Target Wins Perception as Reality Battle
By George Anderson
A Crain’s Chicago Business article points out that, on paper, Target doesn’t appear to operate its business much differently than Wal-Mart.
Both companies operate big box stores manned by non-union labor and stocked primarily with goods made outside the U.S. If Wal-Mart’s presence is said to drive smaller, local retailers out of business, then Target probably has a similar impact.
So why does Target generally receive favorable press coverage (aside from the Salvation Army controversy), while Wal-Mart does not?
Target, it seems, has benefited from the perception that it is more caring about its employees and the communities it serves while Wal-Mart has been portrayed as the commercial equivalent of the alien Borg race from Star Trek: The Next Generation (“Resistance is futile.”).
The perception battle, say observers, is exactly why Target has a reasonably easy time getting permission to build new stores, for example, while Wal-Mart brings out opponents at every turn.
Paul Vogel, principal at the retail real estate consulting firm Realty Development Research Inc., told Crain’s, “Target’s politically correct image has helped them in Chicago, while Wal-Mart’s has been a lightning rod. They (Wal-Mart) just manage to alienate people with their anti-union stance. Target may be anti-union, too, but they’re much more sophisticated about how they handle it.”
Wal-Mart, say others, is also a bigger target.
Madeline Talbott, executive director of the Illinois chapter of Community Organizations for Reform Now, a group opposed to Wal-Mart opening stores in Chicago, said, “We don’t see that Target has anything to recommend it as far as wages and benefits. But, quite frankly, we see Wal-Mart as bigger and as having more impact on the economy. You have to address the industry leader first, then the others will follow.”
Moderator’s Comment: Is Wal-Mart being judged in political circles and in the press by a different standard than other large retailers? In practical
terms, what does this mean for how Wal-Mart conducts business? What concrete actions can it take to level the perceptual playing field? –
George Anderson – Moderator
I am disappointed but NOT surprised about how Wal-Mart handled the media PR campaign. I live in Northwest Arkansas and have for many years. Nearly everyone in this area is employed by Wal-Mart or by one of it’s suppliers who have offices in our area. Wal-Mart struggles with trusting anyone outside their organization and even those employed by them are subject to search and suspicion at any given moment. This “old school” thought will not serve them well in the 21st century where shoppers are more intelligent than ever before and prefer to do business with someone who treats their people well. Also, there is a Target or Kohl’s all over the US as well as NW Arkansas which can match their prices.
Oh, Len. As a journalist for the past 30 years, I’m sick and tired of whining by companies that won’t give the press the time of day, but who then complain when you write the story entirely from outside (and confidential inside) sources, as I now routinely do.
Why does Wal-Mart receive more criticism than Target? 1) Wal-Mart has garnered at least 15 years of animosity for closing down the ‘main street’ economies of small towns across America. 2) State tax payers are forced to pay tens of millions of dollars per year for Wal-Mart employees’ health insurance because Wal-Mart doesn’t adequately cover them. See California for example. 3) Wal-Mart is the biggest company in the world, yet pays meager wages to its employees, including white collar workers. Example: A Fortune article from a couple years ago profiled a female Wal-Mart associate who oversees a $1 billion budget yet is compensated with only $50,000 per year. 4) Wal-Mart has a Christian conservative agenda, which is its right. However, because of its sheer size, Wal-Mart’s limited choice of what products it carries affects what products are produced by manufacturers (books, music and movies, for example) and what products are available to consumers. 5) Wal-Mart cultivates a goody two-shoes image, but recent scandals (illegal workers, locking employees in at night, etc.) have exposed the company’s hypocrisy. Given these reasons and many more, it’s no surprise Wal-Mart is experiencing a backlash.
The two biggest factors I see at play are: Wal-Mart is bigger, thus an easier target. Its sheer mass, in so many markets, has resulted in nationwide constant publicity. Exacerbating this, of course, is that Wal-Mart has apparently adopted Richard Nixon’s play book on how to work the media. Limited access, deep mistrust, and then, with this recent two-day media event, they micromanage everything so the press doesn’t get to take any photos or talk directly to any of the execs, except for Scott in a public forum. God knows, I am one of the biggest defenders (and cheerleaders for) Wal-Mart on this site, but I worry about their behavior with the press, especially when it comes to letting their execs speak to reporters. That’s bad enough in itself, but it also suggests that they don’t think enough of the intelligence and acumen of their own people to let them talk. And that attitude is worrisome, as it reflects on the core of leadership.
Public concern in respect to incorporating Wal-Mart into a city economy is not even in the same realm as Target. In my experience, city planning is concerned with Wal-Mart because the company has the ability to leverage its size to buy products in large quantities, facilitating their ability to negotiate lower prices from the associated manufacturers. They can then turn around and resell the product for a lower price, drawing mass numbers of consumers who want to make their hard-earned dollars go a little further. Other merchants do not have this leverage and are therefore unable to compete on an economic scale with the Wal-Mart pricing. The fact that consumers want to get more bang for their buck will draw them away from merchants who have to keep prices up on those same products in order to cover overhead. Essentially these merchants can’t compete with high volume economy pricing, like Wal-Mart, when the product offering does not vary, therefore creating a niche. The fear of running long standing businesses out of the area is the reason for the contention with Wal-Mart site development. Target, on the other hand, does not offer bottom line pricing on most product lines, because it offers a higher quality version that may incorporate an aesthetically pleasing appearance, for example. Target is only comparative to Wal-Mart in the sense that they are both high volume superstores. The quality of the product offerings and the atmospheres of the two stores are entirely different. Target is upscale and sophisticated to meet the needs an entirely different consumer. In respect to spending power, for the most part, the two stores are not catering to the same people. This is what maintains their mutual success…they have created their own unique niche and are not competing for the same customers.
Wal-Mart is judged differently, simply because it is the largest retailer. If they were a klutz like Kmart, no one would care. They are also more successful with sales per unit compared to Target, especially with the supercenter concept, which Target has struggled with. Reality is not reality. Perception is reality. In my opinion, Target is probably perceived to be a higher paying company because they tend to hire more attractive looking personnel which helps with their positive perception. However, to me, Wal-Mart is the more socially responsible because they hire a lot of people who would be considered unemployable by most other retailer’s standards.
What can Wal-Mart do to improve its image? Continue to be a growing, profitable company. Continue to win the battles against its enemies. Society votes with its pocketbook. The negative PR Wal-Mart gets is often nothing but free advertising in its favor. Having your enemies complain that your prices are too low it the best advertising you can get. My favorite is when Wal-Mart gets some petty fine for selling gas too cheap. That’s a fine they like to get.
As a journalist for the past 30 years, let me say this: I am sick and tired of hearing the press — particularly some segments of the trade press — whine about how Wal-Mart won’t talk to them or won’t give them access — or spoonfeed them stories on a silver platter. Of course Wal-Mart is going to control the situation. What do you think they’re going to do?
The solution is a more proactive press. If you want a story then go after it and don’t rely on press releases for information or take the company line as gospel. I say this to all reporters — go out and find the story, work your sources and you might be surprised how much cooperation from the company might be forthcoming.
By the way, Wal-Mart is no different than Target, IBM, General Motors, Sears, Kraft, P&G or any other major company that has to deal with dozens of requests a day.
As to Wal-Mart’s latest PR initiative — they’re new at it, but I expect them to get better like they do with most everything else.
There’s more to it than Wal-Mart’s employment practices. Wal-Mart sells a huge selection mediocre commodities that used to be sold by smaller regional and local retailers. So they are viewed as a local business killer.
Target, while they sell much of the same stuff, has established an identity as selling product freshness and fashion to the masses. Hence, they are more welcome, since they are selling things that were previously unattainable.
The consumer has much more of a love/hate relationship with Wal-Mart, while her relationship with Target is unambivalent.
I’d call Wal-Mart a lot of things, but “socially responsible” isn’t one of them.
There are many differences operationally, demographically, and even in scale between Wal-Mart and Target. None of these, I think, is the driving force behind the perceptual differences.
Target is a branded PRODUCT, which has been crafted, positioned, and marketed as a product, not simply as a location for stuff. Intentionally. By design. With forethought. Wal-Mart grew into a brand, but is not and has not been managed using the same techniques, methods, and materials that the Target brand has.
The image Target sells includes corporate responsibility, civic participation and societal consciousness. This is because the key demographic they seek to influence wants to identify with those “virtues” as well. Is there a by-product that because of this alignment, Target has less difficulty with civic planners and public relations? Certainly. Did Target structure itself to avoid those PR problems Wal-Mart is facing? Probably not. Call it a happy consequence.
Can Wal-Mart learn from Target and accelerate the process of treating themselves as a brand? Perhaps. It is more likely that they will spend many millions of dollars trying, only to accept in the end that Target has it’s niche, they have theirs, and the PR-related Wal-Mart bashing is an inevitable consequence of the success of their business model.
Certainly Wal-Mart is the largest and most visible target for the social engineers who think more efficient retailing is a bad thing for consumers. But I wouldn’t say they are being judged by a “different standard.” The “standard” at play here is “what I judge to ultimately be in my best interests” — the same one at play in most situations if stripped to their core.
Wal-Mart’s woes are driven by the fact that most civic and news organizations represent some “anti” point of view. That is not an indictment of either. Historically, there have been very few activist groups dedicated to the “preservation of the status quo” or “protecting the rights of the man.” And it has been a long time since “dog bites man” made newspaper selling headlines. So it is only natural that Wal-Mart wind up in the cross hairs of the politicians and press.
Having said that, there is also some “red state / blue state” at work here. There is no doubt that the politics of Humphrey’s Minnesota match up better with the politics of Daley’s Chicago than they do with, say, Delay’s Dallas.
My main attraction to the “retail” world would be the art of merchandising. In my several visits to both Wal-Mart and Target, I have left both feeling satisfied with the amount on my receipt, yet have had two different shopping experiences. Praise goes to Target, where I can walk each aisle and not feel overwhelmed by the mass amounts of “stuff” that fill each shelf. Praise goes to Target, where I can walk in and have already a great overview of where things are located. Praise goes to Target for having a classic, clean line of merchandising. When you are shopping for that particular bed sheet, you have the great option of the Good, Better, Best, Premium scenario. And they market the product with exceptional taste. On the other hand, Wal-Mart is an in and out experience. I arrive with a list, go directly towards those aisles, insert product into my basket and get out as soon as possible. I don’t browse, make eye contact, nor look to see what’s on sale (since there is never anything on sale). My blood pressure does not go down, until I am safely outside in my car and out of the parking lot. When drive and shopping time is unlimited, where do you think I would head to? It’s an easy choice for me.
Arab citizens of many nations hate America for spurious reasons. This is not an intellectual thing; it’s an emotional “feeling’ thing. We know they’re wrong, and that we have no systemic animosity toward them. But, Doc’s rule #34 is that you can’t talk someone out of how they feel. (Especially women, but that’s another topic altogether.) Reason and logic take holidays.
Wal-Mart is the world’s most powerful retailer. Many people don’t like them. Their scorched earth practices harm more people than they help, according to some, and they are the #1 reason why gasoline prices are high (WM sources products from China, and China is buying oil at an accelerated rate to fuel the production facilities that supply WM). But, WM has no systemic alienation strategy. Yet, they alienate.
People like to hate the big guy. It’s human nature, and stupid people can’t focus on anything but the biggest rock in the box. Of course WM is being judged by a different standard. It’s the way of the world, and WM figured that out a long time ago. They’ll handle it.
Target has always avoided the “category killer” prices that Wal-Mart is famous for. They will typically offer a slightly “better” product (a little more upscale) and tend to make their impressions with the consumer in areas like DVDs where they typically offer some fairly current movies at very low prices. It’s easy to compete with Blockbuster on new DVD prices. ALSO, Target seems to have a narrower selection than Wal-Mart but typically offers more choices.
For instance, Wal-Mart might offer 10 types of sheets, each in two colors. Target would counter with 3 types of sheets, but each in four colors. Wal-Mart has 20 skus, Target 12, but if you want sheets in other than white and blue – Target has your business.
Target has a wonderful handle on the amorphous, and increasingly important component of the consumer experience called ‘design.’ They’ve successfully democratized design — such as the iconic Michael Graves’ bird teapot that sells for $30 at Target and is also manufactured (in a very similar design) by Alessi in Italy and sells in the U.S. for $175-200. Or the coopting of Isaac Mizrahi, who designs both for the runway and the ‘realway.’ He’s even designing a new line of home furnishings in Target’s spring line. The utility (real and emotional) of design has become very important to American consumers…some realize it, some don’t. And Target gets this. Wal-Mart? More like anti-design!
Wal-Mart may be held to a more stringent standard, but that’s the price of being big.
Yes, Len and Warren, we ink-stained wretches all know how frustrating it is to report on Wal-Mart, but each of us has still somehow managed to write dozens of pieces about the company over the span of our careers.
Two signs that Wal-Mart is in fact susceptible to public opinion from this morning’s paper and television:
1) On the TODAY show, a Wal-Mart commercial announcing an “Acre for Acre” conservation program, where the company will help preserve one acre of public land for every acre of real estate it occupies commercially. Someone needs to do a story on this – it’s either brilliant or cynical or both.
2) Here in Tucson – a story in the Arizona Star about a new Wal-Mart Neighborhood Market being developed in town, in which the company is offering to buy the properties of residential neighbors for a 10% premium above appraised value.
For better or worse, Wal-Mart is the story. Target may do a better job of shepherding its brand image, but Wal-Mart affects more lives every day than any company on earth.
This is a great question. Objectivity is crucial to get at a meaningful answer. Typically, the category leader draws the slings and arrows. And the occasional state attorney general looking to make a political career.
For a long time it was Sears. In QSR, it is McDonald’s. In Airlines, it was United. Evil empires lurk in most categories and more often it is the revenue leader.
The big dog, with perceived deep pockets, tends to be a lightening rod.
Additionally, in Wal-Mart’s case I think bias exists. Typically, folks who chide Wal-Mart, won’t be found at a NASCAR event. Or won’t consider themselves, an average middle American.
I would choose neither. I have worked for Wegmans Food Markets for 22 years (since I was 16). I have been a store manager for the past 12 and would choose no other retailer in the world! Why would anyone in retail want to work for anyone other than the #1 employer in America to work for?
It all comes down to image. Wal-Mart projects no heart or sense of humor…never has, probably never will. Target projects a hip, sly view of the world which occasionally is reflected in merchandise available in stores. Honestly, their stuff is pretty average but their advertising is excellent. Another good comparison to Wal-Mart is Southwest airlines which has cost thousands of competitive airline jobs but, because they have a fun folksy image, nobody seems to mind being treated like cattle.
Wal-Mart’s culture needs to change dramatically…but it’s unlikely that a generation of hardcore, true-believers who have grown up in the Bentonville culture will do so anytime soon.
Perception is always based at some level on reality. Wal-Mart has their image due to the reality of who they are, how they operate and the impact that they have had on society and the communities in which they are located. Period.
Are they judged by a different standard? No. It also means nothing in how they conduct business. If studied, it’s likely that it would indicate that it makes them work even harder to do the things that have created their image. That is how they got where they are and how they continue to grow.
Target has earned their image just as Costco and others have earned theirs. Image is earned, not just perceived.
In order to change their image, Wal-Mart would actually have to do things. Those things would run contrary to their success and would have implications to make their image even worse as it would be an admission. Talking about it won’t change it for them. They’ll continue because they continue to win just as it is. It’s very clear.
Those who are in direct competition have their model – it works. Wal-Mart’s model works. No PR campaign will change it. Deeds would, but they would run in opposition to the model and it will not happen.
Target is getting a WIN-WIN situationm be it media or people. It plans out strategies very well in the industry. They are really doing well. As far as Wal-Mart is concerned, they are attacked by the media several times as they are large and, socially, do not extend hands. Media is always on the look out for such targets and “TARGET” is not one of the targets, as they are covered by so many good things.
I see Wal-Mart makes about $10 billion a year. If they gave just their USA employees a $7,000 increase in wages and benefits – it would totally wipe out their annual profit. With no profit – what’s the point of being in business? To most people, $7,000 a year would not make any meaningful difference in anyone’s lives. It might even harm poor people more because it would be $7,000 more to be mismanaged and further prevent them from qualifying for government programs needed to manage their mismanaged lives. Wal-Mart is helping this country progress by forcing the competition to improve by taking retailing to a new level. Wal-Mart has paved the path for new and improved retailers like Publix, HEB, Wegmans, Trader Joe’s, Whole Foods, Aldi, etc. Without Wal-Mart, we are only subsidizing weakness. Americans love a winner and will not tolerate a loser. The very thought of losing is hateful and evil. While Wal-Mart might have a shortcoming or two, overall, Americans will admire and support Wal-Mart because they are a winner, they are the biggest, and the strongest. In the end, this is really the best PR a company can have.
Wal-Mart keeps it simple. The lack of frills, sophistication, and diversity in their strategy drives their low price value proposition.
They used to locate where no other chain would care to go. Underserved towns would welcome them. In some places people ran for mayor on a platform of bringing in a Wal-Mart.
Today, they are trying to move into markets that are well-served, even over-stored. A lot of these markets (San Francisco Bay Area for one) have very sophisticated and demanding clientele whose values aren’t aligned with Wal-Mart’s.
Consequently, the competitive impact and culture clash is higher.