In the late 90s, Bill Marquard worked deep inside Wal-Mart as a strategic thought-leader. Besides his first-hand Wal-Mart experience, Bill also spent 17 years at Ernst & Young, did a stint as the EVP/Chief Knowledge Officer at Fleming, and served eight-years as an adjunct professor of finance at Northwestern’s Kellogg School of Management. (So, he has some business chops to speak of.)
Bill has written a brilliant book, WAL-SMART, which sheds new light on Wal-Mart’s business DNA and how companies can profit in the Wal-Mart world we live in.
Marquard reasons Wal-Mart has changed the business landscape not just now — but forever. And if competing businesses fail to recognize how Wal-Mart has changed the rules of doing business, then Marquard says these businesses are choosing to lose. Businesses choose to lose because they fail to address how Wal-Mart has conditioned expectations from competing businesses, suppliers/distributors, employees, and local communities.
Wal-Mart has conditioned competing businesses to focus on executing competitive advantages besides the strategy of low prices.
Wal-Mart has conditioned suppliers/distributors to expect relentless pressure to continuously reduce costs so that lower prices can be brought to market.
Wal-Mart has conditioned employees to be content with meager wages, meager benefits, meager recognition, and meager growth opportunities.
Wal-Mart has conditioned local communities to expect the promise of new jobs and the need to give tax concessions in order to have mega-companies setup shop in their community.
To profit in this Wal-Mart world, Marquard argues, businesses must design and execute a comprehensive strategy that addresses competitive advantage, suppliers/distributors, employees, and local communities.
Competitive Advantage
According to Marquard, businesses today must choose to differentiate, emulate, and then dominate.
Differentiate by saying “yes” to areas that the dominant player in your category says “no” to. Meaning, choose to sell more local products, deliver better customer services, find ways to be more convenient to customers, bring niche products and services to market, and enhance the in-store customer experience in ways the dominant player doesn’t.
Emulate by choosing specific areas from which to plug ‘n play from the dominant player. For example, JetBlue emulated Southwest’s low price strategy but differentiated themselves by enhancing the customer’s in-flight experience with leather seats and free Direct TV.
Dominate by establishing yourself as the obvious number two player in your category. Distance your business from every other competing business striving to take your place as the number two business behind the leading big dog business.
Suppliers/Distributors
To thrive in the Wal-Mart world, Marquard says vendors must make specific choices on what to leverage, how to invest, and where to diversify as it relates to supplying big dog businesses.
Suppliers/distributors must decide which strengths to leverage from the dominant player. For example, the most successful vendors leverage Wal-Mart’s huge terabytes of sales data to better understand sales movement trends at store, regional, and global levels.
Marquard advises vendors to invest in building strong brands to rebalance the scales in favor of the vendor so that the big dog businesses need you more than you need them. Instead of the vendor having to “push” products through the dominant player’s pipeline, a strong brand can flip this relationship to where the giant retailer “pulls” your products through the pipeline.
Vendors must make the important decision of deciding where to diversify so they do not face the problem of relying on sales from one big dog business. Suppliers/distributors who are reliant upon any one business for a significant percentage of sales are running a major risk of placing too many eggs in one basket. To diversify, Marquard advises vendors to develop and/or acquire unique products to supply businesses in different markets and different channels.
Employees
Marquard contends for businesses to profit in the Wal-Mart world, they must serve employees by knowing how to reward them, impassion them, and grow them.
Rewarding employees through compensation should differ depending on the go-to-market strategy of your business. If your business requires employees to have extensive product expertise and superior customer service skills, then these employees should be rewarded with higher wages. Conversely, if your business strategy requires employees to have fewer skills then their wages should be lower.
All companies wanting to succeed in the Wal-Mart world must also impassion employees by offering inspiring perks beyond strict paycheck compensation. Businesses need to go beyond fulfilling financial needs of employees to also fulfilling their emotional needs.
Growing employees is about also fulfilling their intellectual needs by offering programs that encourage education to help them during their life at work and their life away from work.
Local Communities
Successful companies in the Wal-Mart world find ways to endear themselves to the communities they do business in by knowing where to belong, which local activities to align themselves with, and how to engage local citizens.
Belonging is about finding the right places within a community to participate in order to do the greatest good. It’s about finding the right charities and causes to align with that sync, in some meaningful way, with the values of your business. And, it’s about finding the best ways to invite citizens to join the business in making the community stronger.
I’m guilty of overly simplifying the smart thinking of Bill Marquard’s WAL-SMART book. Hopefully the above summary intrigues you enough to wander over to the WAL-SMART website to learn more.
If you are responsible for managing business activities of any retailer or any supplier/distributor, I implore you to read WAL-SMART. It’s chock-full of smart strategy musings which will help you better compete against any big dog dominant company in your competitive set. WAL-SMART is a worthwhile read!
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