Wednesday, October 28, 2009

“Wal-Mart killed the country store”


It was about 1:15 in the afternoon and another rain shower was starting. There was only one stage at the Austin City Limits Music Festival that was fully covered by a tent, and we headed that direction. I had never heard of Reverend Payton’s Big Damn Band before that time, but I’ll remember them from now on. The band only includes Peyton, his brother and his wife, and they play an eclectic brand of self-published bluegrass “truths,” as they call them.

When they performed their single that is downloaded the most, “Wal-Mart killed the country store,” the crowd really responded. Even the people like me that had never heard the sound before were curious. I thought to myself, “I wonder if Wal-Mart leadership knows of this song?” They should. It is feedback. Then I wondered if many companies really make the effort to move beyond the recognized media to see what their reputation really is. There are plenty of blogs, chat rooms, web sites. There are even web sites like www.jobvent.com that specialize in allowing employees to expose culture and environmental factors about their companies. I know a businesswoman that uses information like this during the due diligence process when considering a merger or purchase of a company.

Do you believe this information reaches senior leaders? Have you ever found and used such information?

42 comments:

Kris Puri said...

Of course they know about this stuff. Whenever I see a CNBC episode about Wal-Mart they have people who go into these communities and try and counter their objections to the Wal-Mart. Funny how no one complains about how Home Depot put lots of mom and pop supply houses out, or Kroger the local butcher, green grocer, food store - or Kmart the five and dime, or McDonalds the local greasy spoon, or Pizza Hut the local pizzeria, or Dairy Queen the local ice cream shop, or CVS the local pharmacy, or Goodyear the local mechanic. All of these stores bring lower prices and better selection to the masses so they have more money to pursue their own business - which should be something of a better value proposition than running a local store.

Donald Woo said...

Depending on the Senior Leaders, they may/may not proactively seek information about their entities. Employees (especially those in marketing, competitive intelligence) have a duty to share pertinent information with Senior Leaders, so that they can investigate and respond swiftly (e.g., Public Relations, Media Relations, Marketing) to this sort of thing.

Ashutosh Agrawal said...

Walmart has a radical business model which has created value to customer and cannot be easily copied by its competitors. Hence Walmart has become a leader in retail segment. But its the leader who is attacked and a leader is expected to take care of community. This is not first instance. Ford had to satisfy same expectations and so also Nike in case of sweat shop labour.

Hence leaders in successful company cannot stay insulated to the community opinions and they have to actively address those. Walmart started doing that by its information campaigns and other sustainability initiatives.

Ariza Twatwunnaphong said...

Thank you for sharing this story with us. I think it was a very interesting way to look at companies now and how people choose to express themselves. Personally, I haven't known of any executives who have shared a similar experience. However, I do know that these corporations must be aware of what kind of reputation precedes them to a degree. Perhaps with some, news of incidents like this would reach them, but ultimately, it's really up to them if they will move to alleviate the issues and concerns that generated such feedback.

Peter J. Shaw said...

Does this really surprise you. .....Woolworths, Coles are no different here .....Just interested in the DOLLAR.....Not in the LOCAL BLOKE!

Stacey Aldred said...

The light bulb killed the candle - this group is getting wierd

Julian Mallett said...

Didn't Wal-Mart set out in the first place to compete with, and win, in their market ?
I do agree with you that we don't like the outcome, but we should assume that all businesses are trying to completely dominate their sectors.

Should we consider this as simply a failure of PR or a reason to change their Strategic Plan ?

Harlan Cohen said...

Not only the country store, but the wholesalers, distributors, and farmers who supplied them. Wal-Mart has heard this time and again. Almost every time a Wal-Mart determines to build in Northeast Ohio we hear community leaders and politicians discuss how to protect the independent corner and convenience store operators.

On the other hand, Costco gets praise in comparison to Wal-Mart when it comes to employment practices.

Herb Briggs said...

The only one making money at the country store was the owner. His employees all worked part-time with no benefits, and if business was slow they were told not to come in. Who wants to go back to that?

igor sevonkaev said...

Your topic contains provocative message ))
At first I would disagree with the spirit of the title. I think Walmart kills OVER-priced country stores, and it's good for several reasons. One -- it teaches owners to run business more efficiently and aggressively. Have you been recently to those stores? No design. Gelatin environment. Open from 10 to 4. Closed on weekend with ridiculous "Sorry" sign (Are you really sorry?). Wake up, people. Want to sell something open on weekend when a working person have time to shop. Second -- is the price. As an example, a bike in Walmart costs $100, the same thing in local store is $499, both made by Chinese kids. I would buy it for $150 in local store to help local business, but x5 times is nonsense.

As of your main question "Do you believe this information reaches senior leaders? Have you ever found and used such information?" I think they don't care and they should NOT care.
You see, who makes news, run blogs, yells with transparencies on the corners? People who need PR for their resume, who seek publicity, rarely, people who care. What is the consequence? The consequence is that you see that person and you think "OOH! walmart killed something" But really that was only one annoying individual on your way to the job!

Now what do you think walmart board look at? They look at the sales numbers. If they earn expected sales from specific population it tells them that people agree to buy from Wallmart. NOTE! All people -- the crowd -- agree to buy from walmart. Would they care what one loafer that yells on the corner, or writes in his blog? No.

Mark Gavoor said...

John:

Thanks for your excellent slice of life integrated with business posting.

I have come to the viewpoint that people can expound or emote one opinion and then act very differently economically.

Yes, big box stores led by Wal Mart, have destroyed many small Mom and Pop run businesses. They did it by efficiency and mega-buying power that allowed them offer consumers and customers much lower prices. People respond to lower prices and then complain when their cozy neighborhood businesses fold one by one.

Look at the litany of businesses that are almost no more:
Independently owned
- Drug stores
- Gas stations
- Clothing stores
- Photo processing outlets
- Music stores
- Appliance shops
- Book stores

In fact, in my town there is small privately held bookstore. They have a sign in the store that, and I am paraphrasing, says:

You all say you like our store because of its size and location. Please buy your books here so we can stay in business.

I am a perfect example of this dichotomy. I like the bookstore. I hope they stay in business. But, I tend not to buy very much there. Their prices are too high and I often buy using the convenience of Amazon: On-line, Used, really cheap, and delivered to my house.

We are nostalgic about newspapers, but we no longer subscribe because the convenience and low cost (did I hear free) of on-line and mobil news services.

Companies should pay attention to the sentiments in songs, blogs, and chat rooms. I believe the goods ones and the litigious ones do. I also believe they weigh these sentiments vs. sales and return customer rates.

I believe this is a rich topic for discussion. Thanks again for posting.

Andrew Baker said...

John,

The consumers killed the county store. If they didn't purchase from Walmart, the country store would still exist. They elected to go where they could get the best prices, and now those are the only prices.


Herb,

The employees at Walmart aren't necessarily doing all that much better than the scenario you present (which wasn't necessarily the case in all circumstances). And all the big retailers send people home when business is slow.

Such is life. We want the cheapest prices without accepting responsibility for the ramifications of that choice...

-ASB: http://xeesm.com/AndrewBaker
Providing Competitive Advantage through Effective IT Leadership

Leanne Hoagland-Smith said...

When I first read the discussion topic my immediate response was "Ford killed the horse and buggy business." As markets grow and contract, stores come and go. Much like the 5 and Dime stores. There are still small book retailers who compete again Amazon, Wal-Mart, B&N and Borders.

Maybe this is why some businesses are monitoring social networks to keep on top of the bad pr.

Agree with Herb's perspective as usual.

Henri Rand Furgiuele said...

It might be good to have a handful of sites at my fingertips that I can go to, when I need more in-house information. However, it's even more interesting to me that jobvent and similar sites have created a niche for themselves in the ever-changing market.

And about Walmart......personally I rarely shop there, but I don't think that conglomerate killed the country store. WE did....the consumers By our choices and by where we spent our money. If a lower cost is the ONLY determinant or the most important factor in our spending choices, then we all pulled the trigger, everyone who's shopped there instead of the neighborhoo boutique.

Gerald (Gerry) Crumbley said...

Everything is more expensive now. So, obviously we want to pay the lowest price for everything. The question is why is everything more expensive? Businesses must charge more for their services and products because their costs have gone up. Primarily insurance. Health insurance for their employees (if they elect to cover them) and liability, both general and product. Why is insurance so expensive? Insurance companies will never lose money, ever. As they pay more claims they simply raise their rates to compensate. So the higher the claims paid, the higher the premiums charged. And there's the answer . . . . lawyers. Law suits for minor traffic accidents that end up with multi-million dollars settlements. Those "slip-and-fall" accidents at the stores, and the "I'm too clumsy to drive, let alone drive and drink hot coffe, so I spilled it on my crotch" suits. No one should ever be awarded more than 2 million dollars. Even at 5% the interest alone is $100,000k/yr. That's plenty enough to live a very nice lifestyle on for the rest of your life. Just adding more 00's to the settlement doesn't help anything, and it make's everyone else suffer by increasing our costs of everyday items. And if anyone says you can't put a price on a human life, I'm here to say yes you can.

Bob Wagner said...

The country store owners killed the country store themselves. They had just as much of a shot as Sam Walton did at succeeding. at the level he did.

My sister had the same mindset about her nursery when she tried to compete with Walmart and was about to go under. It wasn't until I told her to go after the upscale market and sell larger, more exotic plants at a higher price did she turn things around.

Ace Hardware is doing the same thing when it comes to going up against Lowes and HomeDepot.

While I see all the damage being done by Walmart and am not in favor of them going overseas' I have yet to see anyone with a mask and a gun forcing people to shop there.

It's called business. If any business fails it is the leaders of THAT business that have failed. As Mary indicated stores come and go; especially those that don't change.

Leanne Hoagland-Smith said...

Here, here to Bob's observation!. Isn't capitalism wonderful?

Mihaly "Mike" Hangyas said...

Since 70% of the US GDP is driven by consumption, it is probable that many of the very consumers against the "giants" like WalMart have the giants to thank for maintaining their high consumption levels.......

Mike Vickers said...

Isn't capitalism wonderful! Well up to a point. I agree with Bob's comment that small organisations will fail on price alone. They will go to the wall. And as Bob says they need to offer up-market products and services. This is just as true in the UK as the US. However I note that at the other end of the scale the largest capitalist institutions in the US were not allowed to go to the wall whether they were banks or car makers. At what size should governments step in an rescue?

Leanne Hoagland-Smith said...

Mike - I believe your last question might be another discussion and could potentially take this discussion off topic since you are bringing in the element of government or what I prefer to call the evil and unfortunately necessary empire. BTW- The institutions should have gone to the wall (my opinion).

Matt Dooley said...

Igor
I think you missed the whole point of the article, it was not about Walmart vs. the country store, but rather about how a company is portrayed and what is the image in the public perception. In my opinion public perception is vital to an organization. Back in the day the nuclear industry knew that their plant designs were safe and who cared about a few crazies who were opposed to them thought. So they sat back and just ignored them. The crazies grew in number and became louder, they even made a movie called the "China Syndrome". Then an accident at Three Mile Island happened and now the industry was dead. My point is that if a business or an industry allows a negative public image to develop and persist, it will eventually overtake them. The days of the mass media being the sole reflection of a public image are over and now there is a wide range of electronic media to consider. Just look at twitter for example and how much of an uproar can come from a single tweet! Or You tube?

By the way I completely disagree with your first paragraph, but that is a subject for another discussion.

Mike Cook said...

The kills mom and pop defense is always the first attack from local groups when Wal-Mart attempts to open at a new location. Sadly, they destroy mom and pop because they are able to offer goods at prices often lower than the mom and pop store can buy the goods themselves. Yes, its a PR problem, and they have major problems trying to penetrate certain municipalities, but more often than not a new Wall-Mart is built and the company continues to be a HUGE success story.

David Frenkel said...

the larger the company the bigger the exposure to the microscope and negative PR, look at Microsoft. These mega companies are in a different league than most companies that are part of your typical mergers and acquisitions. As much bad press Wal-mart gets they are still industry leaders that most of their competitors still try to emulate.

Paul Johnson said...

WalMart did not kill the country store! People who prefer to shop at WalMart and no longer shop at the country store killed the country store. If people preferred the country store then WalMart would be out of business.

Anonymous said...

Hi John,

This is a very interesting conversation. Would you mind if I posted your topic on another Lnkedin group site? I am curious what type of comments I would receive from those in the New Hampshire area.

Tom Holmes said...

Our leader Jack Welch mandated that all GE suppliers had to find a way to "lower price or be gone", part of the process-reengineering phenomenon that outsourced $trillions to China, cost millions of American jobs - and created "Wal*Mart". As Ronald Reagan used to ask us.."are you better off today"?

David McKee said...

Perception is important - and it stems from the question: "Do you really put the customer first?" If you do, then when someone feels that your business is in the wrong in some way, you pay attention. Yes, maybe that person is a crotchety old coot with an ax to grind, but if you can sooth the coot, then guess what, you have probably avoided a bunch of unvoiced concerns held by more "polite" customers who will silently vote with their feet.

Let's not forget that Sam Walton started his first store as a "Country Store". My dad has run his "small-town" grocery store through good times and bad - and grocery stores run on a razor thin profit margin, yet he has been quite successful. Basically it comes down to this, as in any business: Find your Niche (aka "find a need and fill it), Always put the customer first, Never pay full price (for anything!), give your customer more than they thought they would get, know every aspect of your business, and keep learning. After nearly fifty years my dad still studies how other stores and businesses do things to get new ideas - and he listens to customer concerns.

The other thing is that a properly run mom and pop shop is much more nimble than something the size of Walmart, so they can do things Walmart can't do. Listening to perception is easier for the small shop if they are willing.

-DTM

Ron Batra said...

My personal comments and not reflecting any employer are - those methods were short-term designed to help a giant like GE save costs and not innovate and grow. America outsourced everything and at the expense of short-term bonuses for certain executives - slowly destroying the country's capabilities..

For example, I want to buy a good refrigerator - the US brands, even though made globally are really not that good - LG, Samsung rule the market.

So is the case with TV's.

Need I go on ?

As a US naturalized citizen, I wonder if the next generation of kids in the US will have a few choices (not the top 5%) but the median, slightly above average:
- Work at Walmart or equally low-paying jobs.
- Try to compete to get a job in China or India - if they let US citizens go there on a visa.


The kicker was when I went to recruit a few years ago at Universities in the US, professors were asking me "what kind of majors should students pursue to hope to find a job that remains in the US".

Fundamentally globalization and capitalism are very difficult to co-exist from a society's point of view.

John McLane said...

I agree with Leanne. Change with the market or die. And, government old screws things up.

Mimi Meredith said...

Loved this post! Sometimes, one gets the impression (and it's limited, as their is a heavy veil around WalMart that the age of transparency will do nothing to lift) that WM's arrogance cultivates a complete disregard of critics--even singing ones. I think they will keep walking over the country store and entire market sectors for another decade before the discount shoppers begin to seek new alternatives.

So, John, my thought is that WalMart has media campaigns designed to make appear responsive to the common folk. And most of their spokespeople are very well trained in the art of gracious stonewalling and communication strategy. But do they really listen? I don't think sot. To listen well, you have to admit that truth might exist in a perspective beyond your own.

Thomas Hooker said...

Very Old news, it killed small towns not just country stores. Have seen it first hand, the Town I was raised in had 20 small bussiness now it has just a few. Bigger better cheaper, its hard to really blame Wal-Mart for doing a good job. There were others like K-mart that were similiar before Wal-Mart did a complete take over but never really evolved. Wal-Mart is fully aware any market to public demand just like every company.

Amy Allred said...

Coincidentally, as we speak (er... type), my Accounting class is having a debate about if we were investors, which company (Target or Wal-Mart) do we think is a better buy. Primarily we have been reviewing the 2008 Annual Reports for both companies so the hard numbers have been thus far, the biggest weighing factor. Nevertheless, I do believe and have stressed to my classmates, that if we were in a position to buy either one of these companies their reputation should be a crucial part of our decision making, because you take on that reputation (bad or good) when you take the helm of corporate control.

The hard fact is that Wal-Mart is not doing very well reputation-wise in the eyes of the public right now and according to their 2008 Annual Report, they are up to their eyeballs in class-action law suits. Admittedly, if judged in favor of the plaintiff, some of these law suits will cripple them. If this happens, Wal-Mart is going to need to strengthen their Marketing Action Plan big time if they are going to recover and in order to do that, they are going to be forced to look public opinion in its ugly face.
Check out these sites:

http://walmartwatch.com/
http://wakeupwalmart.com/

Val Knowles said...

I agree completely w/the writer who said that it is "People who prefer to shop at Wal-mart who killed the country store." Wal-mart doesn't force anyone to buy at their stores vs the local Mom&Pop. If we shop at Wal-mart, it's because we choose to and the reason we choose to is that most of us are working hard and trying to make our dollar stretch. When I go in a store and find I can buy a single product for .50-$1.00 less than I can buy it at another store, multiplied times a grocery cart full, I will choose the store with the lower price every time, and it happens to be Wal-mart. And since when should a retailer who offers "John Q. Public" a good service at a better, more affordable price be condemned for doing the very thing that draws us to them in droves?

Alex Kersha said...

John, great post once again, thank you.

The main problem with such information about companies is that there is just too much of it. Trying to analyze which information is accurate, which is redundant, which is buyist and which is simply lies is really an effort in futility.

Trying to value a company based on reputation (what people are saying about it) is in my opinion a tad on the ignorant side. Whether or not we like or dislike Walmart doesn't matter. What matters to the executive leadership and of course the investors is that the store is busy every day. Have you ever wandered into a Target or Walmart and not had to stand in line at the register? If so, it may have been once or twice and the first workday after a big holiday or something. Point is, people shop there because of the Walmart BRAND, not the Walmart reputation. There is a subtle but concrete difference between the two.

The same goes for other brands that we may indulge in simply because we're comfortable with them. Personally, I don't care for the fact that a major soft drink producer supports gun control. Does that stop me from buying a can every now and then? No. Does that stop me from saying negative things about them? No again.

Reputation and Brand are certainly intertwined, one feeding off of or being negatively affected by the other. However when it comes to what's important to leadership, a retail store is not generally concerned about what you think of their corporate entity so long as sales are being made.

Change the industry for arguments sake to, say the consulting field and it's a whole different story. Organizatinos such as Deloitte, KPMG et. al .. base their entire existence off of reputation and that reputation IS their BRAND.

Cheers,
Alex Kersha

John Keyes said...

The cournty has a choice on health care the same as accepting Walmart. Stop complaining about rising costs or move to Walmart sized medical diagnostic centers. I think we should stop compalining the stores that went out of business and look at the compeditive advantage was obtained by reduced costs to average workers.

Jarrett Gayne said...

In the early days of Walmart it was an excellent focused on low prices and customer service. It was a good place to shop where you never waited in line. It caused its competitors to improve their price and business model to keep up. As it grew it displaced many of its less savvy competitors. I remember when the first Walmart and Sam's club came to Endicott New York in the 90's we were all excited to go shopping there.

Flash forward 20 years. I avoid Walmart like the plague. There is always a colossal line at the checkout. There is never a customer service representative knowledgeable enough to help with anything and if you ask for a manager they seem annoyed and can't help either. Last weekend my father in law and I went to two different Walmarts. The people in the sporting goods department at the first had lost the keys to the to the case where the items we wanted to buy were stored. Not just one set of keys but three sets. We asked to see the manager and she told us sorry there is nothing she could do for us. We went on down the road 30 miles to the next Walmart and bought the last box of the item we wanted. The manager personally apologized that he couldn't sell us a second box because he did not have it. Corporate had cut back his inventory in an effort to cut costs. Fortunately for Walmart they have run many of the sporting goods and outdoor stores out of business in these communities so they are the only place left to shop.

When at home in Lexington my wife and I prefer to shop at Meijer. There is almost never a line at the checkout, the associates are knowledgeable and helpful and my kids like riding sandy the pony. I wish Walmart luck with their business model but I will not shop there unless there is no other choice.

David T. McKee said...

I have to point out something that Jarrett said - While it is true that, unfortunately, many of the Walmarts of today are failing in their original mission of customer service, this is the usual cycle. A business becomes fabulously successful - and buys up many smaller businesses. Eventually it becomes a behemoth - it can no longer move swiftly, quality becomes and issue, service becomes an issue - and each of those issues leaves room for smaller, more agile competitors to move in and start up new businesses.

Look at IBM. Once upon a time they were computers. Period. Then the smaller more agile PC was create, and they even had a major role in the promoting of it, but that PC put IBM in it's place.

The same thing is happening to Walmart now. For those with the foresight, this is opportunity. That is what is so awesome about Capitalism in a free economy.

Now, if we can just find a way to do the same thing to the REAL dangerous behemoth - the Federal Government!

-David T. McKee
www.achievemaster.com

David Veech said...

John, given the vast amount of consumer information exchanged in internet-based discussions like this one, and based on the previous responses you've gotten to your original question, I would have to conclude that most such feedback/information does not get to senior leaders. Most of us focus on small aspects of performance feedback and often have trouble trusting the information like that provided in Peyton's song. Companies like Walmart and Microsoft spend small fortunes to gather consumer feedback and are very good at using the feedback they gather to do things differently. I think it's safe to say that this method fails to capture everyone's true feelings, so there will always be detractors. Maybe the question should be "Should this kind of information get to senior leaders?" I think when the noise is loud enough it'll get their attention.

Nicholas Guenther said...

Hi John,

I have seen this type of issue with a commercial airline carrier not too long ago when a frustrated passenger wanted to have his damaged guitar replaced. After a while, he became so frustrated he made a song about it and posted it on youtube (5.9 million views and counting). The airline actually acknowledged it and has adapted it into their customer service training. Unfortunately for the airline, the damage had been done and millions of viewers watched the 'broken guitar' video.

I am also curious about your position on the content of the above noted song? Did WalMart really kill the country store? Were Safeway, Fred Meyers, and other department stores predecessors to WalMart combining bakeries, pharmacies, and other 'country stores'? Is WalMart just really good at what they do or has this been in practice for many years?

Chris Ubaldi said...

go to glassdoor.com to read some reviews of Sikorsky. I should have read it before I started working there. Thankfully, it is behind me now.

Greg Waite said...

I'm aware of several such websites, though it helps to take the negative comments with a fair amount of skepticism. Disgruntled employees are everywhere, and virtually any company has its share of critics.

Prior to interviewing with UTC, I did purchase a membership to vault.com. This website, being subscription-based, seems to offer more objective information than others. Regardless, there were a couple of themes established throughout the negative comments and reviews. Many were from employees of the legacy firms acquired by UTC. Even more were union-related and had seemingly placed unrealistic expectations on UTC.

There are legitimate issues of concern for UTC, however, and I do often wonder whether senior leadership is fully aware. Some are inherent to any large organization, but are nonetheless critical. Perhaps my experience in IT while in the military serves as a bias, but I do find our information technology systems (ERP, slowwww servers) and resources (outsourced IT) to be significantly underfunded. Obviously much of the cutbacks were done to lowers costs, but some of the impacts aren't necessarily on a statement of cash flows or balance sheet. I also think that despite a notoriously high turnover within the aerospace industry, UTC suffers disproportionally in retaining younger talent and, consequently, has an aging workforce that could be potentially damaging in the future. There is also a perceived environment of impenetrable workplace politics which, like it or not, certainly seems to contribute to the aforementioned turnover problem.

UTC has some great things going for it, obviously, and it remains to be seen how its new leadership responds to its new challenges.

timengel said...

Perhaps they did. I still like going to Ace and True Value Hardware on occasion - when I need some good one on one service...sometimes they're better than the big box stores like Home Depot. My house is 50 years old...and when I walk in Ace Hardware the associate looks at the 50 year old valve and walks over to a wall and pulls an exact match down and says - here you go. In 20 seconds...

That being said - what is the true cost of $8 tennis shoes and $30 microwaves from Wal Mart? Ask the folks on your street that have been layed off in the last 5 years.

Sure - the world is a different place. We deal in global markets and must compete - we can't put the genie back in the bottle.

But as we move forward, we should have in mind a National Industrial Policy - that is, as we off-load work, consider that we're off-loading our technology to the world. That as we moved out of the production of steel, televisions, etc. - and moved aerospace manufacture and now design overseas - where does it end? What are the ramifications? Southern Califonia was once a hot bed of wealth producing Aerospace Operations jobs.

Now it's slowed to a trickle. And I am among the remaining fortunate few who can say I build aircraft in California. It's a blessing. And I am excited about the future -
Wal-mart may have killed the country store - but we all have a part in these changes. We vote with our dollars, with our purchases, with our choices.

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