Fast Company recently carried an article on a man who did the unthinkable in the corporate world. He said, "No" to Wal-Mart. Jim Wier, the CEO of Simplicity Manufacturing Inc., turned down the chance to reach Wal-Mart's huge customer base. He did it because he would not be bullied and refused to compromise what had made his Snapper brand of lawn equipment a premium name in the market. Good for you, Jim!
In a world full of cheap products and low levels of service, it is nice to see some companies sticking with the strategy that helped them become successful.
The article can be read at http://www.fastcompany.com/magazine/102/open_snapper.html
While I am no Wal-Mart sympathizer, I do recognize that the mega retailer is not as bad as some make it out to be. Sure, it has helped fuel the rise of Asia's manufacturing boom while taking hardline tactics against employee rights in America. But it has also helped keep prices low and forced companies to reduce waste. Of course, any time waste is cut, that also means that someone gets the axe somewhere. With any situation, there will be winners and loser.
The real concern that I have is not with Wal-Mart but the mindset it has helped unearth in our society. I don't know if Wal-Mart created this monster or if it was there all along. Wal-Mart and the other mega retailers at least have helped make sure that price conscious consumers get what they want. And in the process, something has been lost along the way. There seems to be less customer loyalty these days as everyone is looking for a better deal. And I'm not just talking about homogenized products sold in chain stores either. The extra low prices mantra can be heard even in specialized industries these days.
Cutting prices sounds good if you are the buyer. But it spells TROUBLE if you are the seller.
Relationships used to be the driver in business transactions. But price now reigns as king. While relationships are still important, they are no longer the prime selling point. In a world full of homogenized products and chain stores, people are more apt to switch suppliers over a nominal price difference.
People will still pay more for some things. But there has to be a catch like a popular name brand, a special edition, a health benefit, a celebrity tie-in to the product, better quality, convenience, etc. People will pay more for something if by doing so they confirm to a social norm or fulfill an unspoken rule. Many people buy a product because they want to please someone else or fit in with popular trends not because they really think the more expensive item is better. Many people buy a product because it fulfills some hidden need. And in those cases, they may pay high prices for it. But for other things they are as ruthless in cutting prices and looking for the best deal as Attila the Hun was in taking over foreign lands.
Why is this a problem? Well, it means that the whole basic foundation of the economy is changing. As a result, the high cost producers are out of luck. And the bad news is that many of the old economic giants have become the high cost producers. We have legacy issues. Other countries and companies are free to compete without these disadvantages. The Wal-Mart mindset may lead to lower prices today. But in the end, it may help cause America's downfall in the future.
