The story behind the headlines.

"Exec cleared of Kmart Fraud"
Headline Detroit News, 8/15.
"Wal-Mart author's theory says discounts are now entitlements" Headline, USA Today, 8/15

Much has been written about these two discount chains over the past several years, drawing comparisons (and mostly differences) about how one chain has succeeded unbelievably while the other has teetered on extinction for quite a while. A couple things occurred to me as I read these articles that I thought would be good material for this forum.

First, Charles Conaway, may have been found not guilty of doing anything illegal while he was CEO, but he certainly can shoulder a lot of the blame (as could some of his predecessors) for Kmart's ongoing loss of share, loss of sales, and loss of trust by its customers. The company simply ignored what competitors like Wal-Mart and Target were doing in building brands that people not only trusted but where people liked to work. The ongoing reliance on sales and promotions that were not supported in the stores not only turned off most of Kmart's customers but it depressed and de-motivated most of its employees. So the stores looked lousy, the inventories were never where the customer expected, and the customers basically had a poor shopping experience until they gave up.

Unfortunately, the company continued to reward this poor performance with big bucks at the top and big severances for doing a pitiful job of branding the company. The civil court may have found him not guilty, but the jury of customers passed their judgment a long time ago and they haven't forgotten.

Secondly, in his book, "The United States of Wal-Mart", John Dicker calls Wal-Mart the "champion of cheap" while maintaining that all customers care about any more is low prices and one-stop shopping. Well, there's no doubt that Wal-Mart's success has its foundation on having the lowest price perception of any retailer (notice I didn't say cheapest). For some reason, since Wal-Mart has become the largest company in the world, we think it's a fault that they have driven down prices for the consumer. The reality of it, as born out in countless research studies, is that the company has won because the customers trust them to have the lowest prices and to have what they want and need. And they trust the people working in the stores to make sure they do in a friendly way.

Is Wal-Mart a predator? I think "competitor" is a more appropriate description. As a company obsessed with getting the best prices and the best values for its customers, Wal-Mart has beaten a lot of lesser retailers (like Kmart and all those poor small town retailers who never provided good value to their captive markets). And it has developed an organization that believes they are providing the best for their customers. Sure there have been some guilty parties who have taken advantage of the company's strength and positions lately, but with over a million people in an organization, these have been the exception. In a recent store check (which I do regularly), I found the checkouts at both Target and Home Depot (2 of my favorite stores) to be fairly empty on a recent Tuesday night with only two checkouts open plus the self-service aisle. Wal-Mart, on the other hand, had at least seven open and ringing up big shopping baskets.

People shop Wal-Mart because they like it, they trust them, the like their people (who most of the time love where they work), and by the way they save money. That's not being cheap!

What do you think??
Ken

It's about people, not advertising!

Just over a month ago, I finished an exciting and challenging assignment with Doner Advertising in Detroit. Doner is one of the leading agencies in the country and one which still specializes in working with companies who need to reposition themselves in a hurry in order to survive.

Working with a terrific account team in Detroit, I revisited the marketing department of Circuit City in Richmond, where I had been VP-Marketing back in 1994. The challenges were even greater now than a decade ago for the chain. However, instead of being #1 in the industry as it was back then , Circuit City now trailed both Best Buy and Wal-Mart as the preferred choice for America's consumer electronics dollar. It was a great opportunity as we worked to reposition the stores as the places that had "Just What I Needed" in the complex, sometimes-intimidating electronics business.

One thing became blatantly obvious and that was that the lines between category competition are more blurred than ever. No longer can a big box store only worry about its similar competitors and ignore the mass merchandisers, the warehouse clubs, the drug stores, department stores, and, oh yeah,even my old favorites, the chain drug stores. Don't forget all of the online marketers as well who have taught consumers that the easiest way to "shop" is to simply log on and take a look and learn. It still comes back to being the preferred choice by your target customer. Creating a brand that reassures you that you'll get just what you need, at a good price, with an easy return and service policy, and with the convenience of making it easy to get what you wanted and get back to your busy lifestyle.

However, I am more convinced than ever that the most important piece of the branding strategy is often left untouched by all the marketing efforts--the people in the store must live up to the brand everyday. We simply can't expect to hire some warm bodies, give them some essential floor training, and then expect them to personify the brand that we marketers spend so much time and money trying to develop with our customers. For the past five years, I have discussed this in presentations and conversations as we developed totalbrandintegration (tm) as a strategy to make the brand come alive at store level with everyone who comes in contact with the customer. I am more convinced now and am re-focusing my energies to develop programs that will integrate the people into the brand and help companies stop disappointing their customers when they come back to the store.

This web communication is the first of many that I hope will engage others in the business to bring ideas and concepts to the readers on how to better make the brand come alive at the store. Your input will be invaluable and will serve as the catalyst for more research and strategies to help retailers (and any other companies that serve customers directly) make it happen. I look forward to your help and comments.

This blog is just part of the process to keep me and my associates in this crazy business in touch about the business and what's going on today with the consumer.

I hope you'll join me often as we try to understand the consumer better and figure out ways to help companies become their brand of choice.

Let's go.
Ken