Wal-Mart CEO: "I'm not a big fan of marketing"

Posted by: Burth Helm on March 28, 2007

He later said he meant just “advertising,” but that’s what Chief Executive Lee Scott replied when I asked him what he expected from the upcoming ad campaign, and how the company planned to get shoppers to buy items like apparel.

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Scott and his chief of communications Mona Williams are in town this week to meet with members of the media (they’ve been making news with other outlets, too), and during a lunch with several BusinessWeek staffers today Scott was candid, verging on blunt, about his feelings on advertising, the press, and the retailer’s recent troubles in apparel and home goods. More after the jump.

UPDATE: We now have a longer excerpt of the interview (including topics beyond my focus on the marketing and advertising stuff) here.

He started things off with a harsh assessment of last year’s plan to get more of the 137 million Wal-Mart customers interested in items like apparel and home goods. "We're defined by our customer, not by us...We found we can’t wake up and try to do something new and not earn it,” said Scott. He continued: “You couldn’t have spent enough marketing on Wal-Mart apparel last year.” He said he that though they went “too far, too fast,” they hadn’t altogether abandoned the strategy.

So after a tumultuous year in the marketing department, Scott told us he wants to stick to Wal-Mart’s low-price image, and focus on things like smart consumer research and store planning. The key is having the right product in the right place for the right price, he said, and there’s no reason to try anything fancy. "I care that we have good ads, but whether we have a good TV ad or a bad TV ad doesn't make a difference," he said. "The point is reinforcing the message."

So why did Wal-Mart decide last year it needed a new advertising agency? Scott distanced himself from the move. "Wal-Mart Stores, Inc. did not participate in the decision. It was a divisional issue" for the Wal-Mart U.S. operation., he said. He did go on to say that with new marketing executives, it made sense to start fresh. "Then, in the process, someone forgot to manage it." For those under a rock last year, that was an allusion to troubles with execs like Julie Roehm and Sean Womack, and ad agency Draft FCB.

At one point, he admitted the company has trouble using anything but low prices to gain a marketing edge. That's was the problem in Germany, he said, where high costs prevented it from trouncing the competition. "We could never figure out an ambience...or an attractive proposition that transcended price." Wal-Mart sold off its German stores earlier this year.

So pat yourself on the back, Martin Agency. Have fun with this account.

Side note: At the end I spoke with Mona Williams and brought up the counter-suit, which I blogged a bit about this morning. Williams said she thought Wal-Mart had said what it needed on the topic, but that basically the counter-suit was their way of fighting back against Julie Roehm. Her statements in the press, they felt, were damaging the Wal-Mart brand.

Earlier, Scott pointed out that despite the sting of negative press, it doesn't really hurt business. "It doesn't resonate at the customer level," he said. "Less than a tenth of one percent of our current customers have said they would or have stopped shopping because of negative press." I wish they'd share that research with us.

Reader Comments

Daniel

March 29, 2007 10:53 AM

This is all very interesting, especially given the article in this week's 'New Yorker' on Wal-Mart. Mentioned here is the very Mona Williams who, as recounted by Jeffrey Goldberg, keeps a framed copy of the 2003 'BusinessWeek' cover story- "Is Wal-Mart too Powerful"- on her wall as a reminder of why she would never trust reporters.

Yes, this company has difficulty conveying any message other than low prices. A race to the bottom is not the makings of a brand strategy. And, yes, the Martin Agency should have much fun with this account.

Burt Helm

March 29, 2007 12:45 PM

Daniel,
You're right. I had just read the New Yorker article that morning, too. And while I'd spoken with Mona on the phone before, I'd never met her in person. It's a funny thing to have in your head when you finally say hello.

JimBob

March 29, 2007 2:58 PM

I don't know who to laugh at more!!! Why does this have the shades of the Rosie/Donald fight? Because I feel not one bit sorry for either.

David Vinjamuri

March 30, 2007 1:42 AM

I am very surprised that Wal-Mart didn't lock up Roehm with a big check and a non-disclosure. The suit and countersuit have catapulted them onto the front page of the New York Times today (Thursday) and they've taken enough body blows to their public image lately.

Did Scott comment on this aggressive PR strategy? It seems like however improperly they think Roehm acted this will cost them more than her.

Burt Helm

April 2, 2007 12:08 PM

A check and a non-disclosure agreement certainly would have been another strategy! Scott only talked about Roehm in passing when he referred to the agency search, and with Roehm several rungs down and part of the Wal-Mart US division, I don't know how involved he was. Williams described the company's moves to me as acts of defense.
With several prominent stories in the WSJ and the New York Times as a result, I wonder what that kind of defense was actually worth.

Michelle

April 17, 2007 12:21 PM

Wal-Mart has trouble because of Wal-Mart. They do not treat their employees well and are discriminatory towards women. Also it is hard to navigate through their stores and find what you are looking for because of meandering customers who are there to socialize. The quality is terrible and everyone knows it. Wal-Mart has not stayed in touch with its customers. Maybe they should conduct some in-store surveys. If Wal-Mart were not so close to where I live then I would never shop there. Target is much better.

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About

News, opinions, inflammatory meanderings and occasional ravings about the world of advertising, marketing and media. By marketing editor Burt Helm, Innovation Editor Helen Walters, and senior correspondent Michael Arndt.

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