Live from PROMO Expo: Wal-Mart Veteran Ponders Retail Landscape

By Oct 02, 2003

Chicago—Retailers and manufacturers have opposite views of retail marketing, says Paul Higham, retired CMO for Wal-Mart Stores and now principal of consultancy hFactor.

Higham outlined both perspectives in PROMO Expo’s keynote presentation yesterday. He cited several points contrasting each point of view:

  • Manufacturers see their business as cradle to grave, with the store as only one small part of that. Retailers, on the other hand, are location-centric: “The store is the story.”

  • Manufacturers talk about demographically tight user groups; retailers serve a broad audience. “Brand managers ask, ‘Who is Wal-Mart’s average customer?’” says Higham. “To most retailers, that’s an irrelevant question. Everyone shops their store.”

  • Manufacturers are influenced by this year and last year sales. “Salesmen run your relationship with retailers,” Higham told the crowd. Retailers, however, are relationship dependent. “[Wal-Mart founder] Sam Walton said, ‘The secret to this business is getting customers to come to the store over and over again.’ It’s about the people, not the sales numbers.”

  • Retailers are biased towards forward-buying. The same way consumers wait for goods to go on sale, retailers wait for manufacturers desperate to make their sales numbers, then buy in bulk to stock their forward-purchase buildings, says Higham.

  • Manufacturers depend on short-term promotions. These days, retailers are more likely to do long-term branding.

  • Retailers are high-touch. Wal-Mart sends buyers to work with department managers in-store for a certain number of days each month to get managers’ and shoppers’ feedback. “It’s called the ‘eat what you cook program’,” says Higham. “It forces buyers to have a real personal relationship with managers.”

  • Manufacturers think about consumption at home. For retailers, the shopping trip is the consumption. “They consume the retail brand when they’re in the store. That’s why retailers are so focused on the in-store experience.”

  • Manufacturers rely on facts and data. Retailers rely on experience, not distant facts. That’s one reason Walton advocated an inverted pyramid with store staff on top and management (“servant leaders”) at the bottom. “Like every good general, he knew it was the troops who won the war,” says Higham.

“Working together is very hard,” he concluded. “Developing programs together can make you crazy, but that’s no excuse not to do it—and do it well.”