Walmart hits 25 years in Canada

There were skeptics when the chain first crossed the border, but it has held its own by stressing Canadian character and a customer-first mantra.

Walmart_TEDDY_WEB60_EThe 2018 holiday “Teddy” spot by Cossette is the first sign of Walmart’s current strategy to bring more emotion to its marketing.

This story originally appeared in the May 2019 issue of strategy.

By Rae Ann Fera

It’s hard to imagine a Canadian retail landscape without Walmart. Since its debut here in March 1994, the Arkansas-headquartered company has set the gold standard for big-box discount retailers by importing its concept of “Service with a Smile.”

But it’s easy to forget that when Sam Walton’s superstore came to Canada, the welcome wasn’t exactly warm. “Walmart crossed the 49th parallel and brought with it both folklore and fear to the Canadian marketplace,” says retail consultant Tony Chapman of its entrance 25 years ago this spring.

The folklore was the story of its baseball-cap wearing founder who reinvented retail in 1962 in Rogers, Arkansas. The fear, he says, was that the company’s strategy of targeting small towns, which were largely ignored by the day’s big players, like Sears and Woolworth, would eviscerate local retail. So, when Walmart purchased Canada’s last remaining 122 Woolco department stores and set out to bring low prices and Southern charm north of the border, the domestic industry feared it would be a death knell for Canadian retail as they knew it.

What many considered an American invasion, did indeed spell the demise of many independent retailers says Kenneth Wong, professor of marketing at Queen’s University’s Smith School of Business. But, it was largely small retailers’ own doing “in cases where they didn’t differentiate and tried to compete on price… It was often the victim’s own fault for failing to take the abundant advice available about watching margins and not getting too caught up in the race for volume,” says Wong.

Still, Canadian consumers were intrigued by the prospect that shopping at Walmart would no longer require crossing an international border and that the world’s largest retailer was coming here.

“I clearly remember that era and [questioned] why was Canada always so touched to be graced by ‘Made in America’ when we had world-class retailers and brands here,” recalls Chapman.
But the big American brand won over Canadians with its customer-focused ethos, as well delivering “Everyday Low Prices.”

Kirsten Evans, EVP, marketing at Walmart Canada says a quarter century later, the brand has stayed true to its purpose of saving Canadians money. “It’s our DNA. We put the customer first because the customer is our boss. We work very hard every day to find ways to serve our customers better.”

Screen Shot 2019-04-04 at 10.50.26 AM

Becoming Canadian
According to Wong, a key to the brand’s success was that it actually cared about being Canadian. “Walmart was careful to stress its Canadian character,” he says. “Most significantly Walmart recognized that Canada was different and ran it through their international division and not as an extension of the U.S.”

On this point, Jim Dahany, a retail analyst and CEO of consultancy CustomerLab agrees. “Walmart has been a good student of every market it works in and has been prepared to listen – unlike Target, which was pure economic imperialism,” he says of the latter retailer’s ultimate demise in Canada.

Walmart knew that Canadians were a sceptical bunch and wouldn’t believe its “Everyday Low Prices” were just that. To address this disbelief, the company launched with a TV spot from SMW Advertising, its agency at the time, which introduced the brand in a friendly, homespun way. Opening on “Wilf” the Walmart greeter (above), “Becoming Walmart” asked viewers to pardon the dust as they work hard to become Walmart – a nod to the Woolco locations it was converting at the time – and promised “a better product selection, lower prices on everything in the store and better customer service.”

The strategy worked. Within two years, Walmart Canada was estimated to control 40% of the general merchandising segment, and was ranked the number one retailer among 80% of Canadians, according to a KubasPrimedia study. In 1996, the brand was ranked by Strategy magazine as the best store for customer service and value for money – the same year Walmart introduced its Smiley mascot. By 1999, it was named marketer of the decade by Marketing magazine.
Since then, it’s been consistently named one of Canada’s top 10 most influential brands, serving more than 1.2 million customers each day in-store and 750,000 daily online. And with a head count of more than 85,000, it’s also one of Canada’s largest employers.

A communications crisis
Edelman-Yanik-065With customer acceptance and market dominance, the Canadian expansion was a successful one. Then, in 2004, a small store in Jonquière, a rural town in Quebec, threatened the reputation of the global brand, explains Yanik Deschenes (right), now-managing director, PR at Sid Lee.

Deschenes joined Walmart at the height of what became a global-facing crisis as the company’s director of corporate affairs. Five months after Walmart employees in Jonquière failed in their attempt to unionize, the company closed the store, citing a lack of profitability. The move set off a firestorm of negative sentiment across the province.

The story quickly became a national one and soon it made international waves, right at a time when the company was going through a global expansion.

The communications strategy Deschenes devised while at Walmart, from 2005 to 2009, was to play both offence and defense. Defense meant engaging with media, responding to critics and being part of the discussion instead of trying not engage, which had been the previous approach. Offense meant telling the brand’s story in Quebec because, as Deschenes says, “nobody knew the story of Walmart.”

To do so, the company launched a broad advertising campaign to announce the Buy Quebec program, which was created by Allard Johnson and highlighted all the ways Walmart supported the local economy.

“What people didn’t realize is that Walmart was investing billions of dollars in the province of Quebec and supporting local products by putting them on their shelves,” Deschenes says, believing that Quebec brands like Groupe Biscuits Leclerc owe their national exposure to Walmart’s local support. “The Buy Quebec program shared the story of that investment. The moment people understood the story of Walmart, the vision of its founders and its purpose, the crisis disappeared.”

The company’s tussles with unions have been covered by media since that crisis, both here and abroad. While the Supreme Court of Canada ultimately ruled in 2014 that the closure of the Jonquière store violated Quebec labour code, Deschenes says the Buy Quebec program is a classic case study of how dramatically investing in marketing and PR can impact brand value.

Corporate citizenship
Partnering with charities is a big focus for Walmart Canada, part of its objective to win the hearts of Canadians by giving back to local communities.

Since 1994, Walmart has raised and donated $130 million for Children’s Miracle Network and $350 million for other Canadian charities, including Breakfast Club of Canada and Canadian Red Cross. It’s donated 16 million pounds of food via Food Banks Canada.

Wong also points to Walmart’s track record of asserting itself as an environmental steward by imposing eco-footprint rules on suppliers in order to meet sustainability targets.

Notably, the brand has taken a leadership role on waste reduction. To date, 87% of waste at Walmart Canada in its 400+ stores in this country is diverted from landfills and the retailer is working to send zero waste to landfill by 2025. Other 2025 goals include achieving 100% recyclable, reusable or compostable packaging for its private brand products by 2025, and reducing check-out plastic bags by a further 50%, taking approximately one billion check-out bags out of circulation over that period. And by 2028 it hopes its fleet of vehicles will be 100% powered by alternative energy. Its recent big commitment is Project Gigaton, which entails working with suppliers to remove a gigaton of omissions by 2030.

Walmart Canada-Toronto Walmart store surprises local community wMarketing then and now
Walmart eventually found its place in the market, and the time came for the retailer to take a more targeted approach beyond everyday low pricing. By 2008, the brand brought J. Walter Thompson on as its agency of record, and geared its efforts toward speaking to the female head of the house. Walmart shifted to focus on a composite shopper named “Linda,” which was then broken down into three groups: price-value shoppers, price-sensitive affluents, and younger brand aspirationals. This new push dovetailed a redesigned logo and new tag: “Save Money. Live Better.”

Its 2012 “Mom of the Year” campaign, by JWT, really focused in on celebrating mothers. Recognizing that being a mom can be a thankless job, and that 3.5 million of Canada’s 9.2 million moms shop at Walmart each year, the brand created a campaign to give them the spotlight by asking Canadians to nominate their mothers for the title of “Mom of the Year.”

The ultimate gesture came in 2018 when Walmart turned a store in suburban Toronto into “MOMmart” in celebration of Mother’s Day (above). For the stunt and social video (created by Ruckus Digital), the facade of the store sported a transformed logo, and mothers were treated as champions by employees.

“Moms do so much each and every day, with no ask for recognition – but they certainly deserve it. This never-before-done transformation in one of our communities is our way of sharing a small token of our appreciation for moms everywhere,” Tammy Sadinsky, VP marketing communications, Walmart Canada said at the time. The event also kicked off the brand’s annual fundraising campaign for Children’s Miracle Network.

While the head of the household has been a focus for Walmart for the good part of a decade, these days, the brand is looking to evolve its message. To do just that it has partnered with content and advertising agency Church+State, as well as Cossette, which was named AOR in 2018. “The ambition at the heart of our new AOR partnership is to unlock the potential for such a purpose-driven brand like Walmart and help modernize it,” says Sadinsky. “There is an opportunity to drive greater relevance and resonance of our brand with Canadians, both in what we say and how we say it.”

Carlos Moreno, co-global CCO at Cossette, says that means doubling down on emotion. “Walmart has always been a leader in low prices, but now the opportunity is to take an iconic brand and build an even deeper emotional connection with consumers.”

Screen Shot 2019-04-04 at 10.52.33 AMStrategically, the agency is positioning the retailer as an ally to Canadian families, and the first output of that direction came with “Teddy,” last year’s touching holiday spot that told the story of an overlooked bear. After spending the night exploring a Walmart store, Teddy finds his way back to a restocked shelf where he’s finally chosen by a dad as a gift for a young girl.

The spot was viewed close to a million times, and YouTube Canada listed it on their top five ads in 2018.The featured teddy bear quickly sold out at stores, and there were hundreds of calls for more on social. “Teddy” was also one of the best performing spots for breakthrough and brand link for Walmart in the past decade, based on Ipsos reporting.

Moreno says that not all spots will be as unbearably cute: “It’ll be about figuring out when to be more emotional and tugging at the heartstrings and when to hit harder on the lowest prices.”

Screen Shot 2019-04-04 at 10.40.42 AMA focus on the future
If deepening the human connection is a present and future focus of Walmart Canada, so too is delivering the services and products that Canadians are demanding.

“While our purpose hasn’t changed, our customer has,” says marketing EVP Evans. “To quote Sam Walton, ‘To succeed, you have to stay out in front of the change.’ And, we’re working with more urgency than ever in technology and innovation.”

Jennifer Stahlke, VP customer marketing, says the customer is more demanding than ever and is driving the company’s omnichannel offerings. “Price will always be their number one priority, but now time is on top of their list as well. We are focused on providing the customer price leadership in a way that’s seamless and easy for them to shop, however they choose to shop.”

The brand’s omni-channel ecosystem now includes in-store, online, delivery and, now, pick-up towers for urban centres, through PenguinPickUp. Stahlke says they’re focused on providing faster checkout, expanding its grocery pickup, bringing more third-party sellers to Walmart.ca, and offering a better online experience.

Still, in this age of Amazon and same-day delivery, Evans says the majority of Canadians prefer to shop in-store, which means bricks-and-mortar remains a focus for the brand. In fact, its many physical locations might be an advantage in an era when e-tailers like Amazon are experimenting with bricks-and-mortar stores.

In the last year, Walmart Canada has invested $175 million in features and improvements that enhance the overall customer experience. Those improvements include renovations at 23 stores; the seamless integration of online shopping, with features like dedicated parking spaces for grocery pickup; a new supercentre in Burnaby B.C. with a vast East Asian offering; and the launch of Newfoundland’s first supercentre, meaning Walmart’s large-store format is now available in every province.

All of this amounts to a strong footing for the brand, retail analyst Dahany says.

“I think [Walmart is] a long way from losing momentum. They’re continuing to invest in the drivers of growth that Sears didn’t. They’re staying in touch [with local markets] in a way Target didn’t. And they’re investing in the communities that they serve through bricks-and-mortar and physical contact that Amazon hasn’t yet,” he says. “[Walmart is] investing in the evolution of their model.”