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Monday, August 21, 2006

Wal-Mart, Blacks and Nuns

You have to hand it to Wal-Mart. No matter how bad things get for them, they always manage to make it even worse. First are those urban legends about them driving Mom and Pop stores out of business. I don't know that any of those stories ever were proven, but true or not, they've added more than one log to the Wal-Mart fire.

Of course, let's not forget how they run afoul of environmental regulations, either. As I've mentioned here and on CNBC (http://www.robfrankel.com/videos.html), Wal-Mart has managed to alienate Native Americans at least three different times by building on sacred Indian burial grounds. Each time, Wal-Mart has promised not to do it again.

A while back, on these very pages, I pointed out Wal-Mart's ridiculous program in which they "donated" a teeny parcel of land to the Fish and Wildlife Fund. As if that were going to play with the public, selling them as "good, caring corporate citizens."

Now, it seems, Wal-Mart's reactive policies are grinding in to high gear. In July, reacting to their brand's perceived lack of ethics, Wal-Mart hired an ex-nun to head their public relations efforts. What started out as laudable ended up more laughable, as this clearly transparent ploy also failed to win over the doubting public. As if bringing in an ex-nun was suddenly going to grant absolution to a store whose primary purpose in life is to "bring you low prices" at whatever the cost.

Next up is Andrew Young, former mayor of Atlanta, former representative to the United Nations and former associate of Dr. Martin Luther King. Mr. Young was hired by Wal-Mart in early 2006 to quell the concerns of racial insensitivity, which are on the rise. Seems as if those Mom and Pop stores in the aforementioned urban legends are somehow racially linked to the black community, at least as far as Mr. Young is concerned:

The latest flap involving Mr. Young had him telling the Los Angeles Sentinel, "Those [Mom and Pop stores] are the people who have been overcharging us — selling us stale bread, and bad meat and wilted vegetables. And they sold out and moved to Florida. I think they've ripped off our communities enough. First it was Jews, then it was Koreans and now it's Arabs, very few black people own these stores."

Ouch.

Did I mention that as of August, 2006, Mr. Young no longer works for Wal-Mart? Yeah. Well, you'd think that a company with as much cash and reach as Wal-Mart would have figured it out by now: No amount of band-aids is going to cover up the fact that they're sailing in a rudderless ship. Low prices is fine, but price strategy is no strategy. I'll say it again:

Wal-Mart has an identity, but no brand. And that's why, when it comes to their almost-daily public relations crises, their always a day late and a dollar short, so to speak.

The fact that nobody can tell you why they go to Wal-Mart (other than the low prices) should be your first clue as to the weakness of the brand. The minute someone sells the same stuff for less than Wal-Mart, it's over for Wal-Mart, because there's no reason left to do business with them. If Wal-Mart had a brand, they'd have a brand ethic. There would be a reason to do things "the Wal-Mart way." There woudl be some sort of moral compass. But since Wal-Mart has no brand strategy, they're constantly in panic mode, running fire drills to salvage shareholder value instead of building credibility.

If Wal-Mart truly had a brand, they'd never need nuns or "cultural ambassadors" to constantly explain their behavior. They'd never need to apologize to the public for committing the same mistakes two or three or ten times in a row, because they would never commit them in the first place. Most importantly, the public would perceive them as something other than a monolithic, predatory cash cruncher, rolling over anything and anyone who got in their way.

But they don't get it. The Walton family and managers simply play another round of golf while Rome burns. Oh well. Fine by me. I don't own any Wal-Mart stock.

And neither should you.