Consider these startling facts:

• More than 138 million people shop at Wal-Mart stores around the world each week.
  
  
• Wal-Mart employs over 1.6 million people worldwide and hires 600,000 every year.
  
  
• Wal-Mart’s 2006 sales were over US$ 315 billion, with profit of over US$ 11 billion, second only to Exxon Mobil. For the four years preceding 2006, Wal-Mart was the US company with the highest sales.
  
  
• Wal-Mart has 6,200 facilities worldwide, with 3,800 stores in the US.
  
  
• In 2004, Wal-Mart purchased $18 billion of goods from China. In 2005, Wal-Mart alone was responsible for 1/10th of the US trade deficit with China.

You see, some would claim that Wal-Mart, through its enormous buying power and proliferation of its own store brands is, in fact, a brand killer. Simply put, because Wal-Mart can buy for less, and get products manufactured for its own shelves for less, it can sell for less than any competitor. And because Wal-Mart is such a huge distribution channel, even brand name products cannot afford to be left off the retailer’s shelves. As a result, a manufacturer of a well-known brand may have to make price concessions that cut into its margin to be placed in Wal-Mart stores.

In fact, name brand products are in a strangely uncomfortable position with Wal-Mart. While a name brand product will be exposed to a gargantuan audience, and therefore potentially sell in huge volume, it may very well sit next to a Wal-Mart store brand product priced substantially less. It’s true that this happens in other retail stores as well, but the power of Wal-Mart’s house brands can be downright intimidating.

As for Wal-Mart’s down-and-dirty store appearance, with its stark lighting and huge warehouse-like ambiance, it may work well with the company’s low-price strategy, but it can seem frumpy and dated.

Wal-Mart has been experimenting with a more upscale look. In 2006, Wal-Mart opened a new store in Plano, Texas. It had the Wal-Mart name but little else one would expect of the retailer: wood floors, dressed up sales associates, slick lighting, even sushi and expensive wine. The store, targeted to the demographics of the area, carried less of the traditional Wal-Mart merchandise and more upscale products, including 1,500 premium items being tested.

Nice try, but could it backfire? Branding expert Laura Ries thinks so. In "The Origin of Brands” blog, Ries writes that the Texas store goes “against the philosophy of being the place to save money. Fancy stores mean fancy prices. Plain stores mean cheap prices. … For Wal-Mart, attempting to change the meaning of its brand is a lose-lose proposition. It has the potential to turn-off its existing core customer…”

So Wal-Mart, a supremely effective brand killer, has an interesting dilemma: Does it continue to look and feel like the low-priced retailer it is, and upon which its success is based… or does it try to increase sales in those categories where competitors are stronger? Should Wal-Mart become more stylish and sleek—with the possible consequence of changing its own brand image?

After so many years of killing other brands, Wal-Mart could be faced with the ultimate challenge: whether Wal-Mart’s quest for continued growth and profit could risk killing its own brand.     

[20-Aug-2007]