Saying No to the Mob

Posted on 14. Feb, 2006 by in Accounting, Business

Ok, so maybe comparing Walmart to the mob is somewhat of a stretch, but the prevailing thought is the same – if you cross “the family” you’re going to find yourself at the bottom of the river with cement shoes on. If you cross Walmart, the thought is that you’ll find yourself at the bottom of bankruptcy and out of a job. However, FastCompany reports that one such man, Jim Wier, did just that – he said no the Walmart family.

Jim Wier’s company, Simplicity, was selling Snapper lawn mowers to Walmart, who had actually asked Wier to visit the Arkansas headquarters to tell him they wanted to sell more of his mowers – a lot more. But Wier concluded that continuing to sell Snapper mowers through Wal-Mart stores was, as he put it, “incompatible with our strategy.”

What strategy was that? Quality. Quality over price. Jim Wier wisely saw that Walmart sold lawn mowers only below $200 and he couldn’t bring himself to lower quality to do that.

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.

I think that Jim Wier wisely realized something that many do not. Strategy is more important that short-term gains. Tens of thousands of executives try and convince Walmart to carry their product without thinking of the consequences. There are countless stories of companies that have literally gone out of business because their business revolved around their single biggest customer (Walmart) who then had intense buying power and was able to force prices lower and lower until they literally went out of business.

If you were faced with the situation, would you be big enough to say no to Walmart as well? Are there things more important than short-term profit?

One Response to “Saying No to the Mob”

  1. Phill Ramey

    17. Feb, 2006

    It’s good to hear a story regarding a business person saying “no” to Wal-Mart. I remember seeing a special once on TV covering how desperately people try to get their products into Wal-Mart not realizing that being accepted by Wal-Mart is also surely a dangerious path.

    Feeling the way I do about Wal-Mart I’d have to say that I would indeed be able to say “no” to them.

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