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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.
A similar thing happened a year ago in the Netherlands, where a Dutch 'cake'-maker* (for those who know Dutch: ontbijtkoek)
n ents/financien/rtlz/2005/02_februari/02-peijnenbur g_albert_heijn_supermarktoorlog_koek_uit_schap.xml
actually went to court so that they wouldn't be obliged to sell to a certain supermarket** anymore... (By the way, they won!)
Roel
* Peijnenburg was the 'cake'-maker;
** Albert Hein was the supermarket store.
Link in dutch:
http://www.rtl.nl/(/financien/rtlz/nieuws/)/compo
And this guy said "YES!" to Walmart. Well, for 41 hours at least.
They have created a vicious cycle that makes it so that they drive down the profits of domestic manufacturers, which sends the good jobs out of the country, and then they sell the cheap, Chinese-made crap to the people who lost their job because now it's all they can afford. Eventually, the Wal-Martification of the economy will leave us on the brink of disaster because all of our real manufacturing will be outsourced.
What this guy did that was so smart was to recognize that at the end of the day, there is only economic destruction to be had from placing sales numbers and short term profits on a pedastal. Most of Wal-Mart's suppliers would do well to follow in his foot steps and reach a gentleman's agreement to collectively tell Wally World to agree to their terms or fuck off.
But wait... they can't do that. That'd be price colluding, even though it would actually benefit the public if the makers of kitchen supplies collectively pulled out of Wal-Mart, for example. Wal-Mart isn't that profitable. They make take in $220B a year, but last I saw they only make about $7B. You know what smart people call that, considering how many stores that profit is spread over? A house of cards. All it would take would be 1 or 2 years of a concerted effort by their suppliers to revolt to bring Wal-Mart to its knees.
http://www.cnn.com/2006/US/03/29/walmat.spring.bre ak.ap/index.html
DES MOINES, Iowa (AP) -- For spring break, some college students set out for sun-drenched beaches or cheap European cities. Skyler Bartels headed for the local Wal-Mart. Bartels, 20, an aspiring writer and Drake University sophomore, thought he'd spend a week in a Wal-Mart as a test of endurance, using it as the premise for a magazine article. His college adviser liked the idea.
For 41 hours, Bartels wandered the aisles of a Wal-Mart Supercenter in Windsor Heights that's open 24 hours a day. He checked out shoppers, read magazines, watched movies on the DVD display and played video games.
Other shoppers and employees didn't pay much attention until the end of his stay, he said, when it appeared some store greeters began to take notice -- pointing at him and whispering.
A shift manager approached him and asked him if he was finding everything he needed.
"He said, 'Didn't I see you over by the magazines, like, five hours ago?' I told him, 'Maybe,"' Bartels said.
This guy lived at Wal-Mart during his Spring Break. I heard Des Moines can be boring at times, but come on now, whatever happened to exploring the great outdoors?
He who knows best knows how little he knows. - Thomas Jefferson
And if you RTFA, companies can (and do) give lesser quality products under the same label to Wal-Mart.
IIRC, the same is true of some of the stuff at Best Buy as well.
The problem is that Wal-Mart wants cheap lawnmowers with a prestige name on them. Wal-Mart doesn't care if the products are the same quality as what are sold at higher priced dealers, they just want mowers that have shiny bells and whistles and a prestige name brand. I used to have a Snapper lawn mower, it really was a good as the review made Snapper sound. I had the mower for five years and sold it for nearly what I paid for it.
Dreadful analogy - the 50-cent vending machine coffee is crap, the $3.50 starbucks latte is crap.
Excellent analogy. I'd rather have 7 cups of generic coffee than 1 cup of super expensive coffee that tastes a little better than the generic.
I shop at WalMart. For the basic everyday items (food, toiletries, etc.) generic items at decent prices. However for something that is a long-term investment - computers, furniture, clothing, etc - we go for quality. Its a balance.
This guy is nothing new. I read the article in Fast Company a few months ago. He wasn't willing to bend and neither was Walmart, so the deal was cut off. Deals are called off all the time...
As someone who spent one summer installing security cameras in a Wal-mart (so they could more carefully watch their cashiers) and assembling lawn-mowers etc. for displays and for customers who paid for that option, I can confirm that the quality of the machines they sell is abysmal. It was not at all unusual to go through three sets of parts to get enough properly made parts to assemble one lawn mower. I wouldn't accept one as a gift.
I seem to remember that, in the early days, iPods weren't purchasable anywhere except directly from Apple. Partially this was because they weren't in demand yet, and eventually it became a matter of Apple refusing to discount its products for anybody. The price you paid for a new iPod (or any new Apple product) at Apple's stores is as low as the price you paid anywhere else.
As iPods became more and more popular, it became painfully obvious that Wal-Mart was the last major retailer not to sell them. And, of course, this is because Wal-Mart's policy is to price anything it sells lower than all of its competitors.
So Wal-Mart had a problem: they needed to sell these iconic iPods, but Apple wouldn't let them sell it at a lower price. They'd be eroding their own business, but more importantly, they'd be losing a lot of money on what Apple insisted should be a quality product worth a higher price.
Eventually the two came to some kind of compromise, because you can buy a new iPod Nano at the Apple Store for $149.00, or at Wal-Mart for... $147.88. No matter what iPod you want to buy, Wal-Mart will sell it to you for precisely $1.12 less than Apple. And I'm assuming that Wal-Mart eats that loss themselves in the hopes of selling iPod accessories to you while you're in the store.
Capitalism is capitalism, and I don't begrudge Wal-Mart for the quite successful strategy it uses. But let's face it: for the most part, you get what you pay for. I'd much rather keep enjoying the $150 DVD player I have in my family room than some $30 P.o.S. from an off-brand Chinese manufacturer who only sells it to Wal-Mart because the remote control is incomprehensible and the components aren't expected to last a year.
Where I grew up (very small town, extremely isolated in the middle of nowhere), the local stores could gouge you stupid because it just wasn't worth a 90 minute drive to the nearest other town for better prices on groceries, or a five hour drive for better prices on appliances to the nearest "big city". Granted being in the middle of nowhere meant that the local stores had to contend with high supplier costs, but somehow $8 for 2 litres of Pepsi still seems excessive. The owners were the first to cheerfully admit that they were getting filthy rich off what amounted to a monopoly in this one-horse town.
Then along came Walmart in the next town over. Suddenly the local outfits found themselves having to be competitive. It was still a 90 minute drive so they could charge a slight premium for convenience, but they couldn't get away with the markups they used to enjoy. Today the local grocery store still enjoys a monopoly of sorts in the town, and was able to open a brand new megastore. They just can't charge whatever they feel like anymore.
I'm not saying Walmart's a saint, I'm well aware of the fact that they aren't. I'm just suggesting that it's not always the bad guy, nor is the local non-chain always the good guy. Ok, let the outraged flames commence. :)
Likewise... and I haven't really missed it. I KNOW I am getting better quality stuff from other plaes. In fact, I can't recall the last time I went to Wal-Mart and went in. I was with a friend the other day who just wanted to stop in (during lunch) and I said I'd wait in the car. It eventually lead to a discussion about Wal-Mart and now they don't shop there anymore.
Waking up one customer at a time since....
"If you are on fire you can just stop, drop, and roll. If you fall into Lava you are just dead." - my 5yr old daughter
every single problem people have with walmart is overcome with one salient observation: walmart is cheap
this observation conquers all
there is a disconnect between people's personal ideas about how walmart should work and how much they want to pay for their stuff
as a wider observation, the most entrenched liberal or conservative ideologue, even after decades of rants and fights, will often wind up acting in ways completely against their multiply-stated ideals
a social conservative will fly to canada and get an abortion, and a socialist wal-mart hater will insist on the lowest possible price on everything they buy
why?
because we're all selfish, and anyone who tells you they would never do {xyz} is exactly the kind of person who would, because they are weak idealists
we all are
we can think mighty fine in the abstract, and get quite inflamed and impassionate about whatever issue is stoking us at that particular moment, but in concrete terms that effect someone directly, pure selfishness always wins out
welcome to human nature
we are all weak and shallow
anyone who tells you differently is probably the weakest and shallowest of us all: blind to ones own nature
because when you are confronted with paying $6.99 for the same widget that costs $3.99 somewhere else, no matter what your ideology is, you're spending the $3.99
and, unfortunately for all the walmart haters, this observation trumps all of their rhetoric
i'm not championing walmart, i'm simply signifying to people who spout off on the issue that there is a issue which trumps all of their words: no one wants to pay more
so go ahead and fight walmart, be my guest, but try to understand human nature and the reality of human behavior first before you propose some idealistic scneario which no one will buy into
go ahead and work against walmart, but work against them in the realm of reality of human nature, please
intellectual property law is philosophically incoherent. it is your moral duty to ignore it or sabotage it
Human resources are a company's most valuable asset in some industries. "Brain-based" businesses, where the whole business is nothing but an office building, some computers and furniture, and a whole bunch of people, are pretty aware that if they're not recruiting and retaining good people, they're one foot in the grave.
However, Wal-Mart really is just using its employees as warm bodies. In fact, not even for that. Really they just do things that haven't been automated yet, at least not in a cost-effective way. It's still cheaper to hire a 19-year-old with a strong back to stock bigscreens on a shelf than it is to build a robot to do the same job.
The reason that the health and welfare of their employees doesn't really matter to Wal-Mart is because there is perceived to be a near-infinite supply of them waiting outside the glass doors, ready to take up the helm if anyone gets too ill or starts demanding a higher salary. And this is quite probably true, especially when you consider that Wal-Mart has shown in the past that its not adverse to hiring illegals.
Your salary, in a properly working economy, will never exceed your perceived cost of replacement. When your job can be done by anyone with 2/5ths of a brain and the normal human complement of arms and legs, in short, a lowest-common-denominator job, you shouldn't expect to live anything better than a lowest-common-denominator life. If you want to be paid more, find some way to raise your perceived replacement cost. But it's naieve to assume that anyone is going to pay their employees more than it would cost to recruit and train a new person to do their job; anything less would be irrational, and corporations are notoriously un-irrational.
"Ladies and gentlemen, my killbot features Lotus Notes and a machine gun. It is the finest available."
The bigger problem is having for-profit insurance companies make health care decisions for people. Companies are required by law to maximize profits. These same companies then get to decide what level of medical care you get. If that's not unethical, I don't know what is.
Software sucks. Open Source sucks less.
Mom and pop stores don't suck, they just have to sell at prices higher than walmart.
They charge higher prices because they can get away with it, they're often the only shop in town. The variety is poor, the quality is poor, the amount of stock is poor. Many of them only take cash, or have a cash machine that CHARGES for usage. Large chain supermarkets don't charge for cash machines.
They usually are very knowledgable about the product they sell,
How much knowledge is there to be gained about a tin of beens or a bottle of vodka? I'm there for shopping not an educational experience.
the place was dirty, shelves were disorganized
Sounds like 'mom and pop' stores to me. I can't speak for Walmart, but large British supermarkets like Tescos and Sainsburies are very clean, light and professionally run. On the other hand, small independent shops have lino floors, poor lighting, and the opening hours are rubbish.
If you're not open 24/7, I'm not interested. I'm a shift worker, and when I finish work at 3am those 'mom and pop' stores that close at 5pm are absolutely no use to me.
Fuck, for the lack of service, one might as well go to Club Price, at least, you don't have to face "mom & pop" saying that you don't have this in stock, that he can't order it in less than 6 weeks and when it doesn't work as advertised won't take it back.
This is why Wall-Marde is doing so well, because Mom & Pop has been busy screwing their clientele.
And this story is old. I swear I saw it at least a couple months ago.
...Also I would bet that Snapper is doomed in ten years anyway. Ongoing analysis and JIT manufacturing can save money but can't reverse the US$:yuan exchange rate--and this is the real race Snapper is (losing) in. The ratio of quality to crap sold in most consumer items is rather disenheartening, and professional principles keeps snobby customers happy and gets applause from the peanut gallery but won't usually keep the lights on.
I am operating on a health and investment theory I like to call "dumb money".
What it revolves around is the principal that anything that lots of unintelligent people like is probably both unhealty to do and horribly overpriced as well--and I should therefore invest in it, but not use it myself. One idiot alone is just a random opinion of course (and generally a bad one), but when you average the opinions of increasing-numbers of idiots, the consistency is amazing.
The alien greys probably have a branch of mathematics for this.
~
You really need to take a Valium before logging on, sir.
You didn't shop for health care, you shopped for copays and dental/vision options and PPO choices (which of course can change at any moment, but you have to wait until next years' open enrollment to make any changes on YOUR side of the agreement).
You don't have the slightest clue beyond the very basics what actual health care you have available until you are in a situation where you need it and they tell you a particular procedure isn't covered, or that the hospital went over the limit and by the way here's the bill for the extra (how the heck should you know what the hospital has negotiated with your insurer and be able to verify they didn't go over -- were you supposed to ask the anesthesiologist how mcuh he charges for a breathing tube while he was putting you under?)
When you were in the selction process, did you actually go through and examine the credentials and experience of the potential heart specialist they would send you to if you had a heart attack? Or did you just see that your family doctor was on the list? Do you know which endocrinologist they have approved?
Did you know that if you're in a life-threatening accident and are treated while unconscious, you might get charged tens of thousands of dollars when you wake up because the ambulance took you to the wrong hospital and you didn't go to an approved one after 24 hours? Did you take that into account while "shopping" or did you just look at the phone book of doctors they give you to see that yours was listed and say "fuck, I don't know what any of this is, but paying $20 for my wife's perscription is better than $30, so I'll go with Aetna!"
So you're feeding us a complete line of utter bull, and it isn't necessary for me to read further into that big wordy comment you made.
I'd hate to trouble your initial knee-jerk reaction. have a nice night!
Recursive: Adj. See Recursive.