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The Decade's Major Influences, Pt. VI: Wal-Mart
So much to say, so little space (even on the
by Mike Hartnett (October 1, 2007)
(Note: To celebrate Creative Leisure News' 10th
anniversary, I've surveyed readers and chosen the people, companies,
and events of the past decade that have had the greatest influence
on our industry of today. In previous issues I wrote about the
decade's most influential category, scrapbooking; the most
influential person, Michael Rouleau; the new generation of craft
consumers; changes in the old order; and imports – click on the
headlines in the right-hand column to read them. In future issues
I'll write about other major influences – Technology ... Media ...
Investors ... Lower Margins ... Yarn and Beads.)
It seems everyone loves or hates Wal-Mart. I agree with both.
Let's start with some things I've been told over the years:
1. From my wife, who heads a social agency dealing with the
poorest area in Peoria, IL: "Until places like Big Lots and
Dollar General came along, Wal-Mart was the only chance my clients
ever had to buy something new."
2. From a vendor many years ago: "Wal-Mart is like
having a 500 pound gorilla for a pet. You can say you own it, but
you pretty much do what it says."
3. "The good news is, I just sold Wal-Mart. The bad news
is, I just sold Wal-Mart."
4. From a vendor who'd just declared bankruptcy and called to
say goodbye: "It's my own fault. I said yes to Wal-Mart once
too often. I moved a lot of product, but I never made any
5. From a Wal-Mart buyer, who is no longer there:
"Confidentially, if I were a small company, I'd never sell to
us. We're too big and too hard. We chew vendors up and spit 'em
6. From a small town mayor in Mississippi, after Katrina:
"I wish FEMA was as efficient at bringing help to us as
My pro Wal-Mart thoughts.
Wal-Mart gets a bad rap. Wal-Mart kills the independents, screws
the employees, bullies cities for tax breaks, causes unemployment by
forcing vendors to source offshore, etc. etc. etc.
Ok, why isn't anyone yelling about Kmart or countless other
chains? Because Wal-Mart is very good at what it does. Doesn't the
big guy always get picked on more than the competitors? If Wal-Mart
over the years had been led by the likes of the goofus who led Kmart
into bankruptcy, you wouldn't hear any complaints about Wal-Mart.
About that goofus? He was later charged with criminal offenses. I
assume his only defense was, "Hey I didn't break the law, I was
Here's an example: at one point he promised to match Wal-Mart's
prices on everything. I knew that was a recipe for disaster because
Wal-Mart was better at moving products from the manufacturers'
factories to store shelves more quickly, efficiently, and
inexpensively than anyone.
Remember the gorilla quote? Over the years Wal-Mart demanded
vendors adopt UPC codes and EDI. I can't count the number of vendors
who complained to me about those things, how Wal-Mart had no right
to "force" them into buying the technology. End result?
Thousands of vendors and retailers are now more efficient because
Wal-Mart bullied them into adopting the technology.
Critics now complain that Wal-Mart isn't the company it used to
be, citing its slowing sales growth. Furthermore, same-store sales
growth isn't near what Target's is. Uh, excuse me? The company has
to sell hundreds and hundreds of billions of dollars every year just
to have flat sales.
Let's examine that a minute: Company A has sales grow 0.5% from
$5 billion to $5.025 billion, an increase of $25 million. Company B
also has a sales growth $25 million, from $1 billion to $1.025
billion – same amount of dollar increase, but everyone thinks
Company B is a genius – but Company A is a dolt.
Another example: Target's monthly same-store sales percentages
are always better than Wal-Mart's. But let's look closer. In Peoria,
IL, for example, there was a traditional Wal-Mart; then a few years
ago the company opened a superstore a couple of miles away, which
had to have stolen some of the original store's business. That year,
the superstore's sales weren't counted because it hadn't been open a
full yearr, but the traditional store's sales were.
Today, Wal-Mart seems to be leading the retail industry to go
"green." It's restocking all its stores with concentrated
versions of liquid laundry detergent to save water, plastic, and
cardboard, the Associated Press reported. Now it has asked certain
suppliers to measure the amount of energy they use to make various
products (but none from our industry, yet), Business Week reported.
The company hasn't said if it will use the info to choose one
supplier over another, but just the threat will probably make those
suppliers more energy efficient. Wal-Mart had previously set a goal
of cutting packaging waste by 25% in three years.
Meanwhile, Wal-Mart is offering relatively low-cost medical
insurance to employees, and recently has greatly expanded its $4
generic drug program.
Because Wal-Mart stock has split 11 times over the years, many
long-time employees can retire as millionaires.
If I took a poll of vendors who sell to the big boxes, I am
certain they would name as their favorite customers Wal-Mart and
Hobby Lobby. Why? "Because they don't beat you up with all this
extra stuff, all the goofy entitlements" one vendor explained.
"They just want the best price and on-time shipping."
Wal-Mart has been meticulous about squeezing costs out of the
distribution system and passing those savings directly to consumers.
Wal-Mart's headquarters is relatively primitive compared to many
competitors. Are Wal-Mart clerks underpaid? Well, the company execs,
from the buyers to CEO Lee Scott, make less than their colleagues at
Wal-Mart is so good at squeezing excess costs, sometimes I think
we should put Wal-Mart in charge of the country's health care
My Wal-Mart concerns.
By cutting stitchery with so little advance notice to vendors,
Wal-Mart is sending this message to all its suppliers: "You
keep doing what we want, but don't expect one shred of loyalty in
Upper management is apparently trying to expand its appeal to
consumers with more money. Fair enough, but a sushi bar in the
Plano, TX store? The hot new apparel line flopped. So now there's
going to be a new tag line, after 19 years. Oh yeah, that will lure
some Nordstrom shoppers.
At the same time, they seem to be turning their back on their
core customer. Example #1: They've apparently rejected Sam Walton's
philosophy that fabric attracts the kind of customer he wants in his
Example #2: Dropping its layaway program. "The move [to
eliminate layaways] is especially jarring to some families because
it has come amid other changes Wal-Mart has made, including cutting
back on fabric departments and stocking more trendy clothes, as the
discounting titan tries to appeal to a broader swath of shoppers,
including more upscale consumers. Those changes, some longtime
shoppers say, has made them feel like the store is less interested
in catering to its traditional and loyal market of family shoppers
on tight budgets," wrote Allison Linn, Senior Writer for MSNBC.
That technology advantage Wal-Mart has enjoyed may be slipping
away. A vendor told me he had toured a Wal-Mart distribution center
a decade ago and was awestruck by its efficiency. Ten years later,
he toured it again, and also Michaels warehouse. The Wal-Mart center
hadn't changed, and now Michaels was just as good, if not better.
As a journalist, my major complaint is that Wal-Mart won't talk
to the press, unless it's the Wall Street Journal or somesuch,
and only when the company feels like talking. The result is
countless articles, including some in CLN, that probably
contain inaccuracies. Well, duh!
The problem is, the buyers are ordered not to talk to the press,
and the folks in the public relations department aren't told enough
information to be helpful. (You won't find nicer people than those
in the pr department, but if they're not told anything....)
Some examples: What, exactly, is going on with fabric? There are
stories that the company is re-instating the fabric department when
locals complain loudly enough.
And what's happening with the craft department? It's being
combined with party goods and called "Family Transitions."
No, wait a minute, it's called "Celebrations." What is it?
And will it be system wide, and if so, when?
I'll print whatever the answers are – or doesn't the company
know the answers?
I have heard reports that sales in the new department are going
very well. Are those reports true? I have no idea.
The most recent example: Shortly after the announcement that the
company is dropping stitchery, I emailed the pr department with an
offer and a note that basically said, "Wal-Mart has every right
to drop any department it wants to, but the way it was done – the
general consensus is that the company is being either unethical,
incompetent, or both. Surely there's another side to the story. I'll
be happy to publish anything, word for word, the company wants to
Remember when Sears seemed invincible? And then Kmart? Now it's
Wal-Mart, but we're seeing cracks in the facade these days.
(Note: Agree? Disagree? Did I leave anything out? Email
your thoughts, on or off the record, to email@example.com.
To read previous Business-Wise columns, click on the titles in the