Thursday, March 01, 2007

in praise of wal-mart

I've been reading a very interesting book called The One Thing You Need to Know by Marcus Buckingham. It is a business management book, but has great insights into what it takes to run a successful business, or even to succeed at life in general.

While reading a chapter about great leading, I found this interesting blurb about Wal-Mart:
Last year at the Consumer Healthcare Products Association convention, speaking before a group of executives, I followed Doug Degn onto the podium. Doug heads up all food merchandising for Wal-Mart, and, by any measure, he has had a tremendously successful last fifteen years. Fifteen years ago he sold no food. Now he sells more food than anyone else in the world. In his speech he revealed himself to be a straight-talking, hard-working executive who was suspicious of anyone who over analyzes an issue. Here's a typical comment from Doug: "We had one store that was selling far more fishing equipment than our projections suggested it should. Our analysts back in Bentonville were perplexed. But in the end the answer turned out to be common sense." He paused to set up the punch line. "This particular store was located very close to a large lake." Much laughter from the audience.

Despite his no-nonsense persona, he did have one little device that he sued to engage the audience. toward the end of his speech, he asked us to raise our hands if we lived paycheck to paycheck. Very few of us raised our hands. At which, he stopped his pacing, stood square on, leveled his gaze, and said: "look, you are all welcome in our stores. Please, come into our stores. You will be treated well. But know that our stores are not designed for you. Our stores, every one of them, are designed for people who live paycheck to paycheck. Yes you can come into our stores and find a nice gourmet pizza for six dollars and fifty cents, but I guarantee you that you will also find the best, the highest quality seventy-seven-cent pizza in the neighborhood. Everything we do, everything we buy is designed to served those of us who live paycheck to paycheck."

Why did Wal-Mart land on this notion that they serve customers who live from one paycheck to the next? Yes, their data suggests that the lower-income customers represents the majority of their shoppers--fully 20 percent of Wal-Mart shoppers do not even have a checking account. However, Wal-Mart's history tells us that they seek to serve this customer less because their data indicate the wisdom of doing so than because Sam Walton, their founder, simply decided that this is who he wanted his company to serve."

<>< TM

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