wal-mart rethinks choice, risks loyalty
Larry Silvey’s the editorial director at Advanstar’s Aftermarket Business, and a favorite target is retailing giant Wal-Mart. In a recent column he called them out on two fronts: their new, and puzzling, supplier relationship strategy in which they took over delivery duties of goods from supplier to store, and a marketing decision pitting store against name brand that apparantly backfired. Our interest lies mainly in the marketing side so we’ll leave logistics aside and look at what happened after Wal-Mart marketing decided less is more when it came to consumer choices in the shopping aisles.
The decision to eliminate over 300 name brands as a way to leverage Wal-Mart’s own store brand share blew up when shoppers abandoned ship to buy their preference where available – namely, at the closest competitor. Although the powersports segment isn’t too heavily invested in generics, the lesson couldn’t be clearer. As any trial lawyer knows, don’t ask a witness a question unless you already know the answer.
lessons for powersports
In this example, Wal-Mart bet an assumption – shopppers are sheep (kidding) that will always shop price over brand (not kidding). Wal-Mart lost that bet, for a variety of reasons complex and otherwise, but the easy lessons are to never assume price alone is a motivator – sometimes we’re just loyal to seductive labeling – and never assume that left without a choice customers will accept the default.