Walmart Presses Its Shops for Efficiencies

Retailer Seeks Cost-Containment Proposals From Agencies on Its $2.4 Billion Business

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BATAVIA, Ohio ( -- Walmart stores is seeking proposals from its agencies for operating and cost efficiencies that could include consolidating its advertising and marketing services accounts in the U.S. and globally, according to people familiar with the matter.

The talks are preliminary and haven't reached the stage of a formal review, these people say.

One person close to the company expects the retailer -- the largest in the world -- to look into holding-company consolidation of agency assignments, with an eye toward improving services and lowering fees.

Interpublic Group of Cos. and Publicis Groupe are the two main holding companies whose agencies handle work for the U.S. Walmart division, by far the biggest spender among the global advertiser's units. Shops under those companies that handle pieces of Walmart's U.S. advertising include Martin Agency and Publicis & Hal Riney for creative work; Saatchi & Saatchi X for shopper marketing; and MediaVest for media duties.

WPP Group and Omnicom Group have public relations and market-research assignments for Walmart in the U.S. as well, as do independents such as Rockfish Interactive and Edelman, which handle digital and PR assignments respectively. "Like other retailers, we constantly work with our agencies to further improve the effectiveness of our marketing communications, and this is especially true as we approach key holidays like Christmas," a Walmart spokesman said in an email. "There are always rumors about our business and as a matter of policy, we don't comment on them."

Separate from the discussions on other marketing services, people familiar with the matter said Walmart is considering consolidation of its U.S. consumer public-relations accounts, now split among Omnicom Group's Porter Novelli, Interpublic's Golin Harris and WPP's Cohn & Wolfe.

Globally, Walmart spent $2.4 billion on advertising in the year ended Jan. 30, the company reported. In the U.S., Walmart spent $1.1 billion in measured media, according to Kantar Media and $1.7 billion overall on advertising, per Advertising Age estimates last year.

Opening the door to holding-company proposals raises the possibility of consolidating accounts globally in Walmart's increasingly far-flung operations, which includes operations in Latin America, China, Japan, the U.K. and India. While many large marketers were prompted by the economic crisis to trim the number of agencies on their rosters, Walmart up to now hasn't leveraged its scale as a global marketer to streamline its holding company or agency lineup, or to cut costs. That could change now, however, since Vice Chairman Eduardo Castro-Wright -- who was president of Walmart U.S. when that unit chose current shops Martin, R/GA, MediaVest, Publicis and Saatchi X -- focused his duties earlier this year on procurement and e-commerce.

The discussions on reducing agency costs resembles, according to some familiar with Walmart, the company's approach to dealing with suppliers of merchandise in the stores. As such, it doesn't necessarily mean any current agency gets cut out of the loop, but it clearly puts a focus on providing the best service at the lowest cost.

Walmart has in recent years streamlined some other areas of marketing services. Last year it consolidated in-store sampling and merchandising work that had been handled by several providers for Walmart and Sam's Club with Shopper Events, a partnership between the brokerage firms Crossmark and Advantage.

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Contributing: Michael Bush

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