According to an article published this week in the U.S. advertising-industry publication Advertising Age, Walmart have launched a new initiative which is pressuring brands sold in its U.S. stores to spend more money on the Walmart Smart Network.
The Smart Network is Walmart’s new in-store screen network which has been rolled out to several hundred of Walmart’s stores in the USA.
According to the July 20 Advertising Age article, the “implied threat” from Walmart is that brands which do not pony up more funds for the Smart Network and other Walmart-owned media channels risk having their products removed from store shelves.
The article did not cite any specific examples of brands that Walmart has forced to advertise involuntarily on the Smart Network however, the article did cite some evidence that earlier this month the Arm & Hammer brand of liquid detergent stepped up its marketing spending on Walmart’s TV advertising and print circulars because of this “implied threat.”
Walmart, acting like an ad agency, wants to pull 15% of brands from its shelves
According to the article, this current initiative is part of a larger “Project Impact” through which Walmart is “culling product assortments around 15% on average and as much as 80% on some low-priority items.”
The article quotes heavily from Leon Nicholas, the director of retail insight at Management Ventures, Inc. (MVI). Cambridge, Massachusetts-based MVI is a retail research and consulting firm which issues reports about the retail industry on a regular basis. MVI is a unit of the WPP Group, the international conglomerate of marketing/advertising agencies.
Nicholas said that the effect of these new initiatives by Walmart is to cast the giant retailer into a new role as an advertising agency.
Nicholas said that brands sold at Walmart are being asked to “pony up marketing dollars in order to get more favorable treatment and placement in any number of Walmart promotional vehicles, so that they’re advertising through Walmart almost as if Walmart were an ad agency now. And as that happens,” Nicholas said, “yes, decisions have been reversed” [about product assortment].