Wal-Mart had a reputation for making suppliers and business partners jump through hoops. Someone who regularly experienced this once told me, "they aren't happy unless they think we're doing the impossible." That era is coming to an end, if it's not already over, according to Gary McWilliams, writing for the Wall Street Journal.
"American shoppers are increasingly looking for qualities Wal-Mart has trouble providing," says Mr. McWilliams. "Consumers are demanding more freshness and choice, as well as more personalized service."
As is so often the case in life and in business, we are skewered not for our sins but for our virtues. And it is Wal-Mart's down-market, low-priced, accessible, mass-appeal image that is part of its problem, when shoppers are seeking higher quality and uniqueness. More than many organizations, Wal-Mart's brand concept and their customer experience are very closely aligned. That too is part of their weakness now.
Various competitors have added services -- anathema to the Wal-Mart model -- to support their growth. Examples cited by Mr.McWilliams include Walgreen putting basic health services in their pharmacies and Best Buy offering installation services.
Major packaged goods providers are actively trying to reduce their reliance on Wal-Mart. According to the WSJ article, for Procter & Gamble, this means their Wal-Mart related revenue has dropped from 18 per cent to 15 per cent since 2003. Big bucks indeed.
The truly shocking evidence of a change in the landscape is Wal-Mart's inability to force others to do business in a specific way. Mr.McWilliams reports that Wal-Mart asked all major suppliers to put RFID (radio frequency identification) tags on products, but backed away from the mandate when faced with resistance.
I see from Wal-Mart's online shopping site that they are trying to offer such things as jewelry personalization. OK, it is a family ring, but at less than $50, I bet they sell a lot of them. So we shall not write off Wal-Mart just yet.
Resources:
Wal-Mart Era Wanes Amid Big Shifts in Retail. Rivals find strategies to defeat low prices; world has changed, by Gary McWilliams, Wall Street Journal, Oct.3,2007.
How the world changed on Wal-Mart. After years of dominance, the big-box titan is scrambling to keep up wtih swifter rivals that are redefining the business, by Gary McWilliams, Globe & Mail, Oct. 3, 2007.(Print edition)
We recently wrote about Wal-Mart's decision to reduce their direct customer contact for internet shopping. Customer contact reduction: is Wal-Mart on brand with this program?
