Walmart: Building and defending a corporation’s reputation
From the beginning, the Walmart retail firm and its founder, Sam Walton, have been enormously successful. Sam Walton opened his first Walmart discount store in 1962, the company became a public company in 1970, SAM’s Clubs were rolled out in the 1980s and super-centers in the 1990s. Today, Walmart Stores is the largest retailer in the world and it easily tops the latest Fortune500 list of the world largest corporations in 2003.
Walmart’s success and its exemplary growth (mainly within the US market) has been attributed to the large size of the US market, founder Sam Walton’s inspirational leadership, an associate-focused organizational culture, a capacity for reinvention and innovation, low-cost operations, vendor partnering, an efficient logistics system, extensive internal communications, continuous merchandising, heavy television advertising, a customer service orientation, and competitor inattention. But, the lion’s share of Walmart’s phenomenal growth seems to be its communications strategy, which enabled it to reach its corporate objectives and to ease opposition to its aggressive low-cost strategy.
Walmart is exemplary of the low-cost strategy and it has fine-tuned the low margin, high inventory turnover, and volume-selling practice that comes with it. Volume buying enables lower costs of goods, and the key, according to Sam Walton; ‘is to identify the items that can explode into big volume and big profits if you are smart enough to identify them and take the trouble to promote them’. Walmart demands vendors forgo all other amenities and quote the lowest price. And its retail strategy for capturing market share involves an aggressive carpet-bombing campaign in which an area is chosen and competitors are challenged and eventually driven out by its low-cost strategy.
The mega-retailer low-cost strategy is, according to Thomas Zaucha, president of the National Grocers Association in the USA, alarming enough to call ‘saturation bombing’. Zaucha explains that ‘they [Walmart] have the ability to come into a market with their super-centers, with their Neighbourhood markets, with their traditional Walmarts, and with the Clubs. I think there is a growing concern that not only do we have the potential for concentration, we have the real possibility of monopsony power.’ ‘They are re-structuring the industry,’ according to David Rogers, a market consultant; ‘When you put that amount of store space in, you have to take an equivalent amount of floor space, and that is going to happen through store closings, isn’t it? That’s the brutal truth.’ The latest industry surveys in the USA indicate that of recent bankruptcies of supermarket chains; eight out of nine were heavily influenced by Walmart’s expansion strategy.
Of course, with such an aggressive low-cost strategy, one would expect Walmart to run into fierce opposition from citizens, communities, the industry and the US government. But the retail giant has still maintained its legitimacy; because of its sophisticated communications strategy that connects the retailer symbolically to the dominant ideologies of American life. Through the imagery of frugality, family, religion, neighbourhood, community and patriotism, Walmart locates itself centrally on Main Street of a nostalgic hometown. This symbolism and imagery, carried through in all its advertising, in-store promotions and staff communications, not only positively disposes shoppers but it also ‘decouples’ Walmart from unfavourable outcomes of its low-cost strategy and its market success. These consequences include local retailers being forced out of business, small town opposition, accusations of predatory pricing and allegations about products being sourced from overseas sweatshop suppliers. It is notable in this regard that Walmart, a hard-hitting low-cost firm, has received some public opposition and shuns the limelight in recent anti-globalization demonstrations (which have targeted such companies as Starbucks and Shell).
In other words, Walmart is able to couch its low-cost strategy in terms that are favourable to consumers and the general US public – with language such as ‘Our aim is to lower the world’s cost of living’; ‘Our pledge … to save you more’; ‘Our commitment … to satisfy all your shopping needs’ – and appease opposition to it. This is done, as mentioned, by referring to the retail symbolism of saving, family, America and patriotism, and community and hometown. Advertising flyers, for instance, present ‘plain folks’ (as opposed to professional models), apparently ordinary people including Walmart ‘associates’, spouses, children, parents, pets, suppliers and customers, and devote an inordinate amount of space to community-oriented and patriotic topics, delving in places into philosophical monologues about American enterprise, friendly customer service and other topics. The general public exposed to such flyers is likely to be favorably predisposed to them because of its nostalgia and patriotism.
Stephen Arnold, a professor at Queens School of Business (Canada) and his colleagues3 observed that the symbolic presentation of Walmart might be different from the objective reality. That is, Walmart projects an innocent, homespun image of a happy community involving vendor ‘partners’, associates and customers. The extremely rich weave of cultural-moral symbols upon which this interpretation is based, however, may have as much to do with Walmart’s communications strategy and its quest for legitimacy as it does with a true and profound community spirit. For example, in lieu of the ‘vendor-partner’ persona, aspiring Walmart suppliers wait long periods before meeting a buyer and are then squeezed aggressively for the lowest prices. And many goods, apparel in particular, do not display a ‘Made in the USA’ label and ‘Buy American’ signs are found situated embarrassingly on racks of imported products. Furthermore, some allege the goods are sourced at overseas sweatshops and that the low prices are a consequence of child labour. Newsgroups and websites have sprung up for disgruntled former Walmart associates to vent their unhappiness (e.g. http://www.walmartworkerslv.com, http://www.walmartsuck.com). Walmart is regarded by some as a wolf in sheep’s clothing and its symbolism and communications strategy may in such a view have been the instrument for constructing and legitimizing the sheep’s costume.
Questions for reflection:
1. Reflect upon the corporate brand, themed messages and message styles of Walmart in the US retail sector; what in your view has been effective in this regard? And does the company need to change its strategic messaging moving forward?
2. What would you advise the company to ensure that it is broadly supported by customers and other stakeholders, and avoids organized opposition to its business strategy?
Assignment
Developing and implementing an effective corporate communication strategy is increasingly important for organisations to foster positive and long-term relations with all of their diverse stakeholder groups. An effective strategy will help to build a positive identity and a good corporate reputation, as well as leading to economic advantage.
Question
Refer to the case study given to you about a major corporation and give an account of their corporate communication as revealed in the case. You must include information on at least FOUR of the following: the corporation’s use of social media, their stakeholders, their communication with stakeholders, corporate branding, corporate reputation, media relations, employee relations.
Write a 300-400-word report in which you present your findings.
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