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
The choices on my mower were...
11-hp Briggs & Stratton recoil
12-, 13.5- or 16-hp Briggs & Stratton electric start
11-, 13-hp Honda electric start
15-hp Kohler electric start
The Honda was a good deal more expensive than the B&S of the same size. The Kohler was considerably more expensive than the Honda, though I hear that the Kohler will last insanely long. If I were a professional groundskeeper I'd probably get the Kohler.
I ended up with the 12-hp B&S electric start.
Even die-hard Wal-Mart defenders such as myself will never buy the high-end electronics, outdoor equipment, and tools there. Wal-Mart is just a store to get basic, everyday commodities such as toilet paper and toothpaste, that's all it is.
The supplier made the decision not to sell to Wal-Mart. It's his right and Wal-Mart respects that. Big fricking deal. Happens millions of times in business.
Agree ... this is a story without any point whatsoever. Lots of companies don't sell consumer end-use products at Walmart for good commercial reasons. I doubt that the CEO of Tiffany lies awake wondering whether his products should be on display in the jewelry department.
I have a Wal Mart mower I bought five years ago. It still runs just fine. Starts on the first pull every time. No repairs. Only maintenance has been to clean and oil the air filter once a month, clean and gap the spark plug once a year and sharpen the blade once a year.
I used a Snapper as a teen to mow lawns for pay. But it was a fine mower too. It wasn't enough better to justify 3x the price, to me.
I forgot Kohler. Not bad. And I can't say I'm surprised they went with the Honda. I've taken one of those apart, and it was great on the inside.
We were selling Snapper the Robin engine to help them compete with the new Honda mowers, as a matter of fact, back in the early '80s. Thanks for the info.
"Hire someone!
Add up what you think your time is worth...do that math!
Time wasters...all of that stuff."
Jesus used to do my yardwork. I'm 60, now, and yardwork is good for me. I don't get as much regular exercise as I used to, so stuff like lawnmowing, leaf raking, and snow removal are good for me. I can afford to hire Jesus, but I don't want to.
UsROld. :-)
I've had two Hondas over an18 year period and they performed great. All they need is care and new blades now and then. Sold both to a gardener for $100 each so I figure I came out ahead after so many years of service (9 years each). Oh, now I pay the same gardener to do the yard work and enjoy watching him in my retirement from cutting grass and sweeping leaves.
Levi's really didn't have a choice. They were getting their clocks cleaned by other jeans brands.
My Murray Quatro lawnmower from Walmart is going on three years. It has a 4HP B&S engine. It cost $139.00. I love it. My lawn is about 8,000 Sq feet, and being in TX, we have a long mowing season.
It's lightweight, starts everytime, and other than changing the airfilter once a year, and the spark plug at that same time, I've had virtually no upkeep on it.
"The independant dealers will be gone in 10 years, and then where will snapper be?
"
You're wrong about that. Dead wrong. The independent dealers will still be there, selling and servicing quality equipment. Not everyone is interested in disposable equipment.
One dealer near me has a terrific deal. You give him $20 in November. He cleans, services, and tunes up your mower or other yard equipment, then stores it for the winter. In the spring, you stop in and pick it up all ready to go for another season. In May, he does the same with snowblowers. I usually take the mower in and pick up the snowblower on the same day. Then, I reverse the process later.
Here's the deal. I spent almost $800 for my snowblower. I could service it myself, of course, but I'd still have to store it most of the year. My lawnmower, too, is a good one.
Service! That's what Walmart does not and cannot offer.
I really wanted the Honda or Kohler because they have a simple screw-on replacable oil filter, which I thought was a nice touch. The B&S has no oil filter, so I make sure to change it at least every spring with a fresh quart of M-1. So far so good after three summers.
In other words, I won't sell to Wal-mart, because that will put me out of business, but I will sell out to another company and no longer have my business.
Go figure.
The only reason this guy got press is because, in their mind, he's a hero for saying no to the horrible, evil borg Wal-mart.
B&S makes different types of engines for small engine powered equipment; they no longer make the cast iron block engines that could be successfully rebuilt many times and it is rare today to find a shop that will even do a simple valve grind on a typical engine, but they sell engines to just about all the manufacturers at rock-bottom prices which keeps the place humming.
That $99 mower mentioned in the article that you can buy in a box at Walmart has a 3 1/2 HP B&S engine.
On average, you could expect to get 500 hours of service from this engine provided you didn't let it run out of oil and changed the oil and air filter once each year.
The normal time spent mowing is rarely more than two hours so the engine should last for at least ten years.
Most mowers die around 5-7 years due to poor or no maintenance and the fact that a replacement can still be bought for less than $200 is a testament to efficiency and the public's acceptance of marginal utility.
Snapper rear-engine riders always used B&S engines built to Snapper specs; so did their commercial push mowers.
I've met those guys, don't ever ask them to paint your porch.
"I have to ditch my current mower this spring. It has had 3 plastic parts break and I had a shaft adaptor break."
Quit hitting rocks and letting the bowden cables rust and you won't have that problem.
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