Wal-Mart is one of the top 10 advertisers in the U.S. Hispanic market, spending about $55 million a year. Lopez Negrete Communications, Houston, has been Wal-Mart's Hispanic shop for the last 11 years and will defend the account, said President-CEO Alex Lopez Negrete. The independent shop is the seventh-largest U.S. Hispanic ad agency, with 2005 revenue of $20.2 million, up 22.7% over the previous year, according to Advertising Age's agency ranking. The Hispanic assignment includes media buying.
Other multicultural shops
Wal-Mart's other multicultural agencies are independent E. Morris Communications, Chicago, the seventh-largest shop in Ad Age's ranking of African-American agencies with 2005 revenue of $8.2 million, and Asian-American agency IW Group, Los Angeles, 49%-owned by Interpublic Group of Cos. and ranked No. 6 by Ad Age among Asian-American agencies with 2005 revenue of $6.7 million. Wal-Mart spends a little over $30 million in the African-American market.
Gene Morris, president-CEO of E. Morris Communications, said in a call returned from Wal-Mart's headquarters in Bentonville, Ark., today that his agency will defend the business. E. Morris has had the account, the agency's largest, for 13 years, he said.
"We have been honored to serve Wal-Mart for 11 years as their first and only full-service Hispanic agency of record," Mr. Lopez Negrete said. "Today, Wal-Mart stands tall as the retailer of choice among Latinos. ... During the past year, John and his team have given us the freedom to think, do, create, perform and become integrated like never before. ... We stand ready, excited and positive. We feel the best is yet to come and look forward to being a part of it."
The Wal-Mart account has been the subject of intense speculation since Chief Marketing Officer John Fleming joined from Target Corp. and made it his mission to expand the giant retailer's marketing staff and shake up its playbook. The company confirmed the review April 3 and said that agencies, including longtime incumbents Omnicom Group's GSD&M, Austin, Texas, and independent Bernstein-Rein, Kansas City, Mo., had been notified of the review. A decision is expected this fall. No consultant has been announced yet.
Reaching out to Hispanics
Just a week earlier, Mr. Fleming said in a speech at Ad Age's American Consumer Conference in New York that Hispanics are the fastest-growing customer segment today. He said that Wal-Mart's response is to identify dominant Hispanic communities and merchandise to them. For instance, he said, for the 66% of Wal-Mart's Hispanic customers who are of Mexican descent, food, family and entertainment are very important. So in the food category, for example, Wal-Mart sells up to 12 different brands of tortillas and in some cases is piloting the practice of making tortillas in the store. Wal-Mart is also looking to expand its baby departments is heavily Hispanic stores, and has created a program recognizing that occasions like birthdays, anniversaries and holidays are important to them, leading Wal-Mart to promote gift cards for special occasions. Right now, Wal-Mart is immersed in a major World Cup campaign.
Independent studies of Hispanic shoppers consistently put Wal-Mart at the top of their list of preferred retailers. In a new bilingual survey by Forrester Research of 3,065 Hispanics, Wal-Mart was cited by 71% of respondents as a store they had shopped at. Only five other retailers were cited by 50% or more of respondents: Home Depot (58%), Sears (55%), Kmart (53%), Target (51%) and JC Penney (50%).
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Lisa Sanders and Matthew Creamer contributed to this report.