Walmart’s Communication Strategy to Improve Same Store Sales in the U.S

Executive Summary

Increasing competition has necessitated entities to establish innovative ways of sustaining their sales. Following Wal-Mart’s declining same store sales in the U.S market for the seventh consecutive quarter, this paper presents a promotional plan to increase sales to a level that will lead to a 2.0% positive rating for 2011 financial year.

Although Wal-Mart has enjoyed an increased in operating incomes in 2010 as compared to 2009 financial year, its comparable store sales for this period in its U.S stores were lower. Such a situation has arisen out of factors such as the loss of focus on price (with removal of less expensive brands from its shelves), increasing competition from small stores that can offer smaller-sized packages at reasonable prices, and worsening customer service at the store.

To better its sales in the U.S, Wal-Mart needs to use its economies of scale generated by its large size to offer competitive prices for its products as well as evaluating contractual relationships with dollar stores to penetrate into residential markets. To capture the opportunity to improve its perception by customers thus increase its sales, a promotional plan that involves integrated market communications is a necessity.

The promotional plan estimates an expenditure of $ 2.1 billion, the average of the advertising costs that the entity has used for the last three years. This amount will mainly be used in mass media marketing following observations that information relayed by such traditional channels as television, radio and print media is deemed more reliable and trusted by customers. The creative strategy will involve media advertisement that portrays happy shoppers leaving Wal-Mart stores with filled shopping carts. The success of the campaign will be evaluated on a quarterly basis, the first quarter expected to have generated as equal same store sales as a corresponding period in the previous year.

Introduction

With increasing competition arising from such factors as globalization, companies are being challenged to establish innovative marketing communications, to retain existing customers and win new ones. Increased competitiveness in the U.S market has for instance reduced the competitive advantage that entities such as Wal-Mart stores, Inc. (henceforth herein Wal-Mart) – the giant global retailer – historically enjoyed out of their competitive pricing strategy (Clifford, 2011a). Same-store-sales (also referred to as comparable store sales) for Wal-Mart in the U.S. for instance have been on a decreasing trend for the last seven quarter-years (Clifford, 2011). Comparable store sales is a measure that gauges the relative growth or decline in sales in the entity’s stores that had been operational for the preceding one-year period, as compared with sales for the corresponding period in the previous year (Wal-Mart, 2011a). Whereas Wal-Mart’s same-store sales have been decreasing, other entities in the same industry such as Home Depot and Macy’s have increased their same-store sales (Clifford, 2011). This paper thus evaluates a communication strategy that would help to boost Wal-Mart’s stores in the U.S.  Go to part 2 here.

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