The Man Who Said No to Wal-Mart

What struck Jim Wier first, as he entered the Wal-Mart vice president's office, was the seating area for visitors. "It was just some lawn chairs that some other peddler had left behind as samples." The vice president's office was furnished with a folding lawn chair and a chaise lounge.

And so Wier, the CEO of lawn-equipment maker Simplicity, dressed in a suit, took a seat on the chaise lounge. "I sat forward, of course, with my legs off to the side. If you've ever sat in a lawn chair, well, they are lower than regular chairs. And I was on the chaise. It was a bit intimidating. It was uncomfortable, and it was going to be an uncomfortable meeting."

It was a Wal-Mart moment that couldn't be scripted, or perhaps even imagined. A vice president responsible for billions of dollars' worth of business in the largest company in history has his visitors sit in mismatched, cast-off lawn chairs that Wal-Mart quite likely never had to pay for.

The vice president had a bigger surprise for Wier, though. Wal-Mart not only wanted to keep selling his lawn mowers, it wanted to sell lots more of them. Wal-Mart wanted to sell mowers nose-to-nose against Home Depot and Lowe's.

Usually," says Wier, "I don't perspire easily." But perched on the edge of his chaise, "I felt my arms getting drippy."

Tens of thousands of executives make the pilgrimage to northwest Arkansas every year to woo Wal-Mart, marshaling whatever arguments, data, samples, and pure persuasive power they have in the hope of an order for their products, or an increase in their current order. Almost no matter what you're selling, the gravitational force of Wal-Mart's 3,811 U.S. "doorways" is irresistible. Very few people fly into Northwest Arkansas Regional Airport thinking about telling Wal-Mart no, or no more.

In 2002, Jim Wier's company, Simplicity, was buying Snapper, a complementary company with a 50-year heritage of making high-quality residential and commercial lawn equipment. Wier had studied his new acquisition enough to conclude that continuing to sell Snapper mowers through Wal-Mart stores was, as he put it, "incompatible with our strategy. And I felt I owed them a visit to tell them why we weren't going to continue to sell to them."

Selling Snapper lawn mowers at Wal-Mart wasn't just incompatible with Snapper's future -- Wier thought it was hazardous to Snapper's health. Snapper is known in the outdoor-equipment business not for huge volume but for quality, reliability, durability. A well-maintained Snapper lawn mower will last decades; many customers buy the mowers as adults because their fathers used them when they were kids. But Snapper lawn mowers are not cheap, any more than a Viking range is cheap. The value isn't in the price, it's in the performance and the longevity.

You can buy a lawn mower at Wal-Mart for $99.96, and depending on the size and location of the store, there are slightly better models for every additional $20 bill you're willing to put down -- priced at $122, $138, $154, $163 and $188. That's six models of lawn mowers below $200. Mind you, in some Wal-Marts you literally cannot see what you are buying; there are no display models, just lawn mowers in huge cardboard boxes.

The least expensive Snapper lawn mower -- a 19-inch push mower with a 5.5-horsepower engine -- sells for $349.99 at full list price. Even finding it discounted to $299, you can buy two or three lawn mowers at Wal-Mart for the cost of a single Snapper.

If you know nothing about maintaining a mower, Wal-Mart has helped make that ignorance irrelevant: At even $138, the lawn mowers at Wal-Mart are cheap enough to be disposable. Use one for a season, and if you can't start it the next spring (Wal-Mart won't help you out with that), put it at the curb and buy another one. That kind of pricing changes not just the economics at the low end of the lawn-mower market, it changes expectations of customers throughout the market. Why would you buy a walk-behind mower from Snapper that costs $519? What could it possibly have to justify spending $300 or $400 more?

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 snowblowers 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.

Wier had two things going for him: First, he had another way to get his lawn mowers to customers -- a well-established network of independent lawn-equipment dealers that accounted for 80 percent of Snapper's sales. And Wier had the courage, the foresight, to take an unblinking view of where his Wal-Mart business was heading -- not in year three, or year four, but year 10.

Wier traveled to Bentonville with a firm grasp of the values of Snapper, the dynamics of the lawnmower business, the needs of the dealers, the needs of the Snapper customer, and the needs of the Wal-Mart customer. He was not dazzled by the tens of millions of dollars' worth of lawn mowers Wal-Mart was already selling for Snapper; he was not deluded about his ability to beat Wal-Mart at its own game, to somehow resist the price pressure. He was not imagining that he could take the sales now and figure out the profits later.

Jim Wier believed that Snapper's health -- indeed, its very long-term survival -- required that it not do business with Wal-Mart.

The meeting started with the vice president of the category saying how it was clear that Lowe's was going to build their outdoor power-equipment business with the Cub Cadet brand, and how Home Depot was going to build theirs with John Deere," says Wier. "Wal-Mart wanted to build their outdoor power-equipment business around the Snapper brand. Were we prepared to go large?"

Talk about coming to the table with different agendas. Wier was in Bentonville to pull his mowers from Wal-Mart's stores. The vice president was offering a greater temptation: Let's join hands and go head-to-head against the home-improvement superstores.

"As I look at the three years Snapper has been with you," he told the vice president, "every year the price has come down. Every year the content of the product has gone up. We're at a position where, first, it's still priced where it doesn't meet the needs of your clientele. For Wal-Mart, it's still too high-priced. I think you'd agree with that.

"Now, at the price I'm selling to you today, I'm not making any money on it. And if we do what you want next year, I'll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80% of our business is over here with them. And I can't put them at a competitive disadvantage. If I do that, I lose everything. So this just isn't a compatible fit."

The Wal-Mart vice president responded with strategy and argument. Snapper is the sort of high-quality nameplate, like Levi Strauss, that Wal-Mart hopes can ultimately make it more Target-like. He suggested that Snapper find a lower-cost contract manufacturer. He suggested producing a separate, lesser-quality line with the Snapper nameplate just for Wal-Mart. Just like Levi did.

"My response was, we would take a look at that," says Wier. "The reason I gave that response was, it was a legitimate question. In my own mind, I knew where I'd go with that"--no thanks--"but at that kind of meeting you at least have to be willing to say, I'll investigate." And that was it. "The tone at the end was, We're not going forward as a supplier."

No lightning bolt struck. Except that Snapper instantly gave up almost 20% of its business. "But when we told the dealers that they would no longer find Snapper in Wal-Mart, they were very pleased with that decision. And I think we got most of that business back by winning the hearts of the dealers."

One serious hazard to Wier's strategy is that independent lawn-equipment dealers face all the same pressures that have killed, for instance, many independent hardware stores and toy stores. "That is a legitimate question and a legitimate concern," says Wier. "I think we have a part in that outcome. Can Snapper, as a major supplier, continue to supply [the independents] with great product, and a product different than you can buy at Wal-Mart?"

Wier says, "I'm probably pro-Wal-Mart. I'm certainly not anti-Wal-Mart. I believe Wal-Mart has done a great service to the country in many ways. They offer reasonably good product at very good prices, and they've streamlined the entire distribution system. And it may be that along the way, they've driven some people out of business who shouldn't have been driven out of business." Wier wasn't going to let that happen to Snapper.

Wier had determined to lead Snapper to focus on quality, and through quality, on cachet. Not every car is a Honda Accord or a Toyota Camry; there is more than enough business to support Audi and BMW and Lexus. And so it is with lawn mowers, Wier hoped. Still, perhaps the most remarkable thing is that the Wal-Mart effect is so pervasive that it sets the metabolism even of companies that purposefully do no business with Wal-Mart.

And the power and allure of Wal-Mart is such that even Jim Wier, the man who said no to Wal-Mart, a man who knows all the reasons why that was the right decision, has slivers of doubt.

"I could go to my grave, and my tombstone could say, 'Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.' "

Snapper was successfully integrated into Simplicity, which in 2004 was itself bought by Briggs & Stratton, the company that makes many of the engines in Snapper and Simplicity mowers. Simplicity and Snapper operate as independent divisions, and Wier remained CEO of both until last summer, when he resigned to join the private equity firm Kohlberg & Co. In McDonough, business is strong.

This story has everything to do with marketing and very little to do with Wal-Mart.
1. Snapper is correct in trying to maintain its brand image.
2. Wal-Mart is correct in trying to expand its "low cost" product offerings.

Somethings, both sides win by NOT doing business together.
I know of plenty of small businesses that were bankrupted trying to do business with the Big Three (two ?) automakers, especially GM.

Well, I admit, I've no desire to buy a high end lawn mower, although, I'd be tempted to buy one, if I took care of my yard. However, being as I can't do as good a job as gardener, I'll be subcontracting out that work. I might look into hiring my neighbor, though. I think he does his own yard and it looks pretty good. ;)

Makes sense. I spent several summers working in a hardware store/small engine repair shop. We were also a STIHL dealer.

STIHL won't (or they used to not) let a place sell their products unless they also have a small-engine mechanic on-site to service their products.

And in case anyone is wondering, please save the small engine mechanics time and stay away from Weed-eater brand lawn trimmers ;)

Geez I used to hate those things lol

This story has everything to do with marketing and very little to do with Wal-Mart.

That was my take on it too, both of them made a buisness decision based on what they thought best for their companies.

If he had said "no" to Sears or Lowes there wouldn't have been a David and Goliath story though

"Wier remained CEO of both until last summer, when he resigned to join the private equity firm Kohlberg & Co"..

Code for "he sucked as CEO"..

Hey, a Yugo will get you to work just as well as a BMW, so, why buy a BMW?
Who in their right mind would pay this much for so little?
Of course the moron doesn't understand...
Totally dumbass story

Wow, are you dudes related to...

When I was at PacBell we found a good quality data modem at a very good price. The company decided to buy 5,000 units. Big mistake. The manufacturer was capable of making a couple hundred quality units each month. When they tried to satisfy the order, the produced 5,000 mostly defective devices. PacBell returned the defective goods. The supplier went out of business. Sometimes you have to say no to dealing with the big dogs because you just can't play at that level.

its actually rather simple. would you rather pay $349 one time for a product that will last you 10 years or more, or $150 every year or two? the $320 mower in my garage is ten years old, while in six years, my friend is on his 5th $100 mower.

I read the article at:

http://www.fastcompany.com/magazine/102/open_snapper.html

People call Jim Wier a "hero".

He recognized the market, knew his product and made the choice. Isnt that what youre supposed to do?

The reason this gets so much play is because of the anti-walmart spin.

We all live in a walmart economy...he had to update his manufacturing facility. Fewer people working there, faster production times, more volume than before...yada yada yada. Just becuase he chose not to work with Walmart any longer (remember he was already) doesnt make him or Snapper so much different than others.
What am I missing?

Of course the moron doesn't understand the well-worn tactic of making a cheaper model under another brand name.

WalMart wanted the brand Snapper. Another brand name would not do.

Of course the moron doesn't understand the well-worn tactic of making a cheaper model under another brand name.
_______________________

Walmart didn't want another brand name, which you'd have known if you'd read the article. They wanted cheaper (literally) with the Snapper name.

There is a reason why some people go on to be business executives, and some go on to be, say, math teachers.

I shop at walmart for many commodity type items. Three years ago I needed a battery operated alarm clock for a hunting trip. Paid $5 dollars for it and it still works fine. The article points out that there are different marketing strategies between walmart and some potential suppliers. Wow, this is news?

"Of course the moron doesn't understand the well-worn tactic of making a cheaper model under another brand name."

Walmart already has these. It want's "the "Snapper" nameplate. Reducing quality for the lesser version would damage the higher ends reputation.

Who wants to replace a mower every year? You need to spend the time to go out and shop and buy one. You have to get rid of the old one.
If you can spend more initially and just keep using it for 10 years; that is a much simplier and less expensive route to go.

I've sold to Walmart, and was impressed with how unassuming the corporate office is. Notice how a rich liberal would be disgusted by the lack of a gilded headquarters with lush surroundings. Hypocrisy abounds. If the chairs were worth $1,000 they would complain about the waste of money which should go to the workers.

He had an opportunity to sell to Walmart. That's what counts. His refusal to deal does not mean Walmart is evil, they just have a different idea of who the customer is...and it's not the supplier. It's the CUSTOMER who walks into the store. I was a supplier, not the CEO, and even stupid me understood the concept. Get off your high horse Snapper.

This article is irrelevant, suppliers make these kind of decisions all of the time and if he can sell without Walmart great for him, but don't make a stinkin' political statement out of it.

"That was my take on it too, both of them made a buisness decision based on what they thought best for their companies.

If he had said "no" to Sears or Lowes there wouldn't have been a David and Goliath story though"

Exactly.

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