Consumer Strategies Report June 2005/Executive Life

Somewhere in Arkansas, U.S.A., sometime in the 1950s - If I were Sam Walton, a young family man from the mid-west with strong values and commitment to succeed, I'd probably decide to get into a trade that's easy for me to understand - retail. You get something, sell it, make some money. Sure, I could work on the farm, but I'm no dummy. I see what's happening with these new fangled manufacturing plants cropping up all over the place. They're making things harder for a farmer to earn a decent living. But I can embrace this new age by selling the stuff that's being produced and secure my family's future.

Now, don't go calling me entrepreneur or anything. It's not like folks out here have any other choice. There's no big companies to work for, except maybe the railroads, but that'll keep me away from my family far too long. And even if there were an alternative, what would they have me do? I'm too old to learn new tricks. So, ultimately, out here, you either do for self or you should be put down like a bum horse. No free rides in life.

So I find this great location, not very big, just under 1000 sq ft, but it's in a town with another retailer, so I know there's people who buy stuff here. My banker down the street likes my idea and is willing to give me a loan to start off. I put that money to good use by buying the merchandise at the lowest costs I could negotiate and renting the location. The family all work together to fix up the place, stock the shelves, and man the counter. We decide to stay open dawn till dusk.

During the first couple weeks of business, it was obvious to us that folks just didn't see the point of coming to us when they'd been going to Mr. Jones' store down the street for years. My ma didn't raise me to sit there and take the hits, so I started walking around and asking folks why they preferred shopping at Mr. Jones'. To my surprise, it was mainly because they'd been told by that sly ol' dog not to shop me as a favor to him and that I was an offense to decency for having opened up in his town. They didn't care either or as long as they got what they needed.

In a small town like this, people knew I was opening up shop before I opened. Word travels fast around here. And it was around that time when the bad-mouthing started.

Well, I ain't no pansy and decided to fight fire with water. Customers didn't care because we both offered the same things for the same price, so the real advantage was loyalty, or maybe convenience in some cases. But I'm willing to wager that even ol' Mr. Jones will walk down the street in my direction if I promised to save him a few cents on some essentials like socks or salt.

Well, I was right. I put some signs outfront and folks caught on quick. Too quick. Before long, I ran outta salt, and nothing else. I just decided to reduce my prices on other stuff I knew people always wanted, sometimes right on the spot before I handed it to someone. I was so grateful for each customer, I made it a point to remember their names and the stuff they liked the most. Even the kids started memorizing some stuff. I even promised to try and get it for them cheaper next time. Sure, I was probably making half of what Mr. Jones down the street was making, but a whole lot of a little bit equals the same as a little of a big thing. So, the trick was the sell more and more stuff, which was easy as long as it was cheaper.

There appeared to be unexpected benefits of selling so much stuff: my wholesaler started getting me stuff quicker than anyone else. He even sent a special truck just for me on the quickest selling stuff. Things got so busy every now and then, I had to ask my oldest boy to work extra hours. The wife wasn't none too happy that Sam Jr. couldn't study as much as she wanted. Luckily Mrs. Walton is a pearl and completely supportive.

Well, in short order, I'd paid off our debt to the bank, bought the store, and started seriously thinking about opening up another store. By around this time, at least 80% of the town by my count was stopping by at least once a week and Mr. Jones just decided to close shop and retire, so I was doing something right. (Mr. Jones finally stopped in a few days ago to apologize for being such a lousy neighbor.) As crazy as it sounds to lower your prices, I guess no one realized before that as long as you don't lower prices below what you pay for 'em, it's OK. When Mr. Jones realized what I'd been doing all this time, he felt like an old fool for never having thought of it. All this time, he'd simply been pricing things according to what his wholesaler had told him without question. I told him that that's what I did, but this way works much better for both of us. Mr. Jones still pops in to give me some good advice and I repay his new friendship in kind with some essentials on-the-house.

We found another location in another town and this time, decided to buy the lot outright. It was a bit bigger and pricier, but our banker was kind enough to give us the loan we needed. And of course, this town also had just one other store and I knew we could do better for shoppers on prices. It don't take a genius. I soon expected to have a new former competitor/good friend.

But then arose a new problem: I was running outta kids to man the shelves. I guess it was my oldest that suggested opening up the merchandise behind the counter to the customers. At first, I hesitated; although I trusted my customers not to try and steal nothing, that's because all the merchandise sat behind the counter. But to open it up to self-service and free my kids just to just accept money was a big risk.

I suppose that the real risk wasn't thieves, but rather, the loss of business from too many customers waiting on line. Folks 'round here aren't generally impatient and live a slower pace than city folks, but don't let 'em stand on line for more than 30 seconds. Boy, they'll get crankier than a prairie dog stuck indoors and walk right out the store. They may not ever come back on principle. So, my son won out on this argument. And dang, is that boy not a genius. Sales doubled at both locations almost overnight. I guess folks just found it better to shop for things they can see and feel and ask for help for, instead of from some catalogue which most can't even read.

The third, fourth, and fifth stores were opened in a few short years. I was giving my wholesalers so much business, they just kept giving me better and better rates. But as sure as the sun rises, I could swear some of 'em city slickers were trying to take advantage of this Arkansas boy. One of these days, I'm going to have to just go directly to the manufacturers for the best rates. And as customers keep telling me, the lower the prices, the more business they'll gladly give me. Can't argue with that logic, can I?

In the meantime, I've also gotta find a better way to keep track of so many wonderful customers. It's getting harder and harder to remember what everybody wants. The wife says to use a ledger and I think she's right. I wonder if there's a better way?

Disclaimer: The recommendations, commentary and opinions published herein are based on public information sometimes referenced via hyperlinks. Any similarities or likeness to any ideas or commentary from any other sources not referenced is purely coincidental. al berrios & co. cannot control any results occurring from advice obtained from this publication nor any opinion(s) conveyed by any reader of this publication.

(c) 2005. All Rights Reserved. al berrios & company, inc. Published by al berrios & co. This Report may not be reproduced or redistributed in any form without written permission from al berrios & co., subject to penalty.

Privacy

Back to Menu