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The Man Who Said No to Wal-Mart
Charles Fishman, senior writer for Fast Company magazine has recently published a book entitled The Man Who Said No To Wal-mart. It's an excellent book (Yes, I've read it) that talks about the intersection of making good stuff, the commodization of products, and the changing world that we work in; not exactly high tech, but tech nonetheless.
Every year, thousands of executives venture to Bentonville, Arkansas, hoping to get their products onto the shelves of the world's biggest retailer. But Jim Wier wanted Wal-Mart to stop selling his Snapper mowers.What struck Jim Wier first, as he entered the Wal-Mart vice president's office, was the seating area for visitors. "It was just some lawn chairs that some other peddler had left behind as samples." The vice president's office was furnished with a folding lawn chair and a chaise lounge.
And so Wier, the CEO of lawn-equipment maker Simplicity, dressed in a suit, took a seat on the chaise lounge. "I sat forward, of course, with my legs off to the side. If you've ever sat in a lawn chair, well, they are lower than regular chairs. And I was on the chaise. It was a bit intimidating. It was uncomfortable, and it was going to be an uncomfortable meeting."
It was a Wal-Mart moment that couldn't be scripted, or perhaps even imagined. A vice president responsible for billions of dollars' worth of business in the largest company in history has his visitors sit in mismatched, cast-off lawn chairs that Wal-Mart quite likely never had to pay for.
The vice president had a bigger surprise for Wier, though. Wal-Mart not only wanted to keep selling his lawn mowers, it wanted to sell lots more of them. Wal-Mart wanted to sell mowers nose-to-nose against Home Depot and Lowe's.
"Usually," says Wier, "I don't perspire easily." But perched on the edge of his chaise, "I felt my arms getting drippy."
Wier took a breath and said, "Let me tell you why it doesn't work."
Tens of thousands of executives make the pilgrimage to northwest Arkansas every year to woo Wal-Mart, marshaling whatever arguments, data, samples, and pure persuasive power they have in the hope of an order for their products, or an increase in their current order. Almost no matter what you're selling, the gravitational force of Wal-Mart's 3,811 U.S. "doorways" is irresistible. Very few people fly into Northwest Arkansas Regional Airport thinking about telling Wal-Mart no, or no more.
In 2002, Jim Wier's company, Simplicity, was buying Snapper, a complementary company with a 50-year heritage of making high-quality residential and commercial lawn equipment. Wier had studied his new acquisition enough to conclude that continuing to sell Snapper mowers through Wal-Mart stores was, as he put it, "incompatible with our strategy. And I felt I owed them a visit to tell them why we weren't going to continue to sell to them."
Selling Snapper lawn mowers at Wal-Mart wasn't just incompatible with Snapper's future -- Wier thought it was hazardous to Snapper's health. Snapper is known in the outdoor-equipment business not for huge volume but for quality, reliability, durability. A well-maintained Snapper lawn mower will last decades; many customers buy the mowers as adults because their fathers used them when they were kids. But Snapper lawn mowers are not cheap, any more than a Viking range is cheap. The value isn't in the price, it's in the performance and the longevity.
You can buy a lawn mower at Wal-Mart for $99.96, and depending on the size and location of the store, there are slightly better models for every additional $20 bill you're willing to put down -- priced at $122, $138, $154, $163, and $188. That's six models of lawn mowers below $200. Mind you, in some Wal-Marts you literally cannot see what you are buying; there are no display models, just lawn mowers in huge cardboard boxes.
The least expensive Snapper lawn mower -- a 19-inch push mower with a 5.5-horsepower engine -- sells for $349.99 at full list price. Even finding it discounted to $299, you can buy two or three lawn mowers at Wal-Mart for the cost of a single Snapper.
If you know nothing about maintaining a mower, Wal-Mart has helped make that ignorance irrelevant: At even $138, the lawn mowers at Wal-Mart are cheap enough to be disposable. Use one for a season, and if you can't start it the next spring (Wal-Mart won't help you out with that), put it at the curb and buy another one. That kind of pricing changes not just the economics at the low end of the lawn-mower market, it changes expectations of customers throughout the market. Why would you buy a walk-behind mower from Snapper that costs $519? What could it possibly have to justify spending $300 or $400 more?
That's the question that motivated Jim Wier to stop doing business with Wal-Mart. Wier is too judicious to describe it this way, but he looked into a future of supplying lawn mowers and snow blowers to Wal-Mart and saw a whirlpool of lower prices, collapsing profitability, offshore manufacturing, and the gradual but irresistible corrosion of the very qualities for which Snapper was known. Jim Wier looked into the future and saw a death spiral.
Wier had two things going for him: First, he had another way to get his lawn mowers to customers -- a well-established network of independent lawn-equipment dealers that accounted for 80% of Snapper's sales. And Wier had the courage, the foresight, to take an unblinking view of where his Wal-Mart business was heading -- not in year 3, or year 4, but year 10.
Wier traveled to Bentonville with a firm grasp of the values of Snapper, the dynamics of the lawn-mower business, the needs of the dealers, the needs of the Snapper customer, and the needs of the Wal-Mart customer. He was not dazzled by the tens of millions of dollars' worth of lawn mowers Wal-Mart was already selling for Snapper; he was not deluded about his ability to beat Wal-Mart at its own game, to somehow resist the price pressure. He was not imagining that he could take the sales now and figure out the profits later.
Jim Wier believed that Snapper's health -- indeed, its very long-term survival -- required that it not do business with Wal-Mart.
Every Snapper lawn mower sold anywhere in the world comes from a factory in McDonough, Georgia, a small town 30 minutes southeast of Atlanta. Coils of raw steel arrive on flatbed trucks every day at the old, nondescript building; brand-new fire-engine-red lawn mowers leave every day, loaded in 18-wheelers. The facility looks undistinguished, but it is energetically trying to defy the conventional wisdom about manufacturing in the global economy.
The Snapper factory has had an invigorating decade. Ten years ago, it produced about 40 models of mowers, leaf blowers, and snow blowers; now it makes 145. Today, robots do the welding, lasers cut parts, and computers control the steel-stamping presses. Productivity is three times what it was 10 years ago, and the number of people working here, 650, is half what it was.
Indeed, the productivity of every factory worker is measured "every hour, every day, every month, every year," says Snapper president Shane Sumners, who walks the 10.5-acre factory floor with comfort and familiarity. "And everybody's performance is posted, publicly, every day for everyone to see." It's a lot like Wal-Mart -- which measures the number of items every checkout clerk scans every hour. Some of Snapper's dramatic productivity improvements, in fact, seem to come almost directly from the Wal-Mart playbook. These days, the Snapper factory operates in Wal-Mart time. It must, because it operates in Wal-Mart's ecosystem.
Ten years ago, at about the time Sumners came on board, Snapper had 52 regional distributors. It uses no distributors now -- the company runs four regional warehouses of its own and sells directly to 10,000 independent dealerships. Ten years ago, in part because of the complexity of the middleman distribution system, Snapper carried a huge quantity of inventory. It paid to manufacture and ship thousands of lawn mowers -- worth tens of millions of dollars -- without quite knowing when they would be sold. Now planners come up with an ideal level of inventory for every model, for every region of the country, based on things like historic demand and the weather. The goal is to make sure every customer can get the mower he wants -- while making absolutely the smallest number of lawn mowers.
Production at the Snapper factory is rescheduled every week, according to the pace at which mowers sell. A computer juggles work assignments and balances the various parts of the assembly line. The main manufacturing line for Snapper's entry-level walk-behind mowers -- with 28 people -- was recently charged with producing 265 lawn mowers in an eight-hour shift. The group hit the mark exactly. That's a new lawn mower, from loose parts to sealed box, every 109 seconds. "It's all a matter of seconds," says Sumners.
It's not hard to make a cheap lawn mower. A cheap lawn mower feels flimsy, sounds louder than it has to, and even when new, requires a mysterious, frustrating combination of choke, priming, and pulling to start. The cutting deck of a cheap mower is stamped from thin sheet metal. Making a high-quality lawn mower -- even in 109 seconds -- requires attention to detail and constant improvement, which seems surprising for a machine that doesn't evolve that much.
All Snapper machines, from the simplest walk-behind to the most elaborate riding mower, are painted one color: what Shane Sumners calls "Snapper red." In the factory, the finished chassis of riding mowers coast along slowly, dangling from an overhead conveyor as they approach a 20-foot-long pool of red paint. The conveyor track dips low, and the mowers glide down into the pool and completely disappear beneath the surface, then rise back up, gleaming red, before heading for a pass through a curing oven.
It's not quite as simple as dip and bake, however. Each mower is electrically grounded as it hangs from the overhead conveyor, and a slight positive electrical charge runs through the 16,000-gallon trench of paint. "So the paint is attracted to the metal and builds up on the parts and sticks very effectively and evenly," says Sumners. The process is monitored every hour -- from the speed of the conveyor and the temperature of the ovens to the pH of the paint -- along 115 parameters. "If you control the process," says Sumners, "you will get a good paint job."
Snapper technicians start every riding mower before it leaves the McDonough plant. At the "hot start" station, a man wearing ear protectors squirts gas into the fuel tank and oil into the crankcase, pulls the starter cord, and brings the machine to life. He runs through all the gears, checks speed, engine performance, the mounting of the seat. The engine is given just enough fuel for the "run in." If the mower passes all the tests, the man sucks the oil back out and sends the mower on to be boxed.
As Sumners watches, one of the riding mowers takes two pulls to start, then comes to life with a rough growl. In the blink of an eye, the technician shuts it down. "Did you hear how that sounded?" asks Sumners. "It's not right. That's a bad one." The mower is shunted off to be inspected and properly tuned if possible. "If we didn't," says Sumners, "that mower would have gone to a customer."
The Snapper factory started making riding mowers in 1951. It is unadorned and old, but it is old in the sense of solidity and use. There is nothing tired about it. More significant, there is nothing sentimental about it. This factory isn't here out of some misplaced sense of economic loyalty to U.S. manufacturing. It's here because it makes Snapper-quality lawn mowers at a competitive price.
Snapper's factory hums with discipline and focus and urgency. Even with no products at Wal-Mart, a company like Snapper has to compete psychologically, has to keep the price gap between the big-box lawn mowers and its lawn mowers rational. If it did not, its potential slice of the market would get smaller and smaller.
Sumners has to spur his factory on with the same tirelessness as if it were supplying Wal-Mart -- the efficiency of every factory worker measured every hour of every day -- because Wal-Mart sets the pace, even if you're not working for them.
Jim Wier is 62 years old, with a youthful twinkle, despite a thatch of white hair. He is a solidly built man who dresses casually. He is comfortable with himself. Wier, who until the summer of 2005 ran a group of lawn-equipment businesses that approach half a billion dollars a year in sales, is confident, direct, and unprepossessing. He mows his own lawn. "I don't want to hire a service," he says. "I still love to cut my grass."
Wier is much like Snapper's customers. "When we do surveys of our customers, they like to cut their grass. And they want a good piece of equipment to do it. We're designed to give you the best quality of cut. We have full rollers on the riding mowers, to give that nice striped look on your grass, like on the baseball fields. It makes you feel proud of the home you own. Proud of your lawn. The neighbors walk by, they say, 'Look how good the yard looks.' "
Wier doesn't really think that a $99 lawn mower from Wal-Mart and Snapper's lawn mowers are the same product any more than a cup of 50-cent vending-machine coffee is the same as a Starbucks nonfat venti latte. "We're not obsessed with volume," says Wier. "We're obsessed with having differentiated, high-end, quality products." Wier wants them sold -- he thinks they must be sold -- at a store where the staff is eager to explain the virtues of various models, where they understand the equipment, can teach customers how to use a mower, can service it when something goes wrong. Wier wants customers who want that kind of help -- customers who are unlikely to be happy buying a lawn mower at Wal-Mart, and who might connect a bum experience doing so not with Wal-Mart but with Snapper.
And so in October 2002, with a colleague, Wier kept an appointment with a merchandise vice president for Wal-Mart's outdoor-product category.
"The whole visit to Wal-Mart headquarters is a great experience," says Wier. It really is a pilgrimage to the center of the retail universe. "It's so crowded, you have to drive around, waiting for a parking space, you have to follow someone who is leaving, walking back to their car, and get their spot. Then you go inside this building, you register for your appointment, they give you a badge, and then you wait in the pews with the rest of the peddlers, the guy with the bras draped over his shoulder."
Normally, meetings between Wal-Mart buyers and people from supplier companies take place in the legendary meeting rooms just off the vendor lobby. These cubicles are simple to the point of barren -- a table and four chairs, and 30 minutes to make your case. "It's a little like going to see the principal, really," says Wier.
In this case, Wier says, both he and the Wal-Mart managers "had a feeling that this would be an important meeting." So Wier and his colleague were scheduled to visit the vice president in his office. Sitting on lawn chairs.
"The meeting started with the vice president of the category saying how it was clear that Lowe's was going to build their outdoor power-equipment business with the Cub Cadet brand, and how Home Depot was going to build theirs with John Deere," says Wier. "Wal-Mart wanted to build their outdoor power-equipment business around the Snapper brand. Were we prepared to go large?"
Talk about coming to the table with different agendas. Wier was in Bentonville to pull his mowers from Wal-Mart's stores. The vice president was offering a greater temptation: Let's join hands and go head-to-head against the home-improvement superstores.
Which is when Wier said no.
"As I look at the three years Snapper has been with you," he told the vice president, "every year the price has come down. Every year the content of the product has gone up. We're at a position where, first, it's still priced where it doesn't meet the needs of your clientele. For Wal-Mart, it's still too high-priced. I think you'd agree with that.
"Now, at the price I'm selling to you today, I'm not making any money on it. And if we do what you want next year, I'll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80% of our business is over here with them. And I can't put them at a competitive disadvantage. If I do that, I lose everything. So this just isn't a compatible fit."
The Wal-Mart vice president responded with strategy and argument. Snapper is the sort of high-quality nameplate, like Levi Strauss, that Wal-Mart hopes can ultimately make it more Target-like. He suggested that Snapper find a lower-cost contract manufacturer. He suggested producing a separate, lesser-quality line with the Snapper nameplate just for Wal-Mart. Just like Levi did.
"My response was, we would take a look at that," says Wier. "The reason I gave that response was, it was a legitimate question. In my own mind, I knew where I'd go with that" -- no thanks -- "but at that kind of meeting you at least have to be willing to say, I'll investigate." And that was it. "The tone at the end was, We're not going forward as a supplier."
No lightning bolt struck. Except that Snapper instantly gave up almost 20% of its business. "But when we told the dealers that they would no longer find Snapper in Wal-Mart, they were very pleased with that decision. And I think we got most of that business back by winning the hearts of the dealers."
Snapper was successfully integrated into Simplicity, which in 2004 was itself bought by Briggs & Stratton, the company that makes many of the engines in Snapper and Simplicity mowers. Simplicity and Snapper operate as independent divisions, and Wier remained CEO of both until last summer, when he resigned to join the private equity firm Kohlberg & Co. In McDonough, business is strong. Shane Sumners plans to add a second assembly line for both walk-behind and riding mowers.
One serious hazard to Wier's strategy is that independent lawn-equipment dealers face all the same pressures that have killed, for instance, many independent hardware stores and toy stores. "That is a legitimate question and a legitimate concern," says Wier. "I think we have a part in that outcome. Can Snapper, as a major supplier, continue to supply [the independents] with great product, and a product different than you can buy at Wal-Mart?"
Wier says, "I'm probably pro-Wal-Mart. I'm certainly not anti-Wal-Mart. I believe Wal-Mart has done a great service to the country in many ways. They offer reasonably good product at very good prices, and they've streamlined the entire distribution system. And it may be that along the way, they've driven some people out of business who shouldn't have been driven out of business." Wier wasn't going to let that happen to Snapper.
Wier had determined to lead Snapper to focus on quality, and through quality, on cachet. Not every car is a Honda Accord or a Toyota Camry; there is more than enough business to support Audi and BMW and Lexus. And so it is with lawn mowers, Wier hoped. Still, perhaps the most remarkable thing is that the Wal-Mart effect is so pervasive that it sets the metabolism even of companies that purposefully do no business with Wal-Mart.
And the power and allure of Wal-Mart is such that even Jim Wier, the man who said no to Wal-Mart, a man who knows all the reasons why that was the right decision, has slivers of doubt.
"I could go to my grave, and my tombstone could say, 'Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.'"
Charles Fishman is a Fast Company senior writer and the author of, "The Wal-Mart Effect: How the World's Most Powerful Company Really Works -- And How It's Transforming the American Economy." See www.walmarteffectbook.com for more information.
From THE WAL-MART EFFECT by Charles Fishman. Reprinted by arrangement with The Penguin Press, a member of Penguin Group (USA), Inc. Copyright (c) Charles Fishman, 2006. Charles is a senior writer for Fast Company magazine.
And so Wier, the CEO of lawn-equipment maker Simplicity, dressed in a suit, took a seat on the chaise lounge. "I sat forward, of course, with my legs off to the side. If you've ever sat in a lawn chair, well, they are lower than regular chairs. And I was on the chaise. It was a bit intimidating. It was uncomfortable, and it was going to be an uncomfortable meeting."
It was a Wal-Mart moment that couldn't be scripted, or perhaps even imagined. A vice president responsible for billions of dollars' worth of business in the largest company in history has his visitors sit in mismatched, cast-off lawn chairs that Wal-Mart quite likely never had to pay for.
The vice president had a bigger surprise for Wier, though. Wal-Mart not only wanted to keep selling his lawn mowers, it wanted to sell lots more of them. Wal-Mart wanted to sell mowers nose-to-nose against Home Depot and Lowe's.
"Usually," says Wier, "I don't perspire easily." But perched on the edge of his chaise, "I felt my arms getting drippy."
Wier took a breath and said, "Let me tell you why it doesn't work."
Tens of thousands of executives make the pilgrimage to northwest Arkansas every year to woo Wal-Mart, marshaling whatever arguments, data, samples, and pure persuasive power they have in the hope of an order for their products, or an increase in their current order. Almost no matter what you're selling, the gravitational force of Wal-Mart's 3,811 U.S. "doorways" is irresistible. Very few people fly into Northwest Arkansas Regional Airport thinking about telling Wal-Mart no, or no more.
In 2002, Jim Wier's company, Simplicity, was buying Snapper, a complementary company with a 50-year heritage of making high-quality residential and commercial lawn equipment. Wier had studied his new acquisition enough to conclude that continuing to sell Snapper mowers through Wal-Mart stores was, as he put it, "incompatible with our strategy. And I felt I owed them a visit to tell them why we weren't going to continue to sell to them."
Selling Snapper lawn mowers at Wal-Mart wasn't just incompatible with Snapper's future -- Wier thought it was hazardous to Snapper's health. Snapper is known in the outdoor-equipment business not for huge volume but for quality, reliability, durability. A well-maintained Snapper lawn mower will last decades; many customers buy the mowers as adults because their fathers used them when they were kids. But Snapper lawn mowers are not cheap, any more than a Viking range is cheap. The value isn't in the price, it's in the performance and the longevity.
You can buy a lawn mower at Wal-Mart for $99.96, and depending on the size and location of the store, there are slightly better models for every additional $20 bill you're willing to put down -- priced at $122, $138, $154, $163, and $188. That's six models of lawn mowers below $200. Mind you, in some Wal-Marts you literally cannot see what you are buying; there are no display models, just lawn mowers in huge cardboard boxes.
The least expensive Snapper lawn mower -- a 19-inch push mower with a 5.5-horsepower engine -- sells for $349.99 at full list price. Even finding it discounted to $299, you can buy two or three lawn mowers at Wal-Mart for the cost of a single Snapper.
If you know nothing about maintaining a mower, Wal-Mart has helped make that ignorance irrelevant: At even $138, the lawn mowers at Wal-Mart are cheap enough to be disposable. Use one for a season, and if you can't start it the next spring (Wal-Mart won't help you out with that), put it at the curb and buy another one. That kind of pricing changes not just the economics at the low end of the lawn-mower market, it changes expectations of customers throughout the market. Why would you buy a walk-behind mower from Snapper that costs $519? What could it possibly have to justify spending $300 or $400 more?
That's the question that motivated Jim Wier to stop doing business with Wal-Mart. Wier is too judicious to describe it this way, but he looked into a future of supplying lawn mowers and snow blowers to Wal-Mart and saw a whirlpool of lower prices, collapsing profitability, offshore manufacturing, and the gradual but irresistible corrosion of the very qualities for which Snapper was known. Jim Wier looked into the future and saw a death spiral.
Wier had two things going for him: First, he had another way to get his lawn mowers to customers -- a well-established network of independent lawn-equipment dealers that accounted for 80% of Snapper's sales. And Wier had the courage, the foresight, to take an unblinking view of where his Wal-Mart business was heading -- not in year 3, or year 4, but year 10.
Wier traveled to Bentonville with a firm grasp of the values of Snapper, the dynamics of the lawn-mower business, the needs of the dealers, the needs of the Snapper customer, and the needs of the Wal-Mart customer. He was not dazzled by the tens of millions of dollars' worth of lawn mowers Wal-Mart was already selling for Snapper; he was not deluded about his ability to beat Wal-Mart at its own game, to somehow resist the price pressure. He was not imagining that he could take the sales now and figure out the profits later.
Jim Wier believed that Snapper's health -- indeed, its very long-term survival -- required that it not do business with Wal-Mart.
Every Snapper lawn mower sold anywhere in the world comes from a factory in McDonough, Georgia, a small town 30 minutes southeast of Atlanta. Coils of raw steel arrive on flatbed trucks every day at the old, nondescript building; brand-new fire-engine-red lawn mowers leave every day, loaded in 18-wheelers. The facility looks undistinguished, but it is energetically trying to defy the conventional wisdom about manufacturing in the global economy.
The Snapper factory has had an invigorating decade. Ten years ago, it produced about 40 models of mowers, leaf blowers, and snow blowers; now it makes 145. Today, robots do the welding, lasers cut parts, and computers control the steel-stamping presses. Productivity is three times what it was 10 years ago, and the number of people working here, 650, is half what it was.
Indeed, the productivity of every factory worker is measured "every hour, every day, every month, every year," says Snapper president Shane Sumners, who walks the 10.5-acre factory floor with comfort and familiarity. "And everybody's performance is posted, publicly, every day for everyone to see." It's a lot like Wal-Mart -- which measures the number of items every checkout clerk scans every hour. Some of Snapper's dramatic productivity improvements, in fact, seem to come almost directly from the Wal-Mart playbook. These days, the Snapper factory operates in Wal-Mart time. It must, because it operates in Wal-Mart's ecosystem.
Ten years ago, at about the time Sumners came on board, Snapper had 52 regional distributors. It uses no distributors now -- the company runs four regional warehouses of its own and sells directly to 10,000 independent dealerships. Ten years ago, in part because of the complexity of the middleman distribution system, Snapper carried a huge quantity of inventory. It paid to manufacture and ship thousands of lawn mowers -- worth tens of millions of dollars -- without quite knowing when they would be sold. Now planners come up with an ideal level of inventory for every model, for every region of the country, based on things like historic demand and the weather. The goal is to make sure every customer can get the mower he wants -- while making absolutely the smallest number of lawn mowers.
Production at the Snapper factory is rescheduled every week, according to the pace at which mowers sell. A computer juggles work assignments and balances the various parts of the assembly line. The main manufacturing line for Snapper's entry-level walk-behind mowers -- with 28 people -- was recently charged with producing 265 lawn mowers in an eight-hour shift. The group hit the mark exactly. That's a new lawn mower, from loose parts to sealed box, every 109 seconds. "It's all a matter of seconds," says Sumners.
It's not hard to make a cheap lawn mower. A cheap lawn mower feels flimsy, sounds louder than it has to, and even when new, requires a mysterious, frustrating combination of choke, priming, and pulling to start. The cutting deck of a cheap mower is stamped from thin sheet metal. Making a high-quality lawn mower -- even in 109 seconds -- requires attention to detail and constant improvement, which seems surprising for a machine that doesn't evolve that much.
All Snapper machines, from the simplest walk-behind to the most elaborate riding mower, are painted one color: what Shane Sumners calls "Snapper red." In the factory, the finished chassis of riding mowers coast along slowly, dangling from an overhead conveyor as they approach a 20-foot-long pool of red paint. The conveyor track dips low, and the mowers glide down into the pool and completely disappear beneath the surface, then rise back up, gleaming red, before heading for a pass through a curing oven.
It's not quite as simple as dip and bake, however. Each mower is electrically grounded as it hangs from the overhead conveyor, and a slight positive electrical charge runs through the 16,000-gallon trench of paint. "So the paint is attracted to the metal and builds up on the parts and sticks very effectively and evenly," says Sumners. The process is monitored every hour -- from the speed of the conveyor and the temperature of the ovens to the pH of the paint -- along 115 parameters. "If you control the process," says Sumners, "you will get a good paint job."
Snapper technicians start every riding mower before it leaves the McDonough plant. At the "hot start" station, a man wearing ear protectors squirts gas into the fuel tank and oil into the crankcase, pulls the starter cord, and brings the machine to life. He runs through all the gears, checks speed, engine performance, the mounting of the seat. The engine is given just enough fuel for the "run in." If the mower passes all the tests, the man sucks the oil back out and sends the mower on to be boxed.
As Sumners watches, one of the riding mowers takes two pulls to start, then comes to life with a rough growl. In the blink of an eye, the technician shuts it down. "Did you hear how that sounded?" asks Sumners. "It's not right. That's a bad one." The mower is shunted off to be inspected and properly tuned if possible. "If we didn't," says Sumners, "that mower would have gone to a customer."
The Snapper factory started making riding mowers in 1951. It is unadorned and old, but it is old in the sense of solidity and use. There is nothing tired about it. More significant, there is nothing sentimental about it. This factory isn't here out of some misplaced sense of economic loyalty to U.S. manufacturing. It's here because it makes Snapper-quality lawn mowers at a competitive price.
Snapper's factory hums with discipline and focus and urgency. Even with no products at Wal-Mart, a company like Snapper has to compete psychologically, has to keep the price gap between the big-box lawn mowers and its lawn mowers rational. If it did not, its potential slice of the market would get smaller and smaller.
Sumners has to spur his factory on with the same tirelessness as if it were supplying Wal-Mart -- the efficiency of every factory worker measured every hour of every day -- because Wal-Mart sets the pace, even if you're not working for them.
Jim Wier is 62 years old, with a youthful twinkle, despite a thatch of white hair. He is a solidly built man who dresses casually. He is comfortable with himself. Wier, who until the summer of 2005 ran a group of lawn-equipment businesses that approach half a billion dollars a year in sales, is confident, direct, and unprepossessing. He mows his own lawn. "I don't want to hire a service," he says. "I still love to cut my grass."
Wier is much like Snapper's customers. "When we do surveys of our customers, they like to cut their grass. And they want a good piece of equipment to do it. We're designed to give you the best quality of cut. We have full rollers on the riding mowers, to give that nice striped look on your grass, like on the baseball fields. It makes you feel proud of the home you own. Proud of your lawn. The neighbors walk by, they say, 'Look how good the yard looks.' "
Wier doesn't really think that a $99 lawn mower from Wal-Mart and Snapper's lawn mowers are the same product any more than a cup of 50-cent vending-machine coffee is the same as a Starbucks nonfat venti latte. "We're not obsessed with volume," says Wier. "We're obsessed with having differentiated, high-end, quality products." Wier wants them sold -- he thinks they must be sold -- at a store where the staff is eager to explain the virtues of various models, where they understand the equipment, can teach customers how to use a mower, can service it when something goes wrong. Wier wants customers who want that kind of help -- customers who are unlikely to be happy buying a lawn mower at Wal-Mart, and who might connect a bum experience doing so not with Wal-Mart but with Snapper.
And so in October 2002, with a colleague, Wier kept an appointment with a merchandise vice president for Wal-Mart's outdoor-product category.
"The whole visit to Wal-Mart headquarters is a great experience," says Wier. It really is a pilgrimage to the center of the retail universe. "It's so crowded, you have to drive around, waiting for a parking space, you have to follow someone who is leaving, walking back to their car, and get their spot. Then you go inside this building, you register for your appointment, they give you a badge, and then you wait in the pews with the rest of the peddlers, the guy with the bras draped over his shoulder."
Normally, meetings between Wal-Mart buyers and people from supplier companies take place in the legendary meeting rooms just off the vendor lobby. These cubicles are simple to the point of barren -- a table and four chairs, and 30 minutes to make your case. "It's a little like going to see the principal, really," says Wier.
In this case, Wier says, both he and the Wal-Mart managers "had a feeling that this would be an important meeting." So Wier and his colleague were scheduled to visit the vice president in his office. Sitting on lawn chairs.
"The meeting started with the vice president of the category saying how it was clear that Lowe's was going to build their outdoor power-equipment business with the Cub Cadet brand, and how Home Depot was going to build theirs with John Deere," says Wier. "Wal-Mart wanted to build their outdoor power-equipment business around the Snapper brand. Were we prepared to go large?"
Talk about coming to the table with different agendas. Wier was in Bentonville to pull his mowers from Wal-Mart's stores. The vice president was offering a greater temptation: Let's join hands and go head-to-head against the home-improvement superstores.
Which is when Wier said no.
"As I look at the three years Snapper has been with you," he told the vice president, "every year the price has come down. Every year the content of the product has gone up. We're at a position where, first, it's still priced where it doesn't meet the needs of your clientele. For Wal-Mart, it's still too high-priced. I think you'd agree with that.
"Now, at the price I'm selling to you today, I'm not making any money on it. And if we do what you want next year, I'll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80% of our business is over here with them. And I can't put them at a competitive disadvantage. If I do that, I lose everything. So this just isn't a compatible fit."
The Wal-Mart vice president responded with strategy and argument. Snapper is the sort of high-quality nameplate, like Levi Strauss, that Wal-Mart hopes can ultimately make it more Target-like. He suggested that Snapper find a lower-cost contract manufacturer. He suggested producing a separate, lesser-quality line with the Snapper nameplate just for Wal-Mart. Just like Levi did.
"My response was, we would take a look at that," says Wier. "The reason I gave that response was, it was a legitimate question. In my own mind, I knew where I'd go with that" -- no thanks -- "but at that kind of meeting you at least have to be willing to say, I'll investigate." And that was it. "The tone at the end was, We're not going forward as a supplier."
No lightning bolt struck. Except that Snapper instantly gave up almost 20% of its business. "But when we told the dealers that they would no longer find Snapper in Wal-Mart, they were very pleased with that decision. And I think we got most of that business back by winning the hearts of the dealers."
Snapper was successfully integrated into Simplicity, which in 2004 was itself bought by Briggs & Stratton, the company that makes many of the engines in Snapper and Simplicity mowers. Simplicity and Snapper operate as independent divisions, and Wier remained CEO of both until last summer, when he resigned to join the private equity firm Kohlberg & Co. In McDonough, business is strong. Shane Sumners plans to add a second assembly line for both walk-behind and riding mowers.
One serious hazard to Wier's strategy is that independent lawn-equipment dealers face all the same pressures that have killed, for instance, many independent hardware stores and toy stores. "That is a legitimate question and a legitimate concern," says Wier. "I think we have a part in that outcome. Can Snapper, as a major supplier, continue to supply [the independents] with great product, and a product different than you can buy at Wal-Mart?"
Wier says, "I'm probably pro-Wal-Mart. I'm certainly not anti-Wal-Mart. I believe Wal-Mart has done a great service to the country in many ways. They offer reasonably good product at very good prices, and they've streamlined the entire distribution system. And it may be that along the way, they've driven some people out of business who shouldn't have been driven out of business." Wier wasn't going to let that happen to Snapper.
Wier had determined to lead Snapper to focus on quality, and through quality, on cachet. Not every car is a Honda Accord or a Toyota Camry; there is more than enough business to support Audi and BMW and Lexus. And so it is with lawn mowers, Wier hoped. Still, perhaps the most remarkable thing is that the Wal-Mart effect is so pervasive that it sets the metabolism even of companies that purposefully do no business with Wal-Mart.
And the power and allure of Wal-Mart is such that even Jim Wier, the man who said no to Wal-Mart, a man who knows all the reasons why that was the right decision, has slivers of doubt.
"I could go to my grave, and my tombstone could say, 'Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.'"
Charles Fishman is a Fast Company senior writer and the author of, "The Wal-Mart Effect: How the World's Most Powerful Company Really Works -- And How It's Transforming the American Economy." See www.walmarteffectbook.com for more information.
From THE WAL-MART EFFECT by Charles Fishman. Reprinted by arrangement with The Penguin Press, a member of Penguin Group (USA), Inc. Copyright (c) Charles Fishman, 2006. Charles is a senior writer for Fast Company magazine.
Walmart sells cheap crap - if your company does not sell cheap crap, you can't sell at walmart.
Oh - and the quote: same product any more than a cup of 50-cent vending-machine coffee is the same as a Starbucks nonfat venti latte.
Dreadful analogy - the 50-cent vending machine coffee is crap, the $3.50 starbucks latte is crap.
My pics.
The decision not to do business with Walmart is not only an issue of branding, but an issue of scalability. With your mowers in the hands of 20% more consumers, more warranties have to be honored forcing Snapper to increase 'support' for their machines.
And if it turns out that the lower end users have a propensity to be pickier about the product, requesting support, service, and such, the returns get even worse.
Jim http://www.runfatboy.net/
I usually enjoy the book reviews here, but this isn't that, this just appears to be an ad.
Company A decides to target a higher-margin, lower-volume segment of the market v/s a lower-margin, higher-volume segment. I didn't need to read a 1000-word essay telling me about it. Companies do this all the time and it's not news. Sounds more like a publicity stunt for Snapper and the book author than anything else.
Mmmm.. Donuts
I mean, really, this is hardly the earth-shattering revelation I was expecting. Walmart sells cheap stuff. Company wants to sell expensive stuff. Company decides not to go with Walmart. There weren't any death threats or dirty tricks, just some calm discussion and reasonable logic.
I don't see why it's news that branding and quality are important. Even the folks running Walmart are not so dense - they just like to feed off that lower part of the retail sector. Historical note: the United States got its start in the textile industry not by producing higher quality stuff than you'd find in, say, Britain, but by producing lower quality stuff that was "good enough", but much cheaper. America got a reputation for cheap, lousy material - but then again, everyone bought it, even when better-but-more-expensive local material was available
-Erwos
Plausible conjecture should not be misrepresented as proof positive.
...so you keep your precious Snapper brand name for your quality products and start up some new brand name for your low end crap you sell at Wal-Mart.
Because Walmart didn't want his production capabilities. They wanted his brand.
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It makes the company look good, look smart, look loyal to its customers, and so forth.
And that's a problem how? In the age where most companies are willing to hamstring their customers for the WalMart fast buck it's good to know that there is somewhere that does play like that.
Dedicated Cthulhu Cultist since 4523 BC.
in that, despite the cult like devotion of their followers, they're are merely human inventions, that can and will fail.
"Wier doesn't really think that a $99 lawn mower from Wal-Mart and Snapper's lawn mowers are the same product any more than a cup of 50-cent vending-machine coffee is the same as a Starbucks nonfat venti latte."
Yeah, one of each pair is massively overpriced for what you get. Snapper makes a decent mower, but similar quality mowers can be found at far cheaper prices.
I've boycotted them 100% now...its not hard and it really isn't a $$ issue. Anyone with half a brain will realize that the stuff at Walmart isnt inexpensive, it is just cheap. There are few things in their stores that I could not get somewhere else for cheaper, often much cheaper, or a better product for a comparable prices. The only thing walmart had was its convenience...having all that shit in one place can save trips, though I found you just ended up buying stuff you didn't need.
You haven't described Wal-Mart as much as most capitalists today. The goal of every organization seems to be solely to drive down prices. Wal_Mart has just grown to the point where it's most effective at it.
The problem isn't walmart per se as much as how we've constructed the system. It focusses solely on a very small part of the complex system known as an economy, an individual corporation's costs. It rewards companies that do this - Wal-Mart, Dell, etc. The problem is this isn't good for the long term health of the overall system.
Henry Ford years ago knew that the best way to make his cars sell was to have overall system health. The efficiencies of the assembly line allowed him to raise wages, as he thought having people able to afford his cars was a good thing. The Snapper guy saw the same, the long term health of his company, and made a business decision that he felt was best for longer term health. I wish him well, he doesn't have the advantages that Ford did at his time, and lots of disadvantages.
Parasite? Landlord is more like it.
This reminded of something I learned 20 years ago when my college made me learn economics: Ricardo's Theory of Rent.
Suppose you are a landlord with two plots of land suitable for growing corn. A, however, products more corn per acre than B. Do you charge the same rent? Of course not. You charge more for A of course. But how much more? Ricardo's argument supposedly showed that if A produced a hundred bushels a year more than B, market forces would place the rent of A at price higher than B by the amount of profit in a hundred bushels of corn.
Get it? Any excess productivity due to the land goes to the landlord.
I don't see why his argument doesn't apply equally to Wal-Mart. If Wal-Mart's access to customers is so much greater, then the differential profit is largely if not entirely theirs.
Why would you do business with them? Well, perhaps you're especially efficient at being a large scale sharecropper. Your marginal cost for producing an 100 additional bushels of corn is less than the difference in rent, so you still profit more by renting A. The fellow renting B, however, may be at or above his capacity. Imagine he makes fancy "artisinal" corn to supply high end restaurants. He could in theory produce more corn on A, but it would cost him more than the difference in rent.
Clearly, a company like Snapper is no more suited for supplying Wal-Mart than a Japanese Kobe beef farmer can supply McDonalds. And that wasn't what Wal-Mart wanted. Wal-Mart was offering him a chance to liquidate the value in his company's brand, turning future steady profits into quick cash. If this had been a family business with sons who didn't want to take it over, it would have been a sweet deal. However, as he intended to continue running the business, it was not in his interest to undermine his high end product with cheap knock-offs carrying the same nameplate.
It's not exactly a genius move.
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A lawn mower is for the most part, an engine. B&S makes engines for most of the mowers out there (Snapper included). B&S engines are also on Murrays - the $138 mower sold at Walmart.
I bought one of these mowers 5 years ago... and it still runs fine.
Briggs and Stratton is the real variable here, not Snapper.
I am very small, utmostly microscopic.
I'm... blown away by this advertisement for Snapper. What makes this a SlashDot worthy article? I used to be a professional writer. I pitched stories on two technology related startups (who will remain nameless so as to respect the editor's right of refusal) to SlashDot that were very relevant. The first was about an open iTunes publisher who puts your music up for sale for a flat fee (ties in with digital music rights, open source). The second was a new web based real estate company (that I'm the CEO of, but they knew that) built on 100 percent open source software, promoting affordable housing by taking a team approach with real estate purchases. Now I'm fine with these kinds of stories being turned down, if SlashDot's policy is to avoid anything that might even be considered free advertising. They'll have to pass on some very relevant pieces, but that's the price you pay. Sure, a reasonable policy. But after seeing this, I have no idea what to think. Maybe Jeff just loves their products. Maybe he liked the writing. We may never know. All I can say is: This piece was an advertisement, pure and simple.
Bill Ricardi - Jigsale LLP
Henry Ford's context for those amazing wages was that he was the first, or one of the first, mass production automobile manufacturers, had little or no competition, and could afford to not sweat the salaries in order to hire the best workers. No one ever mentions that, they make him out to be some magnanimous altruistic nice guy who liked paying his workers fairly. He was not. He was just as cold blooded as any factory owner and later proved it when he had competition.
Infuriate left and right
But not all companies are like that. I think people tend to overfocus on the companies that screw their employees and forget there are a lot that don't. In the category of competition to Wal Mart there's Costco. They are a discount sotre, big warehouse large volume and all that. They are profitable, to the tune of $1 billion per year real profit (like $6.6 billion gross profit), $3 billion in the bank, less than a billion in debt, all in all a solid, profitable corp. None the less they pay their employess very well, to the tune of $15/hour, they get good benefits, etc.
They don't make as much as Walmart does, but then they aren't as big. Also Walmart has a great deal of outstanding debt, about 70% of their total equity, whereas Costco could pay their entire debt, if it was to their advantage to do so.
It's perfectly possible for companies to thrive and not be cutthroats like Walmart. Will they be as big? Maybe not, but who cares? There is room in the market for a big guy who's all about cutting things to the minimum as well as others that pitch a little higher class.
Walmart's "low prices" aren't some magical field that just suck everyone in. I personally don't care for their stores and the merchandise they choose to stock. So I don't shop there, I shop at Costco instead for the most part. Works just fine. It's not like Walmart is charging 10% of what their competitors do or anything. Sure they are probably a little cheaper, but not enough I have to care.
Why should the employer pay for health insurance? Where is this written? Should he pay your car insurance too?
Look people, Wal-Mart provides poor people with low prices, so they don't need as much money to live on. So Wal-Mart also "subsidizes" society by making the cost of living lower.
Wal Mart drives prices lower and lower, forcing suppliers to move their production offshore. This means that we're losing manufacturing capability in this country, and we're losing the manufacturing jobs.
Good, if other countries can do it cheaper, better for all involved. Besides, the US should be moving to a service-providing country - they have the highest per-capita incomes anyway. Why is /. so socialist?
Slashdot "libertarians": Small government for me, big government for those I disagree with. -1, I disagree with you
Actually, what you're saying is, in fact, probably true. If your goal was to insure everyone in the country at the lowest rate possible, then the most efficient way to do it would be to only have one giant insurance company, and one risk pool.
However this ignores several things. First, and what I think is most important, is by eliminating all competition in the insurance industry, you would remove any impetus to become more efficient. Such a company would probably become hideously bloated and turn into a giant cash sink, employ many times the number of people it actually needed to operate, and would be beholden to basically nobody. Since there wouldn't be any alternatives for customers to switch to, their level of service could also deteriorate to rock-bottom.
The argument you're making is the classic argument for centralization in an economy. "Hey, everyone wants to have a car -- why don't we just make one really big car factory? It'll be really efficient." True, but not everyone wants the same car, and even if they did, eliminating the competition in the marketplace to build better cars would probably over time eliminate the advantage of centralization.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
So dont buy the $30 P.o.S. nobody is forcing you. You can buy whatever dvd player you want, where ever you want.
Just remember that sometimes those P.o.S. players can play all sorts of file formats, and have hacking abilities. Apex anyone?
The $150 player may not even play DVD+Rs or DVD-Rs. God forbid RWs.
To be completely accurate; the supermarket-chain (Albert Hein) subpoena'ed the 'cake'-maker after the latter declined to deliver its 'cakes' to the former.
Ah, must have been a contract dispute, then. That makes sense.
To the other poster, re: refusal to deal. Usually that only comes up if there some sort of relationship between the parties involved. For instance, if Wholesaler A refused to sell goods to Retailer X while selling to Retailer Y, who is a subsidiary of Wholesaler A or its parent company.
Real world example: I owned an online game store years ago (lost in the divorce, small price). This was around the time when Games Workshop started refusing to sell to online retailers, but still sold through their own mail order and online store. I casually mentioned the fact that it looked like they were trying to start a monopoly to my account rep one day, and never heard anything after that about not being able to buy product from them.
God invented whiskey so the Irish would not rule the world.
I, and many peple I know, will spend more money in a local owned shop, then any chain.
Twice as much? no, but then I have never seen any chain have the same item for half the price as a mom and pop. Almost always within 20-0% depending on the level of item cost. The more expensive type of item, the less difference there is.
I don't go to wal-mart. I have known people who have been in management, and the stories they tell are amazing. The red lining books, telling companies how to operate once they become dependent on WAL-Mart sales, getting a company to make a cheap version of it's product, then using it against that same company.
Yes, business want to make money, but that does not oblidge them to behave poorly.
The Kruger Dunning explains most post on
I have to say, you're just simply wrong...
o us_Good_For_Business
The problem is that the idealists are in the minority, while the shallow whiners who will do anything to save a buck are the majority.
Personally, I haven't gone in to a walmart in several years, even though it's the closest store to me. Personally, I'm happy to pay twice as much if it means I don't have to dig through piles of junk strewn around the store, don't get treated like cattle, and don't have to wait in absouletely massively long lines, because they don't want to open another register.
What's more, paying twice as much, elsewhere, usually puts you out ahead... Instead of getting cheap crap at Walmart, you can get decent-quality crap elsewhere, which will be better from day 1, and last a lot longer as well.
I think the real of Walmart becomes most obvious when you compare Sam's Club with Costco:
http://gnn.tv/articles/239/The_Wal_Mart_Myth
http://shogo.gnn.tv/headlines/3846/Is_Being_Gener
Slashdot gets worse every day... Pipedot: News for nerds, without the corporate slant
It saddens me that we Arkansans/Arkansawyers are so equated to Wal*Mart. Though I can't think of anything better to be associated with.
All comments are properties and trademarks of the voices in my head. Not like I'm gonna claim them.
Is anyone else bothered by the fact that the U.S. is borrowing money to buy products from foreign countries with unemployment checks?
Anyone else bothered by the fact that entire towns are being closed because Wal-Mart says "your product is too expensive?"
Can anyone explain what the fuck "your product is too expensive" has to do with the free market? Isn't "too expensive" the customer's decision?
Anyone bothered by the fact of both record budget and trade deficits while 50% of working-age adults are not employed full-time?
Or is everyone just fine with their neighbors being thrown out of work while they rack up another five figures on the 28% credit card for a plasma TV?
Can anyone tell me what "circling the bowl" means?
This isn't about low low prices. This is about low low standard of living. It sucks and it's getting worse.
Business isn't willing to pay for products, innovation and careers, so we get brands, mortgage commercials and layoffs.
Employers should have no connection with the health system and neither should individuals. The best system, one that is practised in Canada, Cuba, almost all of Europe and tons of other countries is a government supplied, universal health care. Everybody gets good service and everybody pays equally according to their means. It's about basic human dignity and support of your fellow man. As soon as money gets involved it's survival of the richest.
How many millions did buisnesses kill in the twentyth century? Far fewer then governments.
We still have'nt found a good way to select leaders. All that is apparent is that anybody who wants to lead should not be allowed to. I'm for selecting the president and congresscriters by lottery (of actual voters).
John McAfee 'It was like that time I hired that Bangkok prostitute; to do my taxes, while I fucked my accountant'
What you need is incentives to keep costs under control.
Medicare keeps medical costs under control better than any private insurance company. The government uses the exact same mechanism as the private carriers -- they negotiate specific rates they will reimbuse for a procedure. The only difference is that the government doesn't also need marketing expenses and profit, which takes another 20-50% out of the actual medical care provided by private insurers.
Get a job in a hospital in the US sometime, you'll see that medicare and private insurance operate almost exactly the same, the only difference being that medicare doesn't waste as much money on "other stuff". People complain about government bureaucracy, but Medicare can be a downright easy process compared to most private insurers if you're doing anything more complicated than getting a wart removed.
Otherwise you will keep the costs under control by rationing care like in Canada and England. That's just the historic record.
Health care is always rationed, and it is rationed more by private companies than it is by US government health insurance. Insurers do everything possible to keep you from ever actually getting expensive care. Dealing with Medicare or the Veteran's Administration isn't always convenient, but there is no deliberate hurdle-jumping placed in your way as there is with private care. There are no claims processors looking for excuses to deny coverage so that you're stuck with half a needed treatment and a hundred grand of debt if you want to continue.
People do shop for health care, you're just not in the right age group to notice yet. What do you think old folks talk about (their kids, grandkids and their health/doctors).
I'm not in the right age group as a buyer, but I did work in public/private healthcare for the last decade so I have a more than passing acquantaince with the process. Old folks talk about care, but only the wealthy ones can actually afford to change providers. If you've got a solid retirement savings that covers long-term care, that's great, but that covers maybe 5% of the health care customers in the USA, and they aren't the ones anybody is concerned about.
Many insured people don't get their checkups on time.
Denial and other human foibles are certainly factors, but when it comes to private insurance you also have to realize that people are often genuinely scared of going to the doctor if they think something is wrong. If they find out they are unhealthy, they could lose their job or insurance, because now they are a "risk". God forbid you discover you have diabetes or another chronic but livable condition -- your premiums will become crazy (or you will be outright uninsurable) if you pay for your own coverage, or you will become a huge liability to your employer if you don't.
We've put people in a lose-lose situation where it is BETTER for them to willfully ignore health problems as long as possible, all because we refuse to accept that it makes no sense to make health insurance a market commodity. Nobody can do without it, everybody needs it, and if you tie it to emplyment, all it does is put people's jobs in jeopardy when they do, inevitably, get sick.
It reminds me of the old joke about democracy -- of course government health care is a horrible, horrible idea. But it is still better than all the alternatives.
In theory, everything you say is right. I support the free market, believe it comes up with the best solutions through competition, and find government sluggishness to be incapable of meeting the changing landscape of needs. Unfortunately when it comes to health insurance, for many reasons theory and reality part ways and the free market has somehow managed to provide worse care at higher cost while not even being able to cover those most in need of the service!
Recursive: Adj. See Recursive.