Pick Yer Bucket

Walmart's customer segmentation strategy is floating around cyberspace (I found my copy here). Not sure which is worse: the powerpoint content or design.

The design is simply awful. Why is a pie chart used on page 3 with colors and images yet nowhere else in the presentation? There are way too many words and not enough images on the bulk of the slides. I wouldn't let a recently graduated Assistant Account Executive present something this basic to clients, yet clearly this was a presentation aimed much higher in the organization.

The content is very simplistic and carefully cultivated. Most Fortune 1000 companies have some way of segmenting their customers (and prospective customers). Whether it is the more basic 'RFM' (recency, frequency, monetary) or some other activity-based approach or more qualitative psychographic personas that Wal-mart is using, applying a common nomenclature to customer behavior is traditional 'old-school' marketing.

Descriptions of the 3 'price sensitive categories' are very stereotypical. Look at the images of rural mom and apple pie to define their 'core' Price Value shopper or the media consumption habits of the "Brand Aspirational" urban shopper. Even though the definition of this category is 50/50 split between gender, the media skews heavily male in terms of the tv and print titles suggested. I have an issue with the last slide distinguishing this group because they all skew lower than average in these areas, yet that is not clearly distinguished in the content on this slide.

And the final category, the 'Price Affluent' shopper is not that different than their 'Price Value shopper' except for their household income being higher and their need for research before they buy. I wonder if the Price Value shopper (mom) migrates into the Price Affluent (dad) over time, becoming less loyal to Walmart in the process as the shopping moves from mom's responsibility to dad's once he approaches retirement?

My conclusion from this presentation: Walmart has a huge loyalty problem that is going to get much worse. Their only 'loyal' group has an average income of less than 40k. Tesco is coming to the US in a $2 billion way. They have a Borg-like track record over the past 10 years in Europe of exterminating their competition. If Tesco cherry picks their store locations in urban locations (which their new 'Express' format seems designed to do), Walmart will watch their 'Brand Aspirationals' find a new, hip retailer who stocks to their price-sensitive needs. Tesco has become a powerhouse retailer because of their loyalty program, which bases rewards on what customers want (not on the 'deal of the week' from the suppliers as most retail grocery and merchandise programs work).

Walmart grew to become the largest retailer in America because it employed a store-centric, sophisticated IT infrastructure that smoothed the supply chain process and ensured every product was in stock. Tesco is customer-centric and has refined their retention approach over the last 10+ years. Tesco has vast data that provides the supply chain with updated information to keep items in stock, but more importantly, it rolls that data up to the customer's household to influence shopping behavior. When that shopper data is overlaid with the psychographic profiles, it becomes much more granular, highly targeted and easier for Tesco to market to consumers more effectively. Walmart simply cannot compete on that level.

I'm off to short Walmart.