Posted on 01/18/2006 9:32:09 AM PST by freepatriot32
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."
Wier took a breath and said, "Let me tell you why it doesn't work."
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.
Which is when Wier said no.
"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.
Go to: Fast Company's Full-Length Article
So that is why youre reading it eh? Takes one to know one.
I am curious if Goodyear is doing this too. I have bought 2 sets of Goodyear tires from Sam's Club and they were some of the worst tires I've ever used. I switched back to Michelins and the vibration, irregular wear, and premature wear stopped.
I agree with you! You get what you pay for! You always pay less for high quality items over the long-term vs. the expense of buying low-quality items.
Just curious though, since B&S bought Simplicity out, does that mean we might see Snappers again in WalMart?
And the other poster is right about the quality of B&S engines, they are indeed junk nowadays, imo.
I would, look at it this way. A snapper will last 10+ years, if not abused. I have to ditch my current mower this spring. It has had 3 plastic parts break and I had a shaft adaptor break. And it will coset $75 to replace them. I will be looking hard at a snapper. It may cost more bu it lasts longer. I spent $200 of my current one, lasted 4 years. That comes to $50 a year. A snapper for say $400 last 10 years, that is $40 a year. Quality is almost always cheaper in the long run.
I inherited the Toro my grandfather bought for me to mow his lawn with back in the early 80's. I adjusted the original drive belt and it worked great. I gave it to a friend when I moved across the country and it is still performing well.
Good luck and good business. Hope you beat the WAL*MART behemoth.
Great article. Have discussed at length with coworkers about quality of similar items. How many mowers are sitting on the curb in our city, every fall because the deck rusted out. My son has refurbished them for cash during summer breaks. Almost all have B&S engines still working well, just the decks rusted thru.
I solved the problem by buying a 2nd hand aluminum deck to
put my B&S engines on. I'm set for life.
Walmart is having manufactures "badge engineer" products for them. I think this started with small boat motors like Mercury "badge engineering" for Western Auto and WA placing the name "Wizard" on the cover. But that was before the quality problems.
MiniMow by Snapper. Sell a scaled-down no-frills version with a separate name but with the brand attached. Think of it as an iPod Shuffle for your grass. This is called a "loss leader", if you haven't heard of the term. It keeps the Snapper brand in the public eye (in 10 years, nobody will buy Snapper, they'll either be buying the Lowes or Home Depot high-end offering or the cheapo Walmart generic product, having lost brand attachment) but provides an opportunity to purchase a low-end product. When the low-end product breaks down, they'll be naturally inclined to look up and they will look to the same brand to upgrade. That's especially true if you manage to sell lots of cross-compatible accessories.
But this marketing stuff is too complicated, I should just stick to some basic Lebesgue measure theory.
Good for you!! Keep up that quality!! Wal Mart is not known for it's quality, that's for dam sure! Other things, just like he said, it's fine. But If you want a good machine to last for years, don't go to wally world.
You guys don't get it.
Go ahead, keep buying all that equipment...mowers, weed wackers, leaf blowers, snow blowers, edge trimmers, chain saws, rakes, gas, oil, sharpening costs, ...etc.
Been there, done that.
Give it all up.
Hire someone!
Add up what you think your time is worth...do that math!
Time wasters...all of that stuff!
My bottom of the line MTD mower is 14 years old and runs fine, because I take care of my stuff and do necessary repairs. Anybody who pays 3 times as much for a mower with a Briggs & Stratton engine is a fool.
There's an old saying when talking about quality vs. price.
Buy cheap, buy twice.
Your example illustrates that perfectly.
kewl... that way you can pay more for all the stuff you get at Walmart and Sam's Club...that's right, I forgot. Walmart is bad, cause it makes a profit and is more efficient and bringing products to consumers.
Bastards!!!
Why do Lawyers, Union Members, Liberals , Luddites, environmentalist, communists, socialists and Democrats hate Walmart?...but shop there like I do. bwahahahahaha. If that groups hates Walmart, I love it.
The liberals should be happy that the executives are sitting on lawn chairs. It's a bit much. MSNBC aired a good documentary on Walmart recently. The rooms where vendors pitch Walmart buyers look like modern prison cells.
Jayzus, you crushing rock with the thing? A set of blades should last 5-10 years anyway, even with regular sharpening.
I think it's getting the spin from both sides. You've got those that will comment 'look what wal-mart is doing to the economy. Bad wal-mart, bad'. And then the other side the very loyal Wal-Mart shopper (who wouldn't buy a Snapper in the first place) is going to comment that Snapper is bad, dumb, wrong (fill in the blank) for not willing to compromise on their price. These are the same people that would get upset that Corvettes aren't sold for the same price as Saturns and think it's somehow unfair that there are different levels of markets that appeal to different customers.
Personally I agree with the CEO. What Wal-Mart has done for the country is good. It's just not a good business plan for his company personally
He was a complete idiot, all he had to do was say they weren't going to lower the price anymore and then let walmart decide whether they were going to continue carrying the snapper line.
The independant dealers will be gone in 10 years, and then where will snapper be?
Someone who only wants to buy a mower every 10-20 years, I suppose.
"There's plenty of guys around who will do my yard work for a fair price."
Yeah, especially if you don't require silly little things like a green card.
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