Wal-Mart's Primary Media Channel: Its Stores

CMO John Fleming: An Ad Age Original Video Report

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NEW YORK (AdAge.com) -- As other marketers and industry observers continue to debate whether stores can effectively function as media channels, Wal-Mart has adjusted its advertising strategies in a way that assumes that fact to be true.
'Most important'
Speaking at Advertising Age's American Consumer Conference in Manhattan last week, Wal-Mart's exec VP-chief marketing officer, John Fleming, said, "The most important media channel that we have is our store."

"Everywhere I go," he said, "I get asked about [Wal-Mart's] media mix and I know that in advertising that's such an important thing."

He emphasized that while the company continues to value and rethink its advertising mix in other traditional channels, "our primary focus is using the store as a media channel and figuring out ways to add to the customer experience but give them the information that they need to make good product decisions."

6,000 stores
Wal-Mart, which is the world's single largest retailer, operates more than 6,000 stores, two-thirds of which are in the U.S., that are shopped by 130 million consumers. As a reachable group inside Wal-mart facilities, these consumers constitute a potential audience larger than the populations of most countries.

The issue of whether in-store advertising is actually effective remains a hot one throughout the advertising industry. For instance, in a online Advertising Age poll conducted a month ago, 69% of respondents said the store-as-a-media-channel concept can work but that current methods of delivering ads to consumers needs to be improved. Meanwhile, 31% said stores don't work well as advertising venues for a number of reasons, including the fact that once they've walked into a retail outslet, consumers tend to be more focused on the product-purchasing process than on listening to TV systems blaring ads from overhead or reading ad materials that festoon aisles, floors and endcaps.

Inventory management
Hitting another topic in his keynote address, Mr. Fleming noted that Wal-Mart is "very focused on inventory management ... [and] a better experience for customers."

"In fact we were driving in [to this conference] yesterday and went past the Secaucus, N.J., Wal-Mart store and one of the merchants was in the car with me and she pointed out that 40% of our business in that store is apparel. Yet, we still carry tools and still have a big fishing department there."

He said that new plans call for the company to "manage our business by segment and location. We don't [now] make big adjustments ... but there is a way we can get it right by location so that it's relevant to the customers that shop that store."
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