When Amex Took on Walmart to Save Small U.S. Businesses

If you ever dream of becoming a legendary entrepreneur, this brand story is for you. It’s a story of a brand that has leveraged perhaps the most undervalued attributes of mankind and made a billion dollars out of it.

If you learn how to use these attributes, you can easily outperform your toughest competition regardless of any domain you belong to.

The attributes that I’m referring to are kindness and empathy.

In this capitalistic world, while most people might consider empathy and kindness as intangible qualities, it is an open secret recipe that can enable you to design game-changing marketing strategies in the twenty-first century.

Small businesses were dying due to the Walmart Effect

The story dates back to 2010, America. The U.S. economy was still experiencing the wrath of the 2008 subprime crisis and the resultant recession, which caused the stock market to hit rock bottom, giant corporations to shut down, and caused millions of job losses within a fortnight.

When the entire economy was collapsing, one company did not just survive but also made 13.4 billion dollars.

The company was the giant American retailer Walmart, and during the two years of recession, Walmart improved its year-on-year profitability by 700 million dollars.

Additionally, Walmart never had a return of equity of less than twenty percent during the recession.

Now, this might sound like a fantastic achievement, but if you take a closer look at the impact of Walmart on retail America, it’s pretty devastating; it has even got a term called the “Walmart Effect.”

Multiple studies conducted in the past proved time and again that every time a Walmart store opens up in a city or a town, hundreds of small businesses along the radius of the store shut down within one year or two, making it sort of a monopoly type of situation.

The reason for this is that Walmart buys all of its products in such high quantities that it can lower the price of products to such a low level that small businesses couldn’t even come close to competing with Walmart prices.

To explain this with an example, say if you own a small retail shop and buy notebooks from the wholesaler for 5 dollars per book, and sell it at 8 dollars in the market. But, Walmart would sell the same notebook at 4 dollars because it can procure it from the manufacturer at 3 dollars.

This means Walmart’s selling price is lower than your cost price, making it impossible for small businesses to survive. Due to this reason, small businesses even hold protests every time Walmart announces that it’s going to open up a store in a town. So, the dominance of Walmart seems unchallengeable.

But there is a slight twist in the tail.

This story is not about the gigantic fame of Walmart. Instead, this story is about another big brand that beat Walmart at this game.

The other giant company stepped up and became a savior for small businesses during the recession. This company lodged a campaign that was such a great hit that the senate of the United States itself unanimously passed a resolution to support the initiative.

The cherry on the cake was from president Barack Obama who himself publicly supported the campaign.

If you wonder which company took on Walmart and what was so special about them that the American president himself ended up endorsing their marketing campaign, let me spill the beans.

The company was American Express, and the campaign that it launched is known as the “Small Business Saturday.”

As part of this initiative, American Express gave away twenty-five dollars of special credit to hundreds of credit card members to redeem it only at a small business on a Saturday after thanksgiving.

Amex also gave one hundred dollars of Facebook advertising credits to ten thousand small businesses to utilize digital marketing campaigns and maximize profits.

Additionally, Amex ran tv ads, radio ads, and even social media campaigns to educate the American population about their impact on small businesses.

Hundreds of small business owners all across the country participated in the campaign and what followed next was nothing short of a capitalistic miracle that many considered impossible.

Millions of Americans started walking into a small business store instead of Walmart. What was remarkable was that they were shopping from a small business despite knowing that they were making a more expensive purchase than Walmart.

In its second year, small business Saturday became even more successful, wherein five thousand small businesses participated in the campaign, and one hundred and three million Americans shopped small.

Soon enough, the small business Saturday became such a social phenomenon that it generated over 2.7 million Facebook likes and became a top trending topic on Twitter.

#SmallBusinessSaturday became so popular that even President Barack Obama tweeted his support towards the campaign.

This is how capitalistic America went beyond its conventions and came together as a community to spread kindness and show empathy towards small businesses in their community.

By 2012 American Express took the campaign a notch further by not just giving credit card incentives but also providing the small business owners with social media kits — email templates and various marketing materials to help them maximize their marketing, to further maximize their sales.

Within just two years, Small Business Saturday became a part of the annual American tradition wherein everybody from small business owners to the president himself participates in the campaign.

Soon enough, it turned into a beautiful occasion with lots of happiness, loads of smiles, and most importantly, it became an occasion of communal unity for the U.S.

President Obama even documented taking his daughters to the local bookstore to promote shopping at a small business.

Fast forward to 2020, American Express estimated that 110 million people participated in the Small Business Saturday, and sales hit a record high of 19.6 billion dollars in spendings.

And all of this money helped keep small businesses alive even during the COVID19 recession.

This is how a bank like American Express used empathy and kindness to make an economic miracle come true even during the most challenging times in American history.

Key Learnings

#1) Identifying the audience’s pain and interest is always the key to unlock extraordinary business ideas.

American Express recognized the shoppers’ pain and used its services to give them a twenty-five dollar credit and motivate them to shop from a small business. Therefore the interest of the shoppers was addressed, and it also catered to the pain of the small business owners.

#2) Power of participatory marketing campaigns.

In the twenty-first century, participatory campaigns will always be more powerful than even an award-winning advertisement because the new age of marketing is moving from impressions to expressions.

So more than a tv ad, it is the customers’ participation that will create more impact.

In this case, American Express gave out email templates and social media kits. Thus, shopkeepers automatically became the local ambassadors who participated in the campaign, which eventually led to a chain reaction and got millions of shoppers onboard. This is what we call a participatory marketing campaign.

#3) Always remember that empathy and compassion are the most undervalued attributes of this capitalistic world.

Last and most importantly, very few people know that these are two of those qualities that are so powerful that they can turn a commoner into a king. In this case, they were powerful enough to give rise to a capitalistic miracle that America will cherish forever.

Source : My own work on Medium.