Ad Firm's Report Asks, Is Wal-Mart Too Cheap on Food to Grow?

BENTONVILLE, Ark. - "Always low Prices" might not be the best policy all the time. A confidential positioning report delivered to Wal-Mart Stores by an outside agency concluded that the mega-discounter's fundamental low-price strategy was hurting it in categories, including groceries, where low prices are not the only factor consumer care about.

The New York Times got a hold of the confidential report, issued initially last October, from Wake Up Wal-Mart, the union-backed organization known for deriding the retailer over many of its policies. The ad agency that did the consumer research behind the report and prepared it for Wal-Mart, GSD&M Advertising, no longer works for the chain.

The report concluded that Wal-Mart's traditional strengths - its image as a deep discounter, a supreme one-stop shop, and a mass merchant with a huge selection, was getting in the way of its own strategy to broaden its appeal in categories such as groceries, pharmacy, home decor, apparel, and electronics.

"The truth is, our shoppers do not believe we are the smartest choice in the categories we need to grow," said the report. "They have other needs that competitive retailers are meeting better than Wal-Mart. In fact, some of our core equities work against us."

GSD&M, which The New York Times said had worked with Wal-Mart since 1974, submitted the report in a bid to hold onto Wal-Mart's ad agency business. Ultimately, Wal-Mart chose other firms.

Nick Agarwal, a spokesman for Wal-Mart, said that the report was "out of date and, in some areas, it is just plain wrong," reported the New York Times. He said sales in the chain's grocery, pharmacy, electronics departments were strong.

In the report, Wal-Mart's former ad firm provided a set of remedies that for the most part the chain has not put into action.
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