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09.17.2004

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Watching Wal-mart

All Hail Wal-Mart

Why is it so many of us in the CPG, retail, marketing and analyst communities spend so much time and energy paying homage to the great Wal-Mart? Even if you eschew the obvious knee-jerk reaction (e.g., "Wal-Mart destroys communities"), Wal-Mart still captivates our contemporary imagination like few other subjects. Always there in spirit, Wal-Mart hovers above every dialogue, discussion or debate - the specter which needs to be accounted for, appeased, explained or, in less forgiving situations, submitted to.

Yet more puzzling, whenever we spend any amount of time talking with consumers about their Wal-Mart experiences or impressions, we never uncover such fervor or devotion. To be certain, some of the consumers we interview claim to patronize a Wal-Mart "occasionally" or "regularly," typically citing some combination of convenience factors and low-prices as justification for their visits. Yet only very rarely, if ever, do we encounter consumers with a fervent passion or commitment to this retailer. In the words of a more typical consumer:

"Look, what can I say, you know? It's like, it's just Wal-Mart, okay? Yeah, I go there to stock up on toilet paper, soda, light bulbs and plastic bags. And yeah, it's cheaper than the alternatives, but it's not like I'm going to start going there all the time just to save a little money. I do have a life you know..."

You see, it's not so much that consumers don't like Wal-Mart as much as it is just not a salient part of their everyday life. For many, if not most, a visit to Wal-Mart does little more than a visit to the gas station.

All of this raises the question, how can we collectively be so obsessed with a contemporary institution that appears only modestly relevant to our individual, everyday lives?

In fact, I believe much of the disconnect here can be explained as a tension between cultural ideals and everyday practices, between how we believe we are supposed to be conducting our lives and how we really want to live those lives.

Most are well aware of our unique cultural heritage. A hypothetical blend of rugged, do-it-yourself individualism tempered by a heaping dose of the protestant work ethic - and a dash of unabashed optimism - forged a culture dedicated to the ideals of rationality, thrift productivity and efficiency. Emerging as a conscious alternative to the particularistic patriarchy of our colonial past, our democratic impulses spawned an ideological vision known as the American Dream. At once, the opportunity for bountiful wealth and privilege awaited not just those lucky enough to be born into greatness. Quite to the contrary, the American Dream was (theoretically) within reach of all who demonstrated commitment to our virtues of thrift, industriousness and efficiency.

In this, our culture deifies men like Ray Croc and Henry Ford, visionaries whose goal wasn't so much to offer the highest quality products to the marketplace as it was to offer an acceptable, consistent product in the most reliable, affordable manner possible. Ours is, you see, a pragmatic dream - a dream not of Utopian communities or a higher-order existence but of Big Mac's, Chrysler K cars, affordable suburban houses and $17 oil changes. Not coincidentally, this is a dream that appears perfectly consistent with the values espoused by Wal-Mart.

There is just one problem with the above analyses. Even though our cultural values are alive and well, the whisper in our head that chides us for paying too much for a beer at the ballpark, few of us ever prefer to go about our daily lives in a manner consistent with these principles. Sure we may pay lip service to these values while meeting a potential in-law for the first time ("You wouldn't believe the great deal I got on this DVD player..."), but heck if we're gonna go for Chilean Merlot when we want to impress our date. Likewise, economists have proven repeatedly that fund managers and stock brokers perform no better in the market than one's next-door neighbor, and yet we all find it so very difficult to place our 401(k) in an index fund. The rational move, it so happens, isn't always very much fun.

Breaking Out of Our Iron Cage

All of the squeaking and squawking regarding Wal-Mart is really less about Wal-Mart's abject talents or performance in the marketplace and more about deeper contradictions in American life. Namely, Wal-Mart represents a sort of hypothetical standard of efficiency by which we feel compelled to judge our daily existence, even though we have no necessary desire to live our lives that way. In psychotherapy parlance, Wal-Mart is the judgmental parent we just can't seem to shake; at once the cause and target of our post-adolescent angst. So when we hear the analyst decry Wal-Mart's competitive pressures, the decline in local wage structures or the impact on local retailers, what we are often witnessing is a simple rationalization for how we desire to live our lives, not to mention how we've chosen to live our lives.

While it should be evident by now that many of us desire something more out of life than a weekly trip to a homogenous mass retailer to meet our family's basic provisioning needs, I suggest we need only look toward other domains to see the obvious limits of a Wal-Mart world. Far from proving a category killer, McDonald's - and, for that matter, the entire fast-food industry - have watched quietly from the sidelines as the more differentiated fast-casual segment witnessed enviable growth in recent years. And while mainstream grocery has generally been lucky to experience single digit growth, growth rates among local and specialty retail, not to mention natural foods retailers, have fared far better. Likewise, as we continue to hear of challenges in the retail dairy segment, analysts are now predicting the return of, of all things, the local dairy sporting home delivery via the old-fashioned milkman. In short, don't let our cultural tendency to scrutinize everything we do according to largely outmoded cultural values color our understanding of contemporary consumer behavior in the marketplace.

Finally, none of this is to suggest that Wal-Mart is not, nor will not continue to be, successful. There will always be a market for durable goods marketed according to the logics of predictability and efficiency. The only question is whether or not that market should so constrain and dominate our understanding to the point that it limits our ability to creatively serve the consumer in new and innovative ways. Ultimately, we believe there is a vast landscape of opportunity that lies beyond the cage with which many have surrounded themselves. The challenge is getting past the rusty door.

Watch for Part Two where we pick up this dialogue with targeted examples of how Wal-Mart fails to connect with consumer interest and practice regarding key contemporary notions such as "fresh."

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