The Man Who Said No to Wal-Mart

http://money.aol.com/ ^ | 1 18 06 | Charles Fishman

[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

[Aquinasfan]

Time wasters...all of that stuff!

Some people actually like it, like me 8-)

[wallcrawlr]

hmmm...you think so?
I'm not so sure about that.

[Labyrinthos]

Who in their right mind would pay this much for so little? If someone wants to pay that much, that someone can easily afford to have someone cut their grass!

I can afford to hire someone to cut my grass. I can afford to hire a fulltime groundskeeper. But I continue to cut my own grass and do about 90% of the outdoor maintenance work, which is one of the reasons I'm not 40 lbs overweight and look is if my only exercise is using the remote control. I paid over $500 for my John Deer -- 16 years ago -- and it still runs better than the crap that Wallyworld sells.

Believe it or not, there are still people like me who appreciate quality products, which is why I will NEVER shop at Wallyworld. Indeed, I could hardly care less about low wage, uninsured workers. What I do care about is decent products that turned to crap once the manufacturers climbed into bed with the people from Bentonville. Levi's are now the cheapest quality jeans on the market. Vlassic pickles went from a top brand name to bankruptcy. I can go on. Note, however, I don't blame Walmart, because no one made Levi Strauss and Vlassic et al. sign a deal with the "devil." But I don't have to shop at Walmart and I don't.

[MamaB]

We have had the same guy to do our yard for about 15 or 20 years. He comes by to see what needs to be done and does it. He comes by to get paid when he needs the money. The last check I wrote him was for over $1,000. He does all the grass cutting, shrub trimming, plants veggies for me, rakes and bags the leaves, etc. He has several nephews he is rearing to help him. Now, he does nearly all the yards on this short street plus others in this part of town,

I told our daughter that I did not know what we would do if he ever retired. He is the most reliable person we ever had.

[conservative physics]

at that price i'd rather pay some neighborhood kid $20 every other week for the 9 months the lawn actually grows, including edging and blowing away the cutting and leaves.

40 a month * 9 months = $360 a year

with no worries about your equipment braking or not starting the next season and no expenses for fuel, oil, or sharpening your blades.

[Howlin]

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

Kenmore.

[Howlin]

LOL!

[right right]

There is a place for both. I can't buy a snapper or any high end mower cost effectively because I often mow over hidden rocks, hidden stumps, etc., and those items tear up ANY mower. Sometimes they last 4-5 years, sometimes less than a mowing season. (march-nov) Not all of us live in a cute city with a cute yard.

[TheForceOfOne]

If you stare into a mirror with the lights off and chant

Wal-Mart is evil!
Wal-Mart is evil!
Wal-Mart is evil!
Wal-Mart is evil!

For 10 minutes, the face of Sam Walton will magically appear!

I'm series, try it!

[ansel12]

"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."


Home Depot does exactly the same thing. Moen,American Standard, Kohler, among others were forced to introduce special Home Depot lines 0f cheaper made versions or lose Home Depot as a dealer.

[MajorityOfOne]

I'm glad everyone else loves their Toros. I have a Toro lawn tractor with a super-cool auto-style transmission that won't go into reverse, and the dealer tells me that, due to that wonderful, high-quality tranny, it'll cost me hundreds to fix. (PS... don't assume that, just because a Simplicity mower costs 3 times as much, it will last for 10 years).

[najida]

Some of us like doing our own yards.

My issue with the hired help is the constant "Bush, what bush? That stick was a tree? You want plant HOW MANY bulbs!?" etc....

I'd have to be out there the entire time supervising because my yard is well, big and different. Besides, it's excellent exercise :)

[MarineBrat]

 

The whole reason I have a Snapper mower is because I don't plan on ever getting a new one. I expect it will last another 20 years *at least*, by which time I'll be ready to give up yard work. I live in the country and have a large yard, and part of my therapy ... er, ah, exercise routine is to work on my yard and garden and orchard and pasture.

My Snapper is built rugged and simple. The parts have not changed for many many years, and are available everywhere. It's easy to service and was a good value.

 

I understand that it's good politics here at FR to stand behind Wal-Mart no matter what, but I get the impression that that's only because the Democrats are against Wal-Mart because of their hiring practices.  People here love Wal-Mart simply because the Dems hate Wal-Mart, but that's not good enough for me.  While I'm not anti-Wal-Mart, neither am I pro-Wal-Mart simply becaue the Dems don't like them.  I think Wal-Mart is free do do business how they choose, and hire who they choose, and pay their employees whatever their employees are willing to work for.  That's business.  That's life.  You are worth exactly what you're willing to work for.  Period.  And, in fact, I know people who work for Wal-Mart and have never heard a complaint from any of them.

But, the fact is that much of what Wal-Mart sells is cheap Chinese made crap!  So when I want cheap crap I go to Wal-Mart.  That's what they're there for.  Their aisles are narrow and crowded, but their stuff is cheap.  That's the deal, and I wish the Dems could deal with it better.

But I must defend Snapper here.  They make a GREAT lawn mower.  Made in the USA.  Expensive.  But a good deal if you intend to care for it.  I got my Snapper from a local "small engine" shop, and will defend that decision.  My money stayed in the USA and supported my neighbors.  And if you look at the picture of the Snapper mower above you can see that it's designed to be serviced.  It's essentially made inside-out, where everything can be gotten to.  One of the best investments I've ever made.  Not just in my lawn mower, but in my neighbors.  I say buy USA when it makes sense!

[HIDEK6]

If someone wants to pay that much, that someone can easily afford to have someone cut their grass!

Maybe the guy that's doing the grass cutting for the homeowner is the guy who wants the durable lawn mower.

[HeadOn]

Well, yes and no - I haven't been in the industry in a while, but Snapper used to require special build engines from the manufacturers. I can't imagine they don't do that now, especially reading this article. We sold them a Subaru (Wisconsin Robin) a few years back - don't know if they still use it. I think they went with another Japanese engine for that segment of the market.

But - Snapper made Briggs come up with a little higher quality engine (ball bearings on the crank, etc.), and they have used special-built Tecumseh engines as well. Snapper ain't no slouch.

I have a John Deere rider, by the way. Paid twice as much to get a real one from a dealer. As for a Home Depot "John Deere" - they ain't really John Deeres, if you ask me. Lots of significant engineering differences. JD used to call them "Sabres", but must have bowed to the low price pressure of Home Depot and put the JD badge on them, just like the Snapper guy in the story refused to do. Good for him.

[HIDEK6]

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

Walmart should just call Mao Tse Silverstein over in Beijing, get him to make a hundred million cheap lawn mowers, but a nameplate on them that says "Snaper" and let Weir sue.

The legal fight would be ruinous to the little guy.

[HeadOn]

$349 for 20 years, vs. $130 for maybe 5? You do the math. You're saving money. Snappers LAST and LAST.

[HeadOn]

Yep. With lawn mowers, you most definitely get what you pay for. See post 75...

[connectthedots]

Or about Huffy bicycles.

[RockinRight]

Often though if you don't do it yourself, they screw up things. My father had the following happen with the people he hired:

-cut down a 24" tree seedling that cost $100 (rare species)
-chipped the paint on neighbor's car by running mower over gravel
-cut down daffodils that hadn't even bloomed yet (again, with the mower)