Image efforts cut into Wal-Mart sales

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Watch a Wal-Mart ad the past year and you were more likely to see a heart-tugging commercial about how the world's largest retailer is rebuilding blighted urban communities, advancing minority employees or granting wishes to terminally ill children than a smiley-faced pitch about low prices.

Walk into a Wal-Mart store, and you'll see giant banners proclaiming a commitment to "Wal-Mart Good Works" before you see the first "Rollback" placard.

It's marketing from the Book of James, as in the Bible's broadside against faith without works, rather than the Book of Sam, as in Walton, legendary "Mr. Sam" to the Wal-Mart nation.

big shift

Mr. Walton seldom diverted his focus from what kept his flock flocking to stores-the "We Sell for Less" philosophy plastered out front. But beset by a rising tide of bad publicity that intensified late last year, from a class-action lawsuit charging sex discrimination to exposes on Wal-Mart's use of illegal aliens and other labor practices, the retailer shifted much of its ad budget into image advertising.

In a mid-course correction, Wal-Mart Stores shifted more of its ad budget back to traditional price-focused advertising last week after a disappointing November, rolling out more deep discounts, buying rare (for Wal-Mart) run-of-press newspaper ads to highlight them, and boosting the frequency of the long-running "Always Low Prices" TV ads. Omnicom Group's GSD&M, Austin, handles the campaigns.

Yet the corporate image advertising remains-as do the reasons for it. The trouble is, soft and fuzzy ads or no, Wal-Mart actually has moved up a notch this year to become the No. 1 corporate target of negative online buzz concerning employment practices, said Pete Blackshaw, chief marketing officer of Intelliseek, which tracks what consumers say about brands in online message boards, blogs and other forums.

Wal-Mart's negative ratings from consumers for shopping experience didn't improve, either, in the past year and remained well behind that of Target. The biggest area of online consumer complaints against Wal-Mart, Mr. Blackshaw said, was "staff attitude," which he speculated may have a link to the employment practices issues.

"Unfortunately, you can't really beat negative PR with advertising," said Laura Ries, president of the marketing consultancy Ries & Ries. "Negative PR will win every time. They hadn't done that much [image] advertising before the negative PR hit, so they were in a quandary. ... It's always best to focus on your core asset, which is Always Low Prices."

strong competition

Still, she doesn't blame any shift in ad strategy for Wal-Mart's slowing sales growth. "I think Target's just a very strong competitor," she said. "I think the cheap chic positioning has done a number on Wal-Mart and people are choosing that shopping experience."

But Paul Higham, former chief marketing officer at Wal-Mart as well as a former Target executive, who now runs the consulting firm H-Factor, downplays the ad shift and any negative impact on Wal-Mart. "They've always done [image advertising]," he said, adding that he believes much of it is for the benefit of Wal-Mart's own million-strong workforce and their morale.

As for the recent slowing in sales growth, his own checks of Wal-Mart stores in early December indicated a strong rebound. "Come January," Mr. Higham said, "I think it's all forgotten and people will be talking about Wal-Mart having another great year."

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