Bad News Doesn't Rattle Walmart Shoppers

Bad News Doesn't Rattle Walmart Shoppers

Loyalty isn’t always tied to positive brand recall

The retail game can be a fickle mistress, especially when it comes to consumer loyalty. But Walmart seems to be doing a good job of maintaining its base despite some recent changes that have garnered mixed results.

A January 2018 survey of US internet users by CivicScience found that 87% of respondents reported hearing Walmart-related news in the week prior to polling. More people recalled hearing about the closing of Walmart-owned Sam’s Club locations (75%) than Walmart employees getting better benefits (58%). However, CivicScience also found that it takes more than bad news to change consumers’ loyalties. 

“Over the past year, Walmart has worked hard on improving worker benefits, largely to reduce the churn of workers but also to improve its image. But the news about store closures and layoffs shows just how hard it is to change a brand's reputation,” said eMarketer principal analyst Yory Wurmser.

But whether respondents loved (15%), liked (32%) or disliked (30%) shopping at the big-box retailer, many tended to value a company’s “social consciousness and overall kindness.” Roughly one-third of those who were in both the love and dislike camps thought a company's social consciousness was very important when choosing where to shop and what to buy. 

And a large share of respondents—roughly two-thirds—who are favorable to the Walmart brand believe that a company's social consciousness is key when choosing where to shop.

Recently, Walmart said it will raise starting wages for all hourly employees in the the US to $11. The move follows a similar increase announced by Target in late September. Meanwhile, the company also announced plans to shutter about 10% of its Sam's Club locations.

According to eMarketer's Retail Database, average sales per store at Sam’s Club dipped over the past three years, but increased slightly (0.5%) in 2017. The average sales per square foot has also started to improve, up 0.4% in 2017 to reach $591 billion. This turnaround isn’t necessarily tied directly to store closures, but in this uncertain retail climate, underperforming brick-and-mortar locations can be liabilities.

Ultimately, there’s one thing that might be more dangerous for Walmart than public perception. “Long-run, Walmart needs to keep improving its brand image as it competes in an increasingly pitched competition with Amazon,” said Wurmser.