I'll admit that I got a good chuckle the first time I saw the Wal-Mart (NYSE: WMT) television commercial with the members of Destiny's Child huddled around a Christmas tree, swapping gifts with their friends and families. All of the PSPs, clothes, and plasma TVs naturally came from Wal-Mart, but whom were we kidding here? Beyonce Knowles? A Wal-Mart shopper?
The world's largest retailer also has amusing holiday spots with country music stars Garth Brooks and Martina McBride getting into the seasonal spirit. Ridiculous, right?
Well, guess what? It's working. Wal-Mart came through with a 4.3% uptick in same-store sales last month. That contrasts nicely with the relatively lackluster comps growth that Wal-Mart reported early in the 2004 holiday shopping season. Even more impressive is that Wal-Mart's performance at the store level trounced that of rival Target (NYSE: TGT) -- the cheap-chic department store chain mustered a mere 2.6% gain in comps for November.
When was the last time Wal-Mart produced higher monthly comps than Target did? You have to go all the way back to July 2003.
Naturally, you can't give all of the credit to Wal-Mart's latest batch of ads. Unlike with its more cautious stance last Thanksgiving, Wal-Mart was generous with the Black Friday discounts this time around, and the crowds came ready to shop. If that aggressive approach slices margins, the same-store sales will go for naught. But at least the company is keeping its cash registers busy.
Wal-Mart has also been promoting its website through seasonal deals and cheap shipping options, and that has worked, too. Walmart.com was the third most-visited e-commerce site over the holiday weekend, trailing only those of Stock Advisor recommendations eBay (Nasdaq: EBAY) and Amazon.com (Nasdaq: AMZN).
That's why we can't lay all the praise behind Wal-Mart's newfound success on something as simple as a new marketing campaign, but the ads are tactfully brilliant. At a time when the company is coming under fire for everything from its hiring practices to its health plans, notice how the ads steer clear of taking you inside the actual stores. Brooks is driving around. Destiny's Child is celebrating at home. Wal-Mart is conveying positive images without showcasing the actual stores. Good move.
Celebrity endorsements and retailers don't always mix. Penny Marshall and Rosie O'Donnell didn't do Sears Holdings' (Nasdaq: SHLD) Kmart any favors. When Gap's (NYSE: GPS) Old Navy turned to flashy 1980s television stars like Morgan Fairchild and George Hamilton, it didn't help the apparel specialist much. Wal-Mart's tapping into a higher caliber of star power for its campaign, and that seems to be beating Target to the cheap-chic punch.
A prosperous 2005 holiday season for Wal-Mart? That's destiny, child.
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Longtime Fool contributor Rick Munarriz has probably spent more at Wal-Mart's online store than at its bricks-and-mortar empire in recent years. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of theRule Breakersnewsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
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