A view of the industry through the
eyes of a chain buyer.
Wal-Mart and Our
A brief, casual history of the relationship.
by Mike Hartnett (July 18, 2011)
Recently someone new to the industry asked me
about the history of the world's largest retailer and crafts and
fabric. So I rattled off what I knew, what I thought I knew, what
I'd been told, and so on. Here are the highlights.
Sam Walton started as a Ben Franklin retailer
and said he liked the sewing/fabric department because it attracted
the kind of customer he wanted. The modern craft industry was in its
infancy (it really started shortly after World War II), but as it
grew, Wal-Mart added crafts in part, according to industry lore,
because Sam's wife Helen was a huge crafter.
It finally reached the point where Wal-Mart
opened three all-craft stores, Helen's Creative Crafts. (I
believe two were in Missouri and one in Louisiana.) Wal-Mart sold
them a few years later to Michaels. A couple of years after that, I
asked a top exec at the time, Don Soderquist, why the stores were
sold. He said they felt they'd learned all they needed to about
crafts. I suspect the real reason was they were seeing a much bigger
return on investment with their new superstores, so they abandoned
the craft stores to concentrate on the superstores.
Some Miscellaneous Thoughts
1. Through the decades, rumors that
Wal-Mart was dropping crafts were like the tide. They'd sweep
through the industry, then recede. One time when the rumors were
rampant, I asked the former craft buyer at Wal-Mart if she thought
this time it was true.
She said no, because of what she called
"destination studies," where consumers walking in the stores were
asked what department they were going to first. Crafts apparently
always did well in those studies. So the logic was, Wal-Mart may
sell more detergent than crafts, but they wouldn't sell as much
detergent if they didn't have crafts.
2. Wal-Mart forced vendors into the late
20th century by demanding they adopt modern technology
standards such as UPC codes. Today vendors have lots of technology
that they take for granted, but they wouldn't have them unless
they'd been forced to, kicking and screaming, by Wal-Mart.
3. Quotes from a couple of vendors:
A) "Having Wal-Mart as a customer is like owning an 800-pound
gorilla. You may think you own it, but you pretty much do what he
says." B) When a vendor called me to say goodbye because he
was going out of business, he said, "It's my own fault. I said yes
to Wal-Mart once too often."
4. At one point Wal-Mart announced they
didn't want to see any more manufacturers' sales reps. They only
wanted the vendors' top execs and, by the way, Wal-Mart and the
vendor should split the savings that would have been the sales reps'
5. Discount Retailer (now called
Retailing Today) used to publish an annual study of chains'
departments. Crafts always had one of the lowest turnover rates, but
one of the highest margin rates.
6. THE best, most even-handed book about
Wal-Mart I've ever read is The Wal-Mart Effect by Charles
Fishman. It includes interviews with a couple of current/ex industry
7. I wondered for years about the fabric
department because you needed a clerk to cut the fabric. Same would
be true of the fish department where you need a clerk to scoop out
8. For many years Wal-Mart had an
excellent reputation among vendors. The company didn't
nickel-and-dime vendors, just asked for the best price. But that
reputation was damaged a few years ago when the company decided to
drop needlework. Vendors were not given much notice. Numerous
vendors said, "It wouldn't have been handled this way if Sam were
still in charge."
9. When the recession hit, Wal-Mart
appeared to be attracting more higher-end shoppers, so the powers
that be decided to cut back on lots of SKU's to make the stores more
spacious and inviting to these folks. The idea was carried to an
extreme. In our nearest superstore, in Pekin, IL, the cross-aisle in
front of the checkout counters was so wide and so empty, a small
plane could have landed there.
10. Ooops, that plan didn't work. So the
company is reverting back to basics; I forget what they're called,
but Sam's old favorites – crafts, fishing, etc., are being restored.
I hear fabric is coming back but in cut-fabric packages. (I don't
think that will work, but we'll see.)
11. Here's an unconfirmed story that may
indicate, in part, why the company reversed its decision to reduce
the number of SKUs in the stores. Supposedly at a meeting of the
company's top execs, CEO Mike Duke arrived with a bag of products,
all items, he said, that his wife used to buy at Wal-Mart but now
has to go elsewhere for them.
12. But there's been some damage done to
Wal-Mart's reputation for consistency. No doubt many vendors are
delighted by this return to basics, but are probably wondering in
the back of their minds if/when the top execs will change their
minds yet again.
13. Vendors vent to me all the time
about one thing or another, but I have never heard a single
complaint about a buyer at Wal-Mart. Complaints about company
policies forced on the buyers, yes. Personal complaints, no.
14. I no longer bother to call the
Wal-Mart pr department for comment, clarification, etc. Everyone
I've talked to is always really nice, but says something like, "Gee,
Mike, I'd really like to help you, but I just can't say anything at
15. Sometimes I think Wall Street
analysts are too hard on Wal-Mart. Wal-Mart has to sell a gazillion
products a quarter, far more than any other retailer, just to have
flat sales. So when sales are flat, the Wall Street hotshots shout,
"Oh my god! What's wrong with Wal-Mart?"