Page 128 - Corporate Communication

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Communications Strategy 117

customers and the communities in which the company operates, and also enables it
to reach its market objectives and to cancel out opposition to its aggressive low cost
strategy.

Wal-Mart is exemplary of the low-cost competitive strategy and it has fine-tuned the
low margin, high inventory turnover, and volume selling practice that comes with it.
Volume buying enables lower costs of goods, and the key, according to Sam Walton,
‘is to identify the items that can explode into big volume and big profits if you are
smart enough to identify them and take the trouble to promote them’. Wal-Mart
demands vendors forgo all other amenities and quote the lowest price. And its retail
strategy for capturing market share involves an aggressive carpet bombing campaign
in which an area is chosen and competitors are challenged and eventually driven out
by its low cost strategy.

The mega-retailer’s low cost strategy is, according to Thomas Zaucha, president of
the National Grocers Association in the US, alarming enough to call ‘saturation
bombing’. Zaucha explains that ‘they [Wal-Mart] have the ability to come into a
market with their super-centers, with their Neighborhood markets, with their traditional
Wal-Marts, and with the Clubs. I think there is a growing concern that not only do
we have the potential for concentration, we have the real possibility of [monopoly]
power’. ‘They are re-structuring the industry’, according to David Rogers, a market
consultant; ‘When you put that amount of store space in, you have to take an equiv-
alent amount of floor space, and that is going to happen through store closings, isn’t
it? That’s the brutal truth’. The latest industry surveys in the US indicate that of all
recent bankruptcies of supermarket chains, eight out of nine were heavily influenced
by Wal-Mart’s expansion strategy.
Of course, with such an aggressive low cost market strategy, one would expect
the Wal-Mart corporation to run into fierce opposition from citizens, communities,
the industry and the US government. But the retail giant has not, because of its
sophisticated communications strategy that connects the retailer symbolically to the
dominant ideologies of American life. Through the imagery of frugality, family,
religion, neighbourhood, community and patriotism, Wal-Mart locates itself centrally
on Main Street of a nostalgic hometown. This symbolism and imagery, carried
through in all its advertising, in-store promotions and staff communications, not only
positively disposes shoppers but it also ‘decouples’ Wal-Mart from unfavourable out-
comes of its low cost strategy and its market success. These consequences include
local retailers being forced out of business, small town opposition, accusations of
predatory pricing and allegations about products being sourced from overseas sweat-
shop suppliers. It is noticeable in this regard that Wal-Mart, a hard-hitting low cost
firm, has received fairly little public opposition and shuns the limelight in recent
anti-globalization demonstrations (that have instead targeted such companies as
Starbucks and Shell).
In other words, Wal-Mart is able to couch its low cost market strategy in terms that
not only fit with its own customer-focused corporate identity, but also are acceptable
to consumers and the general US public – with language such as ‘Our aim is to lower
the world’s cost of living’, ‘Our pledge … to save you more’, ‘Our commitment … to
satisfy all your shopping needs’ – and that appease opposition to it. This is done, as
mentioned, by referring to retail symbolism of saving, family, America and patriotism,
and community and hometown. Advertising flyers, for instance, present ‘plain folks’