As communities across the country scramble to defend themselves against the H1N1 virus, the nation’s largest retailer is struggling with a viral infection of a different kind – one that can’t be stopped with antibiotics or layers of disinfectant.

In case you missed it (and maybe it’s for the best if you do), the latest internet craze is People of Walmart.com, a website that allows users to upload photos of the colorful characters they encounter while shopping at their local Walmart.

If you’ve ever been to Walmart at two in the morning, you may already have a good idea of the subject matter involved here. Think mullets, outrageous tattoos, profanity-laced ball caps, and ridiculously undersized clothing, all captured on camera phone and shared with the world.

People of Walmart, launched a month ago as an inside joke between three friends, has gone viral with thousands of visitors and hoards of media attention.

Based on the site’s success, it is clear that people find humor in seeing someone browse the cereal aisle with a live parrot perched on their shoulder. What isn’t as clear is what, if any, effect the website will have on Walmart’s new makeover strategy, Project Impact.

The premise behind Project Impact is straightforward: improve the Walmart shopping experience by providing customers with better service, more attractive store layouts, and higher quality merchandise in areas such as apparel.

Anyone who has spent an hour fighting their way through the big-box retailer’s crowded, narrow aisles only to spend another thirty minutes waiting for a cashier can tell you that an improved shopping experience is a noble goal for Walmart.

But, creating a better atmosphere for existing customers is only part of Walmart’s new plan. The real hope is that Project Impact will help the Bentonville, Arkansas based company expand their already dominate market share by luring customers away from competitors like Target and Toys-R-Us.

Unfortunately, the popularity of People of Walmart suggests that Walmart may have a hard time winning over the loyalties of Target shoppers who expect a more “upscale” experience.

Even though the site’s original purpose was to poke a little fun at the most extreme Walmart shoppers, People of Walmart has unwittingly become a microcosm for how the public perceives the store.

Walmart’s “always” low-prices have earned them the reputation of being a store that caters to society’s lowest common denominator. It’s as if the Yellow Smiley Face logo of Walmart has been saying “give me your most eccentric, possibly unstable shoppers yearning for Ramen Noodles by the case load.”

If that sounds elitist, it shouldn’t. I shop at Walmart every week. But, the truth is, you won’t find a People of TJ Maxx or a People of Target or even a People of KMart.

And since the “shopping experience” includes store aesthetics and the makeup of the shoppers, the idea that Walmart can go upscale by throwing out a few nice sweaters is questionable.

Walmart’s problem is as much about image as it is about inventory, and a website highlighting the store’s anything goes demographic isn’t helping matters.

So, now we’ve come to Walmart’s viral dilemma. They can try to shut down the defamatory, yet beloved, website or just ignore it. As B.L. Ochman of Advertising Age points out, both paths have complications.

“If Walmart tries to squash the site, they'll quickly become the laughing stock of social media. If they laugh with the site, they'll be accused of laughing at their own customers.”

Ochman’s conclusion is that Walmart should lay low and wait for the internet crowd to move onto something else, which will eventually happen, as Lol Cats and Awkward Family Photos have proven.

For the time being, Walmart appears to be taking Ochman’s advice, having declined the opportunity to speak with ABC News on the matter. In addition to sparing Wally World from the wrath of “social media,” this approach helps keep the website on the internet fringe and out of the six-o-clock news.

What this approach doesn’t do is address the fact that many of the stars of People of Wal-Mart are unwitting participants, snapped covertly by fellow shoppers. Nor does it address the potential damage the site could have on Walmart’s brand.

At some point, Walmart may be forced to respond to these concerns.

Until that day comes, you may want to double-check yourself in the mirror before heading to your friendly Walmart.