Retail Intimacy, Part 12: Walmart: How to Win Now

For Walmart, change has rarely come easily – or quietly. The world’s largest retailer, which operates about 11,500 stores in 27 countries and whose annual sales are approaching a half trillion dollars, does not often shy away from its biggest challenges. The company needs to be bold now more than ever, given the intense competitive threats – from the monolithic power of Amazon.com to the reinvigoration of grocery chains and the continued rise of dollar stores – coming from every corner of the market.One consequence of the unrelenting competition has stood out more than any other: According to most retail industry observers, Walmart has lost its long-held perception as the dominant price leader. At the start of 2015, new CEO Doug McMillon threw down the gauntlet to the business community. During meetings with Wall Street analysts and in conversations with vendors and marketing partners, he stated, in effect, that Walmart was no longer going to “allow anyone to beat us on price.”The mandate was clear: Walmart was putting the focus back on Every Day Low Prices (EDLP).Since then, Walmart has taken several significant steps to streamline its shopper marketing playbook and declutter its stores. The retailer has cut back drastically on its calendar-driven co-op programs, print circular “tabs” and FSI inserts, and eliminated some incremental displays. The co-op initiatives had become a point of contention with Walmart’s own buyers, who questioned whether suppliers should pour millions of dollars in media support into things like brand logo placement, which delivered arguably minimal returns. Over the last several months, buyers have been encouraging their supplier partners to shift those dollars into more strategic efforts to convert shoppers through price reductions and a vigorous value message.To be sure, the mounting pressure on Walmart’s suppliers (a din that grew louder with headlines in The Wall Street Journal and other outlets) was cause for some concern within the shopper marketing community. Clearly, Walmart was changing the way it was doing business. Less clear, however, was whether the new store environment would prove more restrictive.“They’re trying to simplify their message around EDLP. It was getting too cluttered. But that doesn’t mean they’re giving up on marketing or that marketing is going away,” says Robin Sherk, an analyst with Kantar Retail. “They’re removing some of the traditional vehicles that were seen as adding to the clutter or not delivering the best engagement or solution for the shopper.”“It’s even more critical to think beyond our own category now. Walmart wants us to come up with that big, daring idea that can stop shoppers in their tracks.”— Meredith Davenport, Bayer HealthCareTo the extent that buyers are exerting greater influence over the development and scope of shopper programming at Walmart, experts say the shift may afford manufacturers promising new avenues to penetrate the front lines of the retailer. For brands and their agency partners, the argument goes, it’s an opportunity to collaborate from the get-go and build stronger relationships with Walmart’s merchant teams.“As a supplier, you’re now going to be working more closely with your buyer to drive traffic and conversion in your category. That’s a distinct advantage when you’re in the ideation stage with new programs,” says Scott Caldwell, senior vice president at Catapult. “For marketers, the challenge in this environment will be to create a more impactful experience while providing unique solutions and value designed to earn the increased loyalty of Walmart shoppers.”A New Winning FormulaAs Walmart has scaled back on some of the industry’s tried-and-true promotional tactics – at least for the time being – shopper marketers have had to look for new entry points and re-evaluate the steps toward a winning formula. Some view the challenge as an opportunity to take their programs to the next level.“It opens the door for us to be more creative,” says Meredith Davenport, senior manager of customer and shopper activation for Walmart at Bayer HealthCare. For marketing around Bayer products, core messages (e.g., getting shoppers in the right mindset around a health and wellness regimen at the start of a new year) will remain relevant, says Davenport. However, she says, “It’s even more critical to think beyond our own category now. Walmart wants us to come up with that big, daring idea that can stop shoppers in their tracks. We’re pushing the envelope and looking for solutions that will drive traffic and shopper engagement across the total store.”Similarly, marketers remain largely confident that they will not have to sacrifice creativity or innovation in order to build programs with a strong EDLP foundation. “There are many ways to demonstrate value that ensure cost savings for both Walmart and its shoppers,” says Russ Ferrara, director of shopper marketing for the consumer products division at Georgia-Pacific. “The key is being able to leverage category insights into something that’s distinctive or unique in the marketplace.”As an example, Ferrara points to the company’s recent Walmart launch of Angel Soft Mega Roll bath tissues, which he says provides a clear benefit to the shopper with its longer-lasting (4x) rolls. Another Georgia-Pacific brand, Sparkle Paper Towels With A Hint Of Color, grew out of an insight that consumers were open to expressing themselves through household products with a little extra personality or flair. “We’re always looking at ways to innovate at Walmart while providing value to shoppers,” Ferrara says.Partnerships That WorkWhen identifying opportunities for shopper programs at Walmart, experts say there are a few keys to look for in terms of what’s working now. First, the idea must be insights-driven and wrapped in a value-oriented solution for the shopper. Plus, the concept must leverage Walmart’s growing arsenal of omnichannel tools, allowing the retailer to engage with shoppers in a consistent and compelling way across a targeted mix of digital, mobile and social platforms.For packaged goods companies like ConAgra Foods and Mars Chocolate, it is vital to build solutions around new usage occasions that can help grow a category beyond its traditional appeal. In some cases, that strategy may involve additional marketing partners. “Walmart has been looking to pair suppliers with a strong affinity in order to create a larger basket ring. It’s one of their top calls to action right now,” says Caldwell.As an example, consider the recent “Big Night In” promotional partnership between Hasbro and Mars’ M&M’s brand. The program, which ran at Walmart stores this past April and May, arose from the insight that shoppers were looking for more activities to do together as a family (21% of parents had played board games with their families in the last 12 months) and were also spending more time at home. Pairing a candy with board games – a more social form of entertainment than TV or movie watching – would allow family members to connect with each other. The program featured a variety of savings offers, a social media campaign and co-branded merchandising and advertising with M&M’s and Hasbro’s Monopoly and Jenga games.The entertainment-themed solution was aimed at winning a greater share of the trips currently going to more traditional immediate-consumption channels, says Allisha Watkins, shopper marketing manager at Mars Chocolate. “By leveraging our social and digital partners, we were able to develop unique ways of creating fun at home for the whole family, at a great price.”Tapping into seasonal occasions should also be part of the strategic mix, just as ConAgra has done with its Snack Pack Pudding Mix-ins program.To help drive engagement and excitement, ConAgra leveraged Snack Pack Pudding Cups’ new flavors in a program that inspired shoppers with ideas for how to customize the sweet treat during key holidays and other special occasions. A dedicated Mix-ins website prominently displayed an Easter-themed Snack Pack, for example, with one of the pudding cups decorated as an Easter basket filled with jelly bean “eggs,” and another designed as an Easter bunny with graham crackers posing as its ears. The Mix-in ideas were featured on displays and in tear pads (which included partner products to drive cross-category impulse purchases), while a social blogging campaign and live Twitter party drove traffic to stores.“Mom is looking for snacks that allow her to personalize and accommodate her family’s varied preferences. She’s also looking to her peers for creative ideas and recommendations,” says Bridget Sigler, shopper marketing manager at ConAgra. “The social content was effective in support of this program. Mom bloggers were able to increase awareness by highlighting current Mix-in ideas as well as using their creativity to generate new ideas.”Growing Digital ProwessIn 2014, Walmart turned industry heads when it notched a 30% year-over-year increase in online sales, surpassing Amazon’s annual growth rate for the first time. The company intends to build on that success by investing as much as $1.5 billion in e-commerce and other digital initiatives in fiscal year 2016, up from $1 billion the previous year, according to the company.One of the most important tools in that arsenal is the Walmart Exchange (WMX) platform. The analytics-based solution allows marketers to optimize their digital campaigns with Walmart in real time using customer data from brick-and-mortar stores. WMX measures in-store sales lift against the response rate of everything from targeted emails to site placements and display media to all the components (e.g., video, coupons, “Buy Now” buttons) of a brand’s landing page at Walmart.com.“We see opportunity in incorporating WMX segments into our broader programmatic buying approach. It is a significant future opportunity.”— Russ Ferrara, Georgia-Pacific“WMX is one of the only currently existing methods in the shopper marketing space to frequently optimize a campaign based on brick-and-mortar activity at a specific retailer,” says Georgia-Pacific’s Ferrara. Though the platform is still in relatively early testing stages and is making ongoing improvements in methodologies and reporting techniques, Ferrara says WMX is a powerful ROI assessment tool that goes well beyond media. “WMX segments are now available through exchanges. Outside media vendors can purchase inventory on Walmart.com through WMX,” he notes. “We see opportunity in incorporating WMX segments into our broader programmatic buying approach. It is a significant future opportunity.”Walmart has also made major strides in terms of the functionality and design of its e-commerce platform at Walmart.com. As more consumers are using online research for CPG products, Walmart has responded with investments in its website features (such as product detail pages, ratings and reviews) that are all translating into a better online shopping experience, says Caldwell. “Walmart’s enhancements to its product pages – the location where a decision to purchase is actually made – are enabling greater engagement and interaction during a critical point in the shopper’s path to purchase,” he says.Even, apparently, for discerning Millennials. According to a recent survey by the market research firm InfoScout, Walmart ranked first in retailer brand preference among 175,000 shoppers under the age of 24, beating out Target, Costco, Kroger, Whole Foods and Trader Joe’s. It was also rated higher than all of those retailers except Target with shoppers age 25 to 34.Walmart executives publically attributed the scores, in part, to improvements in the retailer’s online assortment and overall digital experience. Ferrara thinks that makes sense.“Walmart is really good about challenging us in our assortment You can only put so much on the physical shelf,” he says. “They’re finding ways to customize the online experience and provide unique offerings to shoppers by expanding and improving the digital shelf. Millennials encompass many different segments, but shopper insights tell us that uniqueness is something they are all looking for.”Given all the heated retail competition these days, so too is Walmart. About the SponsorCatapult is a conversion marketing agency, where branding and buying are part of a total solution. Catapult’s data-driven approach identifies the core, actionable insights that inspire brilliant creative with the power to convert consumers into shoppers, shoppers into buyers, and buyers into loyal advocates. Catapult delivers channel-agnostic solutions that are brand savvy, retailer smart, and digitally enabled. Catapult is an Epsilon brand. Visit them at www.catapultmarketing.com and on Twitter @catapultmktg.

Retail Intimacy, Part 12: Walmart: How to Win Now

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