Dive Brief:
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Wal-Mart Stores Inc. has moved its $900 million U.S. media advertising business to Minneapolis-based Haworth Marketing + Media, sources told news outlets.
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The move has been in discussion since April, when Haworth gave up its Target account to GroupM, which itself has a 49% stake in the Haworth agency, according to MediaPost. Wal-Mart earlier this year confirmed it was in talks with Haworth, but neither the agency nor the retail giant has formally announced the partnership to news agencies.
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Parisian marketing firm Publicis Groupe and Wal-Mart in July announced a new strategic entity that is taking on the retailer's in-store and advertising creative works. That effort doesn’t include media advertising.
Dive Insight:
As the world’s largest retailer, Wal-Mart is a massive advertising and marketing juggernaut, spending nearly $1 billion on measured media last year, according to market research firm Kantar Media. The ongoing shuffle in Wal-Mart's U.S. marketing operations could also mean a shift in marketing strategy, just one aspect of operations that appear to be ripe for change as the retailer looks to boost its e-commerce and appeal to a wider customer base.
Wal-Mart last year named company veteran Tony Rogers as its U.S. chief marketing officer and tapped Target Corp. veteran Michael Francis as a consultant to help with its marketing efforts. In addition, Wal-Mart Stores CEO Doug McMillon said in a July statement that its relationship with Publicis Groupe “will help us think and act differently, which will ultimately enable us to serve our customers even better,” adding “Our ambition globally is to make every day easier for busy families, and having best-in-class marketing is critical to achieving that goal."
But Wal-Mart in some ways has lost its grip on what were once the essential aspects of its business model — assortment and price — made possible by forcing down costs (an approach itself made possible by squeezing vendors and workers). The retailer's “always low prices” stance may be getting more difficult to sustain, at least without much other differentiation to compete with Target's "cheap chic" ethos (which Francis helped implement) or the pure-play Prime membership appeal of Amazon.
To that end, Wal-Mart also splurged on a $3 billion acquisition of e-commerce startup Jet, which set out last summer to provide what it said would be the cheapest prices on the web. Time will tell how Wal-Mart markets Jet to the masses, but Haworth will lead the charge.