because they didn’t listen, preferring this dumb ‘head-in-the sand-publicity-stunt’ strategy, they have damaged their public image, and needlessly hurt their company, their shareholders, and their workers,’’ Kofinis said.

Patricia Edwards, a portfolio manager and retail analyst at Wentworth, Hauser & Violich in Seattle, which manages $9.6 billion in assets and holds about 42,000 Wal-Mart shares, said the report points to a genuine issue for Wal-Mart.

‘’Reputation really does matter,’’ said Edwards. ‘’It’s more and more important, especially as you get to the younger crowd (of consumers). They are less about the money and more about values.’’

Wal-Mart’s shares have been in the doldrums for years, a fact that some analysts blame in part on the potential risk of negative headlines affecting its business. While total sales rose 94 percent from 2000 through last year, the company’s shares are trading about 30 percent below their Jan. 3, 2000 closing price.

GSD&M listed Wal-Mart’s corporate reputation as the first of 10 challenges the company faces. Other problems included a ‘’hillbilly’’ stereotype of its shoppers and competition from smaller Target Corp.

The agency argued that Wal-Mart is a positive force because its low prices help shoppers lead better lives.

But it said Wal-Mart’s brand had slipped over time from standing for values like patriotism, community and opportunity to offering only economic value as low prices. GSD&M said if that gap is not closed, shoppers will have one more reason not to shop at Wal-Mart.

‘’While corporate respect may not be a highly rated driver of store choice, this intangible quality cannot be underestimated—especially as Millennials (people born after 1980) take hold of the marketplace,’’ the report said.

It did not recommend specific steps but said Wal-Mart should rebuild its values and make itself a brand that shoppers, employees, suppliers, shareholders and communities are proud of.

Posted by Alex Goldschmidt on Wednesday, May 30, 2007

COMMENTS

Walmarts legacy will forever be their actions in Jonquiere Quebec.
A company that disrepects Canadian labour laws and Canadians. Walmart disrepects workers.

R E M E M B E R
J O N Q U I E R E
Q U E B E C
Home of Walmart Worker Abuse
We will never forget what you did Walmart.
Never

Alex in Ontario, Canada
Wednesday, May 30 at 06:34 PM

What did you say, Alex???

The Sage in
Wednesday, May 30 at 06:55 PM

Thank you for urging Wal-Mart to change it policy on providing Plan B® without delay.

Now, take the next step! We need your help to keep the pressure on Wal-Mart: ask your friends to join the effort to change Wal-Mart’s policy on providing Plan B®.

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Richard Lockmiller a Walmart Dt Manager lives in winchester tennessee on keith spring mountian. He owns a 4000sq ft home on a 800 by 800 ft lot worth 700.000.00 and has cars and trucks worth 150.000.00. Has 6 kids, 12 grandkids, 2 girl friends and is only 54 years old, he must make 140.000.00 a year. I am an asistant mrg and only make 33.000.00 a year, i think i am worth 40.000.00. please give me a big raise.

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Maintainer: NARAL Pro-Choice America (can@ProChoiceAmerica.org)

Chirs Lee Mitchell in Estill Springs, Tennessee
Thursday, May 31 at 12:18 AM

Chris

Why don’t you tell us what NARAL stands for? Didn’t you used to be the National Abortion Rights League? You support abortion on demand, which is the medical murder of a human life. You support the rights of women to terminate a baby’s life at 6 months, when the baby could live on its own. You support abortion on demand for 12-year olds, even though a pregnant 12-year old in every state has technically been raped. You support the rights of a 12-year old to get an abortion WITHOUT INFORMING HER PARENTS, who pay for her health care and support and are legally responsible for her.

You support abortion and you are too cowardly to admit it. You people are so pathetic. Liberals and abortion supporters don’t use their labels anymore because they know the American people despise them. If abortion or liberals were popular, believe me, you would be calling yourself by your true label.

Finally, a question. Why could Laci Peterson get an abortion with no problem but when her husband is accused of killing her while pregnant, he is charged with a double murder? Wouldn’t killing the baby either way have been murder?

Nick in
Thursday, May 31 at 06:24 PM

Nick,

From where do you get your moral fiber if not from the Bible? The origin of your disposition is ultimately from...?
To stun the ‘war room’, I happen to agree with you on this subject. Now, if only you can bring the same fervent moral interest to the subject of cigarettes.

SanDiegoView in
Thursday, May 31 at 08:10 PM

This is a good article that reveals the COST of disrespecting employees and consumers. These guys might be able to help spread the word:

http://www.unboundedition.com/content/view/685/54/

Jerry in USA
Sunday, June 03 at 12:45 PM

Chris Lee Mitchell has always been a hateful and VERY evil person. Chris NEVER uses the walmart 10ft rule. chris would rather hide from the customers than help them. I wont shiop at the Winchester tn Walmart because He is there.

Nancy Zabel in
Sunday, June 03 at 06:32 PM

Nancy You need to go back to school, Your spelling can use some work. I am cart pusher at the same store and I know what You mean. My friend Josh and I are leaving to work at Home Depot. Why would anyone want to work with Chris He has an anger problem that needs professional help.

Andy in
Sunday, June 03 at 06:40 PM

http://7388cdc96c2cbdcea15f03e56b86d06c-t.tdymop.info 7388cdc96c2cbdcea15f03e56b86d06c http://7388cdc96c2cbdcea15f03e56b86d06c-b1.tdymop.info 7388cdc96c2cbdcea15f03e56b86d06c http://7388cdc96c2cbdcea15f03e56b86d06c-b3.tdymop.info f24fa7c47d24f7cf96c8a5890a8a6274

Tracy in Ronald
Thursday, June 07 at 11:36 AM

Richard Lockmiller is a walmart big shot.address 7525 Rowe Gap rd Winchester, Tn 37398. pn 931-967-6047.

Chris Mitchell in Winchester, Tn
Monday, June 11 at 12:32 AM

Richard Lockmiller is a walmart big shot.address 7525 Rowe Gap rd Winchester, Tn 37398. pn 931-967-6047.

Chris Mitchell in Winchester, Tn
Monday, June 11 at 12:32 AM

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Christopher in Maximilian
Monday, June 11 at 09:49 PM

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Donte in Otis
Tuesday, June 12 at 07:30 PM

I didnt want to leave Walmart But some of the new assistant
Managers and others who work there are not decent people off work or on the clock. Leaving for Home Depot.

Josh Parrish in
Tuesday, June 12 at 09:30 PM

I wish I could Manage the Winchester Tenessee store.
I would be closer to home and I know I can do a better job.

Mark Kelly in Tn
Tuesday, June 12 at 09:40 PM

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