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CHRISTOPHER TAYLOR'S BOOKS

Friday, April 15, 2011

WAL*MART REBOOT

"The basic Wal-Mart customer didn’t leave Wal-Mart. What happened is that Wal-Mart left the customer."

Wal*Mart grew from a small store in Bentonville Arkansas in the 1950s to a retail giant in the 1970s, all based on Sam Walton's basic idea: sell what people want, for cheaper than everyone else. After Walton died, the corporation shifted gears, eventually hiring Leslie Dach who was a senior aid for Al Gore.

Dach had a different vision for Wal*Mart than Sam Walton's immensely successful one. He tried to take Wal*Mart more upscale with more expensive "organic" foods, an attempt to appeal to a more upscale market, and a public campaign of going "green." Working as a public relations chief, she got more "progressives" hired into the company, and pushed more trendy items. In 2009, the company announced plans to develop a "worldwide sustainable product index" to pressure its suppliers into going green. Dach brought in Al Gore to speak to the board and screened An Inconvenient Truth to employees.

Wal*Mart suffered under this change of approach. After ten straight years of solid growth, the company posted losses last quarter after several straight years of slowing growth. Facing greater competition from operations such as The Dollar Store, Wal*Mart has recognized that this new approach is a failure. One of the company's vice presidents recently said "Clearly, we’ve lost some of our focus on what I would call the core customer. … You might say, in short, that we were trying to be something that maybe we’re not."

And the store is shifting gears. Wal*Mart is going back to its roots, going back to fishing tackle, bolts of cloth, inexpensive sweat pants, and away from trendy and expensive items. Sam Walton's formula of every day low prices on the stuff Joe Sixpack wants to buy made money; Dach's schemes lose money.

The job paid Dach well though. In addition to an undisclosed salary, he got $3,000,000 in stock and a 168,000 stock options. That's what happens when you hire an urban leftist to run a red state regular guy operation; he's as lost as a dude at a ranch.

Dach is still in the job at Wal*Mart for now, and he's confident he's helping the company. In a CNN Money segment, He was asked if these green policies have been good for Wal*Mart:
It has been. It has made us a stronger company. It’s fueled the productivity loop, so we’ve been able to lower our costs, so we can lower our prices. But it’s also helped us recruit and retain people. It’s helped us enter new markets, and it’s made the people who work at Walmart feel better about their contribution. So it is clear to us that it’s made us a stronger company.
What does "stronger" mean? It means the company is doing what he wants. Whether he'll keep the job and these policies will continue is in some question, certainly at least some of the execs at Wal*Mart aren't happy with his ideas.

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