Wal-Mart has recently announced plans to make its house brands healthier. Responding to pressures to address the nation’s obesity crisis, the nation’s largest retailer is changing some of their merchandise. Reportedly, the formulas for Wal-Mart’s Great Value brand will now contain less salt, sugar, and trans fats. Additionally, Wal-Mart will be working closely with their supply chain to get healthier products on the shelves.
Is this a good decision?
Early responses have been mixed. Many people have applauded the change, noting that Wal-Mart is the grocery store of choice for shoppers on a budget. They believe that if healthier alternatives are available at the same price point, consumers will opt for those alternatives. Others worry that Wal-Mart may make these changes at the expense of the farmers and food producers who can least afford the hit to already razor-thin profit margins.
Wal-Mart knows that it will always have a cheering section and it will always have detractors. While these groups obviously have some impact on how the company operates, at the end of the day, only one group has an opinion on the healthier that matters: Wal-Mart’s best customers.
Brand Lovers in Action
Wal-Mart is planning to implement the healthier approach over a five-year period. Significant organizational change takes time, and when your organization is as large as Wal-Mart, the time investment can be considerable. However, you can bet that Wal-Mart will be closely monitoring the reaction to the healthier products, especially from their best customers. It’s their response that matters the most—and it’s their reaction that will influence whether Wal-Mart remains committed to whole wheat pasta and discounted broccoli.
Wal-Mart has achieved its dominant position in the marketplace by knowing who—with a frightening degree of precision—their customers are, and who their customers are not. Folk wisdom tells us that appearances can be deceiving, and we have to admit that in Wal-Mart’s case, this is especially true.
It may look like the mega-retailer is trying to capture every free dollar in the world’s marketplace, but the fact is that they’ve captured ongoing profitability by identifying and focusing on the needs of their very best customers—people we call Brand Lovers. If other people want to shop at their stores, that’s fine with Wal-Mart—but at the end of the day, they’re all about satisfying their core group of customers.
There are a lot of misconceptions about who Wal-Mart’s core customers are. There’s certainly the stereotypical Wal-Mart shopper. If you want to understand why Wal-Mart is so dominant, you need to do as Wal-Mart has done and move beyond that stereotype. It’s by delving into a brand’s best customer’s psyche and examining their motivations and values that the place of ultimate profitability can be identified. It doesn’t matter who we think Wal-Mart’s customers are: it matters who Wal-Mart’s customers think they are.
Wal-Mart’s best customers self-identify as hard-working and honest. They are family-focused and great lovers of brand names, yet are very aware of their limited purchasing power. They want to do the best they can for their loved ones, but frequently run into the fact that there’s just not enough money in the paycheck to make that happen.
Understanding this allows Wal-Mart to make changes in their offerings to that will be highly valued and appreciated by their best customers. Wal-Mart can predict, fairly accurately, what will resonate and appeal to their best customers. The decision to go healthy was not motivated by altruism nor a desire for a healthier nation as much as it was a concrete understanding that this is another way to provide their best customers with something they value but feel unable to access previously.
Will the move be a winner? Time will tell—but the safe money says that Wal-Mart is likely to sell far more whole wheat pasta than they ever did before.