They may be coincidences but a confluence of events in late August and early September has pointed to Wal-Mart’s growing efforts – and success – in making inroads in urban America.
- On Aug. 30, the $288 billion retailer and BET announced a partnership whereby Wal-Mart would place two-pack DVDs – in many of its stores under the “BET Official” brand – on its shelves. The DVDs contain exclusive programming consisting of urban-oriented music and movie release content as well as other BET programming. Wal-Mart is placing the merchandise in “thousands” of its stores, including Sam’s Club locations, the companies said. The initial DVD featured rapper/producer Kanye West and his new CD project “Late Registration.”
- On Sept. 5, Time Magazine painted Wal-Mart in glowing terms for reaching out to an Africa-American-owned contractor in building a store on Chicago’s West Side, a desperately poor neighborhood that never recovered from the 1968 riots. The story quoted African-Americans in the area as praising the company because of its low prices and jobs the new store will bring to the community.
- The company won glowing praise in the media for its immediate $15 million contribution to the Hurricane Katrina relief efforts with Denver Post columnist David Harsanyi comparing Wal-Mart’s role favorably with that of the federal government.
One major African-American marketing consultant believes the company is making progress in befriending minority communities overall, not just among black people. Economic realities, not a new sense of economic justice, are the main driver for Wal-Mart’s aggressiveness in urban areas, but Lafayette Jones, president and CEO of Winston-Salem, N.C.-based Segmented Marketing Services Inc. (SMSI) said other companies could take a lesson.
“The best marketing plan is one of a satisfied customer,” Jones said, adding that the BET deal was a prime example of Wal-Mart beginning to understand how to reach out to minorities in urban areas.
Not that civil rights groups are ready to give Wal-Mart any awards yet. Much of the black community remains divided over placing Wal-Mart stores in urban areas because of concerns over providing adequate pay and health insurance as well as putting small minority-owned retailers out of business.
Jesse Jackson, whose Rainbow/PUSH Coalition is headquartered in Chicago, told Time that “Employment and development must go hand in hand. We need work where you can have a livable wage and health insurance, and retirement.”
Even Jones said, “I don’t think Wal-Mart has it totally figured it out,” but still praised the company for its improvements reaching out to urban Americans.
“One of the things Wal-Mart knows is that its employees are ambassadors. They know offering merchandise their customers want and needs is a good thing [as is] their treating these customers with respect and recognizing their cultural differences. Wal-Mart as well as other chains, in putting products in stories – ethnic hair-care sections, BET products – BET has enormous consumer awareness,” Jones said.
For its part, Wal-Mart said it always tries to place merchandise according to demand and that the BET deal is just an extension of its core philosophy. “You’ve got to be in tune with your customers. You’ve got to know what their tastes are, styles are, whether it’s in music, fashion or food,” said company spokeswoman Karen Burk. She said Wal-Mart relies on its customers to help keep it informed on what products they should carry in particular neighborhoods and places a special emphasis on locally owned and grown products.
Demographic changes have caught the attention of companies like Wal-Mart, Jones noted. As savvy marketers Wal-Mart is undoubtedly aware that white suburban kids are also major consumers of urban culture and that African-Americans tend to be populated in relatively concentrated areas – more than 80% across just 16 states, making it easier to reach them through mass marketing and centralized stores.
“Our market is as segmented as anyone else’s,” Jones said about African-Americans, noting that blacks and Latinos tend to be younger than the general population, have larger families and are the fastest growing part of the population. “Our shopping behavior is somewhat different in terms of where we go to shop and how often we shop.”
For example price is important to African-Americans, but as part of an overall formula that includes how a company is perceived in giving back to the community, he said.
Wal-Mart is far from alone in recognizing the emerging economic power of urban America. Jones pointed to drug-store chain Rite-Aid and the Shop-Rite supermarkets as other examples of companies employing more minorities and carrying products they like at more affordable prices. And in inner-city communities where major chains have long remained aloof, that’s no small thing.
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