Thursday, November 18, 2010

Wal Mart

I consider myself a student of retail...actually a student of business. I like to say that I have a degree from the University of the Street.

The biggest company in the world is Wal Mart.
How did Wal Mart get to be the biggest company in the world? By supplying consumers with what they want to buy at affordable prices.

Now, Wal Mart today is a very different company than the one Sam Walton started years ago. And lately, their "same store sales" - which is how retailers measure how their stores are doing - have declined in the US.

Why is that?

Well, before I answer, I need to say...I have my hands full running my own business without trying to help Wal Mart's business :). However, I will try.

Lately, it seems, Wal Mart has strayed from the things that made them famous...namely, offering brand name, quality products at prices consumers can afford. Now, instead of giving consumers what they want - the stuff they have been buying - they are stocking what they think consumers should buy...

In my opinion, that is a mistake.

If "my" local store - and I'm not just referring to Wal Mart here - stops carrying the products I am buying, I am going to shop elsewhere. Apparently, that is what is happening.

Just because they are the world's largest corporation doesn't mean they are immune to making mistakes. Years ago, A&P, a grocery chain on the east coast, was so dominant, they had to sign a consent decree with the Federal government now to use their monopoly power. And K Mart used ti be far larger than Wal Mart....but neither of those companies is anything close to what they were decades ago.

It's very humbling to realize that tastes are's hero can be tomorrow's loser.

For us, it boils down to something I tell the manufacturers we work with: We are a buying agent for our customers and their customers. We are constantly looking to sell quality organic food and non-food products...based on what our customers tell us they want. Anyone who forgets that basic philosophy is headed for trouble. And as the saying goes, the bigger they are, the harder they fall.

1 comment:

  1. Hi Gary,

    I rarely go to Wal Mart because I prefer to support local businesses. However, I do visit from time to time, and I've noticed an increasing lack of diversity over the years, that is to say, fewer choices of products. I've also noticed this in some of the other big retailers.

    To take one example, this past summer I wanted to replace a floor fan I've used for years, originally from K-Mart. I need a very particular size because it needs to sit in a window. I went to Sears, K-Mart, Home Depot and Lowes. Guess what? They all only carried the same fan.

    Well, one of them had a slight variation, but it was from the same company in China. And, it was all plastic, and had less depth, which I discovered meant that the blades moved less volume of air.

    I feel like I'm seeing less variety in lots of consumer goods categories, for example bedding, bathroom towels and floormats. I went to JC Penneys last year to replace my 6 year old bathmats, which is where I had bought the ones I currently have. The ones I found were markedly inferior to the ones I had bought 6 years before.

    I prefer to buy local, but am finding myself going on line more and more for purchases.