Walmart: The Perfect Anti-Brand for a Recession?

Diapers are recession-proof. Even cat diapers.

Yes I’m a cat person. It may not be macho, but there it is. I could blame the girlfriend, but it would be a fib. I’m a bona fide cat person, and these days, I’m afraid to say, I am cat-with-diapers person. It’s a drag. Trixie is quite old and that darn litter box never seems to be where she needs it to be. The solution (and it works): cat diapers! It’s not dignified (and if she knew they were actually doggie diapers she’d be mortified), but putting feline vanity aside, the fact is the diapers work, they do exactly what I expect them to do, and that is the point.

Ambiguity is out. Meeting expectations is in. The recession is here and it is a good time to be a thing that people not only need, but also understand that they need. People understand diapers. They get what a diaper is here to do, and it is really easy to tell if a diaper isn’t living up to expectations. Phew.

Yet a diaper is a category, not a brand. The same is true for peanut butter, spaghetti, and baked beans. There are diaper-producing companies, but which ones are loved? I have to believe that it will take more than a merely catastrophic drop in the Dow to make us trade in our disposables for those old-fashioned cotton nappies.

Will the recession tip the scales for Huggies over Pampers? Is this a win for P&G (NYSE:PG) or Kimberly-Clark (NYSE:KMB)? Probably not - the staple companies will survive, but who will thrive? Are there companies that command the prestige of brand loyalty and offer the clear expectations of a diaper?

I’d bet on the place where most of us buy our diapers (kitty, doggie or others): Walmart (NYSE:WMT). It is not your typical brand story. WMT does not use its substantial brand equity in the usual way. In fact they are almost an anti-brand: Walmart doesn’t use the power of its brand to protect a premium in the marketplace. The “always low prices” mantra inhibits that, but the company doesn’t squander its brand leverage, it turns it on its vendors. The recession means that the squeeze will be on, and as the tempers in the overcrowded Walmart parking lots rise so will the pressure that WMT can apply to already over-taxed suppliers. Bet against those products that are running out of ways to lower costs, but depend on Walmart for distribution.

So before I hop in the car and drive off to good ol’ Walmart to buy some more Pup’sters™ Disposable Diapers, I thought I would leave you with this thought:
I want to find the brand story of the recession.

Let’s face facts, talking about Walmart is about as sexy as talking about diapers, even kitty, I mean doggie diapers. I want to find the company that proves that a business can be authentic, smart and savvy and can chart a successful course even in these rough waters. I think the winners will be ones who blend three factors: clarity of expectation, consistent follow-through on meeting expectations, and a steady stream of the new and the sexy.

Disclosure: no positions.

Comments

[madmilker:]

People in America need to realize jus what got America in this shape..."cheap" yes so-call cheap items from a foreign land.

quote*Wal-Mart firmly believes in local procurement. We recognize that by purchasing quality products, we can generate more job opportunities, support local manufacturing and boost economic development. Over 95% of the merchandise in our stores in China is sourced locally. We have established partnerships with nearly 20,000 suppliers in China. *end quote!

Now! if there be 182 country's making items for the world to buy and they have only 5% of the pie in China...duh! This company makes the nice people of China support their currency(yuan) by keeping it in their country working for the people there.... but with the "yuan" going up in value and the US dollar going down...all the foreign items that the American consumer buys thinking it is cheap has went up in price.

People...its all about the currency and to keep a currency strong you got to keep it floating around the country you live in so it can work for you. For the past 12 years all them US dollars are being shipped overseas to a foreign bank and with the American worker not making anything for the foreigner to buy the "we the people" have to turn to the "second" largest employer in America(Uncle Sam) to sell "we the people" debt in order to get all them dollars back!

50 years ago a foreigner would had given their left nut for a US dollar or a Hershey's chocolate bar and today the same foreigner has got Uncle Sam and the American consumer by both all the while Hershey is moving the chocolate factory to Mexico. Wake up! America and think "MADE IN AMERICA."

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quote*"Considering that there are over 30,000 ships at sea this morning," writes James Carlton, director of the Williams College-Mystic Seaport Maritime Studies Program, in an e-mail, "the total number of organisms and species in this global 'bioflow' on the morning your readers read your piece could be staggering - billions of individuals, and thousands of species."

Indeed, scientists have long considered ballast water the primary way invasive aquatic organisms are introduced. From the zebra mussel's arrival in the Great Lakes, to an American jellyfish severely disrupting Black Sea fisheries, the potential costs of accidental introduction of a species to new homes can be tremendous. Aquatic invasives cost the US $9 billion yearly, according to estimates by David Pimentel, professor emeritus of ecology and evolutionary biology at Cornell University in Ithaca, N.Y. Zebra and quagga mussels (a cousin to the zebra) alone cost the $1 billion annually.*end quote!

tats a cost of $9 billion to "ALL' American taxpayers......now you know why the few fat farmers with the penmanship of a poet didn't put the word "cheap" in tat piece of paper they wrote back in 1776.

and red.....oops! read some of what George Washington said after 8 years....

**Washington had been reelected unanimously in 1792. His decision not to seek a third term established a tradition that is now embedded in the 22d Amendment of the Constitution. In his Farewell Address of Sept. 17, 1796, he drew on the results of his varied experience, offering a guide for both present and future. He urged his compatriots to cherish the Union, support the public credit, be alert to the “insidious wiles of foreign influence,” respect the Constitution and the nation’s laws, abide by the results of elections, and eschew political parties of a sectional cast. Asserting that the United States and Europe had different interests, he declared that it “is our true policy to steer clear of permanent alliances with any portion of the foreign world,” trusting to temporary alliances for emergencies. He also warned against indulging in either habitual favoritism or habitual hostility toward particular nations, lest such attitudes should provoke or involve the country in needless wars.**

2008 Dec 24 10:11 AM

[Jake Berzon:]

I agree, WMT is a clear winner in a recession and that's why I bought it in August of 2007 at $43.56 / share, see stockvalues.org/new-in... , but is it still a good value stock play today? I argue that WMT is already rather richly valued and its stock price will go nowhere from here. On the other hand, taking a chance on SuperValu (SVU) may make a whole lot more sense at this point: seekingalpha.com/artic...

2008 Dec 24 04:25 PM