Tuesday, July 9, 2013

Wal-Mart: "For" or "Against"

As the largest American multinational retailer corporation, the biggest private employer in the world with 2.2 million employees, Wal-Mart Stores, Inc., or Walmart, has been running chains of large discount department stores and warehouse stores since 1962 (incorporated in 1969). Company is controlled by the Walton family with 48% stake in it. It is also the U.S. largest grocery retailer and the world's third largest public corporation after Exxon Mobil and Royal Dutch Shell. By the end of 2012 Walmart had 8,500 stores under 55 different names in 15 countries and is currently developping strategies for growth through the next 20 years. The company is proud of its strategy and even incorporates it within its moniker "Always Low prices, Always." While company's business in United Kingdom, South America, and China is going very well, German and South Korean ventures were unsuccessful.

Walmart is not the only store criticized for its policies, but it has become a symbol for much of what is wrong with employers. For the fiscal year ending in January 2011, Walmart reported a net income of $15.4 billion on $422 billion of revenue. It's obviously a lot of money to justify some questionable workplace practices; however, stories persist about wage law violations, inadequate health care, exploitation of employess, and the retailer's anti-union position. Some 5,000 lawsuits are filed against the company each year. Walmart is facing an enormous wave of negativity - from community activists trying to keep big retailer away from their neighbourhoods, to local governments mandating that Wal-Mart supply workers with health insurance, to opportunistic lawyers trying to get rich by bringing on endless lawsuits, to labor unions, grassroots organizations, religious organizations, environmental groups, and customers of course. Company is being accused in racial and gender discrimination, mistreating illegal aliens, denying overtime pay. Criticism also includes the corporation's foreign product sourcing, treatment of suppliers, compensation and working conditions, environmental practices, the use of public subsidies, and the company's security policies.

Walmart's SWOT analysis can help understand its internal and external potential. Among company's Strengths are: large scale of operations, extensive information systems, wide range of products, low cost leadership strategy, and international operations. Weaknesses include labour related lawsuits, high employee turnover, little differentiation, and negative publicity. Corporation's Opportunities are the following: retail market growth in emerging markets, rising acceptance of own label products, healthy eating trends, and growth of online shopping. Threats that Walmart is facing are: increasing competition from non-chain and online competitors, resistance from local communities, rising commodity product prices.

PEST analysis can help to define the areas of Walmart's concern which are important and necessary to activate immediately. This analysis also reveals the positive or negative affects to their business according to some factors. In political sphere, corporation is affected by policies on economy and trading agreements, such as NAFTA. Economically, unemployment rate and slightly increase in consumption are likely to influence Walmart. The U.S. government is planning to decrease the amount of supercenters to leverage capital assets through increase in returns and sales across the country. In socio-cultural terms company is affected by the faster pace of life where efficiency is the key. Social infuence pushes consumers to shop at Walmart to the point where it becomes a trend to use one stop service. Walmart uses IT technologies and online shopping opportunities for the core purpose of marketing, they rely on social media for advertising and selling their products.

There are many groups and individuals who have a stake in what Walmart does, the market and non-market stakeholders are among them. The first ones include the stockholders, company's executives, employees, consumers, non-profit organizations, online and gasoline retailers, and commuities where Walmart is located. Non-market stakeholders have a non-economic or political stake in what course the company takes, they are labor unions, international retail stores, and politicians. In public, Walmart uses top of the line Public Relations strategy firms to produce commercials for its stores and to portray the best possible image. Its relationships with key stakeholders are maintained as well by the communication of corporate statements on its Internet site and through other paper based corporate communications. Walmart's public message is consistent, and has been so over time. The core message is that Walmart is a "family friendly" store, and that it is good to its customers, and that it is an asset to the local community. The messages of selling for less, respecting employees and communities, and expanding are all echoed in company's Annual Reports.

According to company's reports, their sales continue to improve, but different measures of public opinion indicate that their reputation declines, which affects both ability to reach new shoppers and to build new stores. In order to further increase sales the company must either sell more products to existing customers or identify new ones. Recent public opinion surveys indicate that although people are shopping there, they are not happy about it because of Walmart's poor business practices. The Harris Interactive survey found that shoppers consider company's labor practices above all other social responsibility issues. In 2008, The Reputation Institute ranked the 150 largest U.S. companies based on "the overall trust, esteem, admiration and good feelings consumers have toward them." Walmart came in at number 136 out of 150 companies, dropping 76 places from number 57 in 2007. Walmart Watch 2007 Public Opinion Survey indicates the drop by 5% in overall favourability, 27% of respondents developed a more negative opinion on the company. It's clear enough that Walmart needs more than a logo or an advertising campaign to fix the situation.

After all this, we may be curious to see how Walmart's social media strategy addresses its online brand reputation issues. While being perceived as an "evil empire" by some, company does a lot of good for its communities and the world, for example providing 2,450 truckloads of supplies to Hurricane Katrina victims and donating more than $2 million to end world hunger. The brand developed the strategy to share corporate news and build public goodwill by sharing information about how Walmart is helping society. They created multiple Twitter handles, each targeting a different audience with the information and messages that pertain to them. Walmart's Director of Social Media, Umang Shah, also implemented a way to monitor social media conversations almost around the clock so that questions and issues addressed in social media are addressed as soon as possible. Before implementing that strategy company analyzed data by utilizing Social Flow tool.  Additionally, Shah stated that engagement online could be bought, but the true value of the content and the way of engagement is told by how much succeed without paying for it. Walmart constantly updates its Facebook feed, and created pages for each store across the nation. As was noted by Wanda Young, Vice President of Media and Digital Marketing for Walmart, company's marketing team asks questions to engage its customers on Facebook, and uses the answers to change the way it does business. Walmart understands the importance of building relationships with customers through social media platforms, let's see where this  path full of controversy and negativity will take them...

Picture credit: helloladies.com

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