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Paul Naysmith

Quality Insider

The Ghost of Walmart Future

A consumer’s-eye view of the superstore’s death spiral

Published: Tuesday, March 4, 2014 - 16:24

It’s Saturday morning and Mrs. N. has a project for me: assembling her new bicycle. It has arrived in an imposing brown box, and I’m attempting to interpret the instructions. Looking over the variety of nuts, bolts, screws, and connectors in a little plastic bag, I’m performing a mental inventory of the tools needed, and I’m up to seven.

I scour the bottom of the box the bike arrived in, wedged head-first in a space as wide as a cereal box, and there are no tools included. I’m thinking I could easily write an efficiency improvement report on this assembly process; however, my client (Mrs. N.) just wants her bike built. I better get it done ASAP. I’m in the man cave and realize I need to buy more hand tools. So I’m off in my car and speed to the nearest Walmart. I need to get a few other things along with the tools, and since I despise shopping, getting it done at a single destination is perfect for me: grab and go.

I like Walmart’s story, beginning in 1962, when Mr. Sam Walton opened his first store in Arkansas. And I like its business model: everything under one roof. Today the company employs 2.2 million people in 11,000 stores in 27 countries, and manages an operating revenue of $474 billion. I’ll put that into context: The total number of Walmart employees is seven—yes seven—times higher than the population of Iceland. If Walmart were a country, it would sit above Argentina in a GDP ranking.

But back to my bicycle tale. It’s Valentine’s season, and Walmart is bedecked in pink. I know where the tools are and make straight for the aisle, my mental checklist chiming: 5, 6, 8, and 10 mm Allen keys; 3/4 in. spanner; 1/4 in. socket; star-headed screwdriver. (See why I mentioned the inefficiencies of this bike assembly process?) But when I get there, I find it is poorly stocked, of any hand tool, of any description. If I want an orbital sander, I’m in luck, but there’s not even a hammer on the shelf, just labels indicating missing tools and their prices.

Not to worry, I tell myself; I’ll find an assistant to ask. But I can’t find a single employee, only confused and befuddled customers like me. This is still not an insurmountable problem, since as an Improvement Ninja, I know how to overcome it: I’ll try the bicycle aisle. I bet there’s a multi-tool there. I hope so.

“Holy macaroni!” I exclaim when I arrive. This is a loud exclamation, and now that I recall, there’s maybe no mention of macaroni, either. Again, there in the bicycle section, I find empty shelves devoid of tools and most items bicycle-related.

At this point I’m starting to wonder if Mrs. N. is playing some prank, and all of this is being recorded for a television show. I glance around for the hidden cameras before giving up and trying another store. Eventually I find all I need at my local car parts retailer, and although later I get into trouble for not buying the much-needed milk, the bike project is successfully completed.

So my local Walmart sucks. I can’t understand why on a Saturday, presumably the busiest retail day of the week, there are missing items and barren shelves. Mrs. N. doesn’t like shopping there because she finds the quality of the fresh fruit and vegetables below her standards. I agree with her that you do have to wait an eon to be served by a stressed employee, and the customer-returns desk is usually obscured by lines of full shopping carts waiting to be processed. Should I blame the local management for letting standards slip? Or is it something else?

I like to read the business sections of newspapers, websites, and blogs. Pondering my shopping experience, I recalled reading a Walmart manager’s whistle-blowing account, which if true, captures a 20-year downward spiral of the company and explains my recent experience there. Anyone with an appreciation of Deming’s 14 Points will read “Decades of Greed: Behind the Scenes With an Angry Walmart Manager” and check the boxes off. Although the article mainly focuses on pay and compensation, there are a few elements that, well, disturbed me. Here are a couple of sections for your review:

“This company is being managed by the quarter,” says the anonymous Walmart manager. “We have executives who have no vested interest in Walmart. All they care about is their salary and bonus. So when they make poor decisions, for example, this Christmas when they had a One Hour Guarantee for multiple items, it was a complete [financial] disaster, yet the executives praise what a big success it was.... You know what direction us managers were given to do in January? (Remember Walmart’s fiscal year ends January 31.) You guessed it: cut hours. For the poor decision made by executives at Walmart who couldn’t care less where the company is at in 10 or 20 years, we had to cut hours. Not only that, but we had to cut all expenses.

“Lee Scott [Walmart’s CEO from 2000–2009] instituted a [culture] where you could not question the company’s direction or offer critical feedback to the leadership. Years ago on our company intranet site, he had something I believe was called ‘Ask Lee.’ It was basically a place you could ask him a question, and he would respond. I remember a store manager asked Scott why Walmart didn’t offer its store associates a pension program so they could have the ability to retire. Scott blasted this manager for asking this question, and I was quite surprised that he even allowed this example to be posted. Nonetheless, ‘Ask Lee’ was eliminated, and I wouldn’t be surprised if the store manager was, too. This mentality extends all the way down to the lowest level of the company.”

Judging from what I read in that article, someone at Walmart’s head office would benefit from an understanding of quality concepts in business. The writing is on the wall for the company, and news items like that one continue to strongly hint that things need to change, drastically. Trade union members march in protest, communities are stopping developments of Walmart superstores in their neighborhoods, and the company’s sales growth remains poor.

As consumers, suppliers, and employees, should we sit on the sideline and watch the fire burn the building down, or should we do something about it? I have absolutely no influence in Walmart’s transformation. None at all. But I do have the power to spend money where I choose, and spending it at a company’s competitor is a great persuader. For my part, I’m taking my money elsewhere and getting better service and products as a result. And if I am doing this, millions of other customers must be, too.

But do I simply leave it there? Shoud I just take my money to the “other” store, or can I make suggestions? Granted, I don’t have access to the “Ask Lee” portal; however, I do have this column that you are now reading. You or I can make recommendations for change, and these are mine:
1. All senior Walmart executives and managers should get a good dose of quality training. The fear emanating from the manager’s account doesn’t bode well for the company’s long-term sustainability. If this doesn’t change, Sam Walton’s story of success will be memorialized by empty and abandoned superstores as employees and customers go elsewhere.
2. Transform the business into something that will drive customers in, not away. If radical transformation is necessary, then I think Walmart should go in a different direction: It should think smaller, and focus on higher-quality, premium products.
3. I would like to see small businesses run the store’s departments. Imagine an artisan bread maker and a handmade greetings-card producer having the benefits of reduced overhead in an existing building, and offering high-quality products, sourced locally, alongside low-cost alternatives. Give customers that personal touch, products made with pride by a talented neighbor, something you’d want to buy again or recommend to others. All of this is not currently an option at my local Walmart, although easily found elsewhere in my town.
4.  Invest in 3D printer technology, and make it another reason to visit the store. Granted, the technology is still a work in progress, but I foresee a time, and not far off, when I will be able to walk into a store and get Mrs. N.’s bicycle printed while I wait. The efficiency of no stock to hold, no shelves to fill, or no devaluation from theft would increase profits. Customers could view a catalogue and select from limitless options, and it would be made for them there and then.

I recognize that I don’t work in the retail sector, and my ideas may never be realized. It’s easy enough for me to sit in my comfortable world and observe poor quality, but can you? Are your customers or employees leaving you? Are you worried about your business, your job, your future? I believe that changing the system by improving customers’ experience of a product or service can ensure a business’s survival.

Looking back and saying, “If only I had done it differently” is a sad statement to make. We should all learn from the mistakes or errors of others; it’s a lot less painful than experiencing it ourselves. Walmart, like any other company, must learn from the mistakes of others and feel the pain of its own, otherwise its survival won’t be guaranteed. Like many others it will end up as just another name on a very long list of defunct retailers.

Discuss

About The Author

Paul Naysmith’s picture

Paul Naysmith

Paul Naysmith is the author of Business Management Tips From an Improvement Ninja and Business Management Tips From a Quality Punk. He’s also a Fellow and Chartered Quality Professional with the UK’s Chartered Quality Institute (CQI), and an honorary member of the South African Quality Institute (SAQI). Connect with him at www.paulnaysmith.com, or follow him on twitter @PNaysmith.

Those who have read Paul’s columns might be wondering why they haven’t heard from him in a while. After his stint working in the United States, he moved back to his homeland of Scotland, where he quickly found a new career in the medical-device industry; became a dad to his first child, Florence; and decided to restore a classic car back to its roadworthy glory. With the help of his current employer, he’s also started the first-of-its-kind quality apprenticeship scheme, which he hopes will become a pipeline for future improvement ninjas and quality punks.

Comments

Read His Column a Little Closer

One of his main points is empty shevles.  I find this to be true at our Wal-Mart.  In their quest to be all things to all people, Wal-Mart has dropped quite a few products that they used to carry. 

Their aisles are narrow and merchandise is strewn around.  Yes, I agree that the seeds of Wal-Mart's success are sowing its destruction down the road.

Whie I agree that it's not necessarily fair to expect a product to come with tools for assembly, it's not unreasonable, either.  Quite a few manufacturers do provide small specialty tools to assemble their products.

The Ghost of Walmart Future

A problem identified, then solved, is potentially a business opportunity!! So who is going to solve this one for Paul and Walmart? Quality is defined in part by solving problems brilliantly!! So, find the solution, turn it into a business, and find a model to profit superbly from it!! Hope that encourages someone, and Paul.

An interesting editorial on Walmart from 2005

Thought you all might be interested in this editorial on Walmart written by then-Quality Digest publisher, Scott Paton.
http://www.qualitydigest.com/april05/departments/lastword.shtml

Got more than 150 email letters to editor, mostly in support of Paton. A very small sample is here:
http://www.qualitydigest.com/may05/departments/letters.shtml

Well Paul - now you know!

Hey guys - take it easy on Paul.  He learned a valuable lesson.

Walmart

Paul, there is an alternative store similar to the one you describe: Target.

Sadly, what you write is applicable to Global commerce and culture. I threw my hands up some time ago. I'm not proud to be human.

Nay Nay Naysmith

I am generally a fan of your contributions, but you lost me at hello on this one.

First off, expecting tools with a bike or any other purchase that requires more than a cheap allen wrench is irresponsible. These throw away tools end up in landfills or worse. Good quality tools, as are needed to safely and efficiently assemble a bicycle, would be cost prohibitive to include with the purchase. The fact that you did not already possess the few needed tools required to assemble the bike indicates to me that you were not qualified to take on the assembly job for your client. I fear for her safety as well as yours. This point seems to be reinforced as you shop for a "star" screw driver - really?

What a great learning you provided. Consultants should not take on jobs for which they are untrained; unequipped; and unknowledgeable of the most efficient process for accomplishing the task.

You continue this learning as you attempt to perform a proactive post mortem on Wal-Mart.

Wal-Mart is not trying to be everything to everyone. You do not find quality tools at Wal-Mart as they do not move and the normal Walmartian isn't interested in quality tools. Wal-Mart is made for the person who knows what they want at the lowest price possible. Quality and service are not part of the equation. Service and quality increase price. Most of the time, service and quality are worth the incremental cost, but not to a Walmartian. I want in. I want my purchase. I want out. Sales people just get in my way and slow me down in these cases. Price and volume are king at Wal-Mart; nothing else.

In my opinion, you did not put in the time to understand Wal-Mart’s business model or the expectations of the majority of Walmartians. Then you tried to solve a problem that exists only in your reality. That makes it your problem, not that of Wal-Mart. I think they will do fine without your business.

Read closer

First off, I don't believe Mr. Naysmith ever said he purchased the bike at Walmart. Second of all, commenters missed the point of the article. Anyone who has ever shopped at Walmart has had the same or similar experience as Mr. Naysmith. Even with a "world-class" inventory system, shelves are often lacking in basic items, and finding assistance is near impossible, especially finding someone who knows that section. It is the same system that nearly brought Home Depot to it's knees a few years back. They scrambled to reinstall people to help customers. I know many people who's experience has been similar at Walmart. Their's is not a model for the long term. 

Walmart business maxim is lowest price.

Mr. Naysmith,

I respectfully disagree, as a reader who relishes your articles.  I don't see a 'death spiral', only those of the consumer masses spinning the retailer's turnstiles. And stable vlaue for their shareholders.  They, or any other retailer, can't provide every product  anyone needs, despite the founder's virtues.  They stock inventory that moves fast.  Personally, I would shop for specialty items ( eg bike tools) at a related store, where  the chance of stock is maximized.  And online if I can wait for it.

You wrote "But I do have the power to spend money where I choose, and spending it at a company’s competitor is a great persuader. For my part, I’m taking my money elsewhere and getting better service and products as a result."  I agree, that is the loudest voice one has a customer in this era when enormous compensation disparity between boardroom and breakroom defines most all American businesses.  Yes, it violates proven quality driven principles, that I try to employ in my profession.   And in my mancave, where I serve my favorite customers.

Harrison S

You get what you pay for

Let me get this straight - you bought a bike at WalMart and you were upset that it didn't include tools? That seems like quite an unrealistic customer expectation. You could have spent more and gotten a fully-assembled bike at a bike shop. I'd suggest not being mad at WalMart for them being what we should all expect them to be. Do they have opportunities to be better managed? Sure. But, if I were a WalMart manager and you came back and complained about the bike box not having tools in it, I'd laugh at you.