WAL MART

[Mark]

Some of the little guys aren't savvy enough about good/basic business practices, like keeping up your stock.  A while back, I wanted to change the heater hoses on my car.  The mom-and-pop store had three cartons of one size hose that I needed, and none of the other size.  My usual thing is (with auto parts, home repairs, or anything else) if the first place I stop at doesn't have everything to do the job, then it's on to the next store until someone has everything needed.

Walmart bashing is a favorite for a lot of people.  I'm not crazy about the place myself, and don't go there too often (maybe eight or ten times a year, and that's on a steep decline).  But they didn't invent the practice of playing one supplier against another.  Ever walk through Sears and notice that this year's Craftsman lawnmowers don't look anything like last year's?

[Harry P.]

The Walmart formula is that the entire store turns over every six weeks.  They have their vendors on net 90, so vendors literally own all the merchandise in the store. That's why it's so cheap and easy for them to add new stores. Nothing sits stagnant in a Walmart. They know how much every linear foot of shelf space should generate in profit. There are many more products that would like to be in that store than they have shelf space, so Walmart picks and chooses.  Then they tell that vendor the price they will pay. It's up to that vendor to figure out how to sell that product at that price, finance it all for 90 days and make enough profit to stay in business.  Quite a program.

Oh, and Walmart doesn't do their own purchasing. They give vendors access to their computer systems and it's up to the vendors to manage their inventory in the Walmart system.  They produce and ship to the need.  Their systems are so sophisticated that Walmart can give up to the minute information about every store, being fed directly from the cash registers.

I got educated in this when I worked for a major pharma with a considerable over the counter presence in Walmart.  There is also a 2 hr documentary on the Walmart Formula that regularly gets repeated on the cable channels.  There are companion  documentaries done by the same people on Costco and Marriott.  Quite enlightening if you want to learn a bit about how business actually runs.

So what you're saying is that Walmart has very cleverly and intelligently figured out the best model to run their business. And they're very successful at it.

For being smart and running their business the best way they can run it, and being very successful at it... we bash them?

That's like saying the kid who studied hard and aced his finals is a loser because he did better than his classmates who slept through class and flunked their final!

[lordairgtar]

 

The answer is that the little guys have to figure out a way to fill a need the big boys don't or won't, whether that's more personalized customer service, carrying items the big boys don't, or some other value-added service. If they can figure out a way to carve out a small spot of their own in the marketplace, they'll survive. If they can't out-do the big guys in some way or another, they won't survive. That's just the way free-market capitalism works.

    True. Using lawn care equipment as an example, we know Wal*Mart sells lawn mowers and snow blowers, garden tractors too. The local business owner of the lawn care equipment shop may lose some sales to his big competitor but he will service those machines bought elsewhere. After overhead and employee costs, servicing equipment yields better profit on the hourly rate he charges than whatever profit he may have received selling a lawn tractor. The small business owner may also sell accessories for the equipment, no matter the brand.

     If I owned a hobby shop, I would stock more of the specialty stuff like after market detailing supplies, tools, airbrush systems, paints, adhesives...plus maybe hold instructional seminars by master builders to bring in new customers, on top of discounting my kit stock as feasibly possible. I know Model Empire does this (discounting) and the prices are always cheaper than Micheal's, Hobby Lobby, or Wal*Mart, coupons not withstanding. I'd also have a spot for vintage OOP kits. Also Use social media like a Face Book page and create an internet store/presence.

 

Edited March 5, 2016 by lordairgtar

[Longbox55]

  Ever walk through Sears and notice that this year's Craftsman lawnmowers don't look anything like last year's?

Funny that you would use Sears in an example of not being savvy about good/basic business practices. Considering how fast they are closing stores and heading towards going out of business for doing exactly what you mention the mom and pop stores are making mistakes on.

[Harry P.]

Sears is the perfect example of how not to run a retail business.

At one time they were (I believe) the largest retail chain in America (this was before Walmart came along).

They were the big dog, number one. And Sears had every opportunity to put into place the same savvy business/retail techniques and practices that Walmart has done, but they didn't. Now they are on a gradual death spiral, closing stores and losing hundreds of millions every quarter due to poor business practices, bad executive decisions, too much expansion into other areas unrelated to retail (like Sears mortgage, for example), and mismanagement.

Walmart thrives, Sears is on life support. That's how it goes in the world of free enterprise. Some companies get it... some don't.

If Sears had been as sharp as Walmart has been, they might still be number one today. And if they were, some would be bashing them.

 

[Mark]

Nope, the mom/pops are the ones ordering the wrong stock, and not keeping the right things available.  Sears was an early proponent of playing suppliers against one another.  Their present problems are traceable to their still trying to be an "everything" store as opposed to a home/garden store, an apparel store, or an appliance store.  They'd be better off getting out of areas where they aren't doing well.  They've been closing their tool/home/garden stores, that's probably the area where they have been strong...but they've managed to screw that up over the last few years.  I'm done with them, myself.

[martinfan5]

I do not recall the last time that I stepped foot in a Sears store.

[Longbox55]

Very true, Harry. I was unfortunate enough to get to see first hand what is happening to Sears, especially after the merger. The sad part about it is that they were attempting to try to compete head on with Walmart with the Sears Grand concept, but it was poorly executed due to corporate trying to be cheap acquiring properties to put them in (mostly closed K-Marts, go figure). Now, since the merger, the COE declared the Grand concept a total failure, even though it had only just started, and is now more interested in selling off the properties than actually operating the business.

Just for the record, I worked for Sears in their Automotive for just over 22 years, Started out as a tire/battery installer, and worked my way up to being the lead mechanic/shop supervisor.

[Harry P.]

I have fond memories of Sears. Pretty much everything my parents owned came from Sears! And the annual "Wish Book" Christmas catalog was something I always looked forward to. And yes, I used to get my car serviced at a Sears auto center. Good memories. These days the only time I ever set foot in a Sears store is if I'm at the mall and park near the Sears entrance... and cut through Sears to get to the store I actually intend to get to!

[Longbox55]

Mark, I'm going to have to disagree with you to some degree. While you are 100% correct on them pitting suppliers against each other, they also have developed a bad habit of ordering and stocking wrong merchandise in the stores as well. For example, in the automotive department. They would grossly overstock the automotive with low profile sport compact size tires in areas where light trucks are far more common. I lost track of how many times we had to special order tires due not having them in stock. There were plenty on hand, usually around 2200-2500, just not the ones we needed. Another automotive example, batteries. The most common group sizes we sold were the 34, 75, and 78. We actually had times where we couldn't sell batteries to customers with cars that took that size because corporate would not order them for us. In other areas, such as soft lines, instead of stocking clothing that was popular in the area (in my case, a central Illinois farming community), they stocked 3 year out of date clothing that would be more popular in the larger cities.

[Longbox55]

I have fond memories of Sears. Pretty much everything my parents owned came from Sears! And the annual "Wish Book" Christmas catalog was something I always looked forward to. And yes, I used to get my car serviced at a Sears auto center. Good memories.

Same here, Harry. I had several family members that worked for them over the years, and I have many friends that I met that worked there as well.

[1930fordpickup]

Bill I was told that KMart corporation started doing the order for all the stores just before the big decline also. A friend's high school buddy was a manager for years and he said the local managers would have a say in what to carry in their store. But with the big switch all the stores received the same thing.

[Longbox55]

Pre merger, it really wasn't as much of a problem, even though the P.O.S. (Point of Sale) system wasn't perfect. But post merger, it wasn't unusual to have to go and reset the on hand amounts to 0 to force an order for items that sold well, but were not being replenished by corporate.

 

[Pat Minarick]

The Wal Mart by me just filled the shelf this week. 

[highway]

I have fond memories of Sears. Pretty much everything my parents owned came from Sears! And the annual "Wish Book" Christmas catalog was something I always looked forward to. And yes, I used to get my car serviced at a Sears auto center. Good memories. These days the only time I ever set foot in a Sears store is if I'm at the mall and park near the Sears entrance... and cut through Sears to get to the store I actually intend to get to!

Same here, Harry. I had several family members that worked for them over the years, and I have many friends that I met that worked there as well.

Yeah, same here too. My dad worked for Sears for 25 years before injuring his back and going on disability, and I grew up with Craftsman tools in my hand. I still go there for tools on occasion, but that is even very little now since I have found Lowe's Kobalt tools are just as good, and they actually stand up better to the use (read as abuse ) I tend to put my tools through. The quality of Craftsman has gone down greatly, the old ones my dad had were far beyond the quality they have today. In my younger years, I used Craftsman screwdrivers for about everything but screwing a screw and they begged for more. The latest set I bought in 2000 while I was running heavy wrecker and doing mechanic work in their shop, I broke a flat head screwdriver just screwing in a screw. It lays with its broken tip in my toolbox, because after I had a brand new ratchet break while under a semi taking out the U joint bolts from the driveshaft to tow it and then tried to return it for a new one and ending up having the clerk try to give me a rebuilt one for my return, it hasn't been worth the hassle. That was the first time ever I had taken a tool back to Sears and was offered anything other than brand new off the shelf, and I wouldn't take anything less that day, and that is exactly what I told the manager that I had the clerk call. I haven't had any issues with returning any Kobalt tools to Lowe's, because I haven't had any fail yet!

[mikemodeler]

 

Sears certainly did themselves in with some poor management decisions along the way, but the consumers also helped them with abusing the return policies they had. I worked at a Sears Paint and Hardware store in the early 90's and the borderline criminal abuse of policies made me sick. Guys would stop in at 6 PM, buy an electric chainsaw and go home and trim a tree or cut it down and return right before closing wanting their money back because "it didn't do the job" despite being covered in sawdust! When asked if they wanted to buy a gas model, they laughed and said "No thanks". Obviously they knew how to game the system, just like the retired guys who spent their days going to garage sales looking for damaged Craftsman hand tools to return for new replacements! I always loved the guys who would bring in rusty pliers and ratchets, thinking they would be getting shiny new ones. Our store policy, as well as Sears, was to repair or replace defective hand tools. When it came to rusty tools, we went in the back room, sprayed them with WD-40 and got them working again, much to the customer's dismay. When they claimed that they were entitled to NEW tools, we reminded them to read the sign that said "Repair or Replace" and we had just repaired their defective tool. All of the ratchets have replaceable gear drives and are typically the only thing that fails on a ratchet and we were instructed to rebuild a ratchet unless we didn't have a kit to do so. Many customers were ticked off when we just didn't hand over a new $20-40 ratchet and instead rebuilt theirs!

WalMart also grew weary of abusive returns. I remember reading a story about a customer would walk into a WalMart every spring, buy a lawn mower and use it all summer and then return it and get his money back. He would then buy a snow blower and like the lawn mower, use it all season only to return it at the end for a refund. This went on for about 2-3 years before Wal Mart caught on and changed their policies. One could argue the customer did nothing wrong as it was store policy, but most of us would agree that behavior like that only drives up the cost for the rest of us.

Yeah, like Harry I have fond memories of shopping at Sears. Most of my kitchen appliances over the years have been Kenmore, because getting parts and service was easy! 90 percent of my hand tools in my tool box are Craftsman, many of them over 30 years old and I can't remember if I had to have any of them replaced under warranty. Going to Sears on a Saturday was an outing as my Mom and Dad were on different missions but I do remember driving away with tools, clothes and other items because of the convenience Sears offered a family. Sad to see them decline as they have, but like others have said, they failed to change and ventured into unrelated business areas that allowed Wal Mart, Target, Kohls and others step in and take that business from them.

[Spex84]

I have fond memories of Sears and the wishbook too. A lot of my clothes came from Sears when I was a kid, haha. It's been a shame to witness the company's decline.

I have purchased some items from Wal Mart, but I try to keep business local when I can...a lot of small businesses are failing, and part of it is due to large corporations taking advantage of incredibly low wages overseas, and massive production scale, allowing for certain efficiencies that smaller companies can't match. It's good business. And it pretty much eats everyone else's lunch.

As for Wal Mart being a shining example of capitalism working its magic...I feel they're a bit like Lance Armstrong. Strong, capable, driven...and using every trick in the book to get ahead and stay that way.

I read an article a while back about Wal Mart's activities in emerging economies (in this instance, Mexico), and some of the stuff they're doing would be literally criminal in America. Bribes, payoffs, blackmail, buying land cheap from business owners they've deliberately bankrupted and and then evicting tenants, skirting zoning and environmental laws with payola...incredibly mercenary stuff. Again, maybe "good business" but not the kind of thing that gives a person that warm fuzzy feeling...unless that person happens to be a shareholder :/

[Spex84]

Oh, and to carry this to the next possible point (although I've drifted off the topic of models, but might as well mention it): many model kits (most?) are manufactured in China now. China is notorious for knock-off products and copyright infringement. The website Alibaba had a fairly enormous IPO a couple years ago; if you're not familiar with the site, it allows anyone to buy stuff directly from manufacturers in China, cutting out the middleman.

Recently I purchased a hard-drive enclosure for $7, with free shipping on Ebay, from a Chinese seller. Free shipping to Canada is fairly rare I've found...and I thought the product would probably ship from a warehouse in the states or something. It showed up a couple weeks later, with Chinese characters all over the packing slip...contents as expected. Seven dollars. From frickin' China! I can't even fathom the amount of fuel that must have been burnt shipping that stuff over, compared to what I paid for it.

How long before we're all buying knockoff kits (that are the same as the official ones) directly from unscrupulous (and clever) manufacturers overseas? This kind of activity would not only gut the local mom-n-pop hobby shop market, it would hurt the model companies that actually develop the kits in the first place. But I have no doubt that given the choice, people would buy cheaper kits if they could get them.

So before celebrating Wal Mart for evolving with the times and out-pacing their competitors...watch out, there's still room for even purer expressions of consumer capitalism, enabled by the supply-and-demand dynamics of the internet economy. Yikes!

//rant over, haha.

[Harry P.]

I read an article a while back about Wal Mart's activities in emerging economies (in this instance, Mexico), and some of the stuff they're doing would be literally criminal in America. Bribes, payoffs, blackmail, buying land cheap from business owners they've deliberately bankrupted and and then evicting tenants, skirting zoning and environmental laws with payola...incredibly mercenary stuff.

Don't be too quick to blame Walmart for being the bad guy. You have to keep in mind that this is happening in Mexico, one of the most corrupt countries on earth, from the very top of the government down through local politics, the police force, etc. Taking/giving bribes is "normal" in Mexico... it's the way they operate. If you think politics and business is corrupt here in America, it's 100 times worse in Mexico. Walmart has to "play the game" in Mexico as it's played in Mexico. I assume that everyone plays the same game there, because honesty doesn't get you too far in Mexico.

From businessanticorruption.com:

Corruption is a significant risk for companies operating in Mexico. Bribery is widespread in the country's judiciary and police, and business registration processes, including getting construction permits and licenses, are negatively influenced by corruption. Organized crime continues to be a very problematic factor for business, imposing large costs on companies. Collusion between the police, judges and criminal groups is extensive, leading to widespread crime, theft, impunity and weak law enforcement. The petroleum industry is dominated by the state-owned oil company Pemex, which has been the subject of several high-profile corruption cases. Gifts and "hospitality" are not forbidden by law and may be permissible, depending on intent. Attempted bribery, extortion, abuse of office, bribery of foreign public officials and "facilitation payments" are criminalized under Mexico's Federal Penal Code; however, Mexico's anti-corruption laws are almost never enforced, and public officials are rarely held liable for illegal acts.

February 2016

[Spex84]

Indeed, Mexico absolutely has serious and pervasive corruption issues. That doesn't mean I'm gonna let Wally's off the hook!I wouldn't call Wal Mart "bad" (never did!) but they're like the proverbial 800 pound gorilla...they sit where they like. *shrug* makes me nervous. Even so, if there was a Wally's near me with amazing model kit selection, and super low prices....I'd probably give in to temptation, to the detriment of local hobby shops.

[Harry P.]

If you're going to condemn Walmart for playing by Mexico's rules, then you have to condemn all the US companies doing business there, including our car manufacturers.

You think Ford and Chrysler and GM operate plants there without paying bribes? Wake up...

[1930fordpickup]

If you're going to condemn Walmart for playing by Mexico's rules, then you have to condemn all the US companies doing business there, including our car manufacturers.

You think Ford and Chrysler and GM operate plants there without paying bribes? Wake up...

I for one, do blame all of the above for what they are doing. It is not like it never happens here. 

To get back on topic Harry just because they do not carry them in the Big City does not say they do not sell them other places. I think that if t hey never slowed down in sales they kept carrying them all along. They do sell them online you can just pick them up at the local store with no shipping. 

[Bob Ellis]

I don't think this is Walmart bashing. They just decided they can't make money selling models in some stores.

In the Hudson Mass store, models have been gone for 10+ years. In Hudson, NH, they had some last year, but not many. Why none in Massachusetts, but some in New Hampshire? Good question. At first I thought because there was competition in Mass, but none in NH. Seriously, hardly anybody sells models in MA either. I have plenty of fingers to count the number of stores selling models.

Demographics of upcoming potential modelers is very low, maybe true. I see kids doing computer games.

I have a friend that sells new models and I spoke with him. I came to the conclusion that the profit margin is too small. Everybody tries to nickel and dime you and threatens to go online.

I figure Walmart has a statistical program to assess the store model sales, and it doesn't lie.