Retail Wisdom from Sam Walton - 1

I recently finished re-reading Sam Walton's "Made in America" - capturing the classic story of Walmart seen through the founder's eyes. I'd read it earlier when I was in B-school and was impressed. I read it now as a Retailer and I am 'really' impressed. Impressed - with the way they have kept things simple and efficient.

While I do not agree with all their moves and ideas, I am noting down here some pearls of Retail wisdom, that we probably might miss on a regular day:

• On Advantages of Partnership: The best way to reduce paying estate taxes is to give your assets away before they appreciate.
• This is really the essence of Discounting: by cutting your price, you can boost your sales to a point where you earn far more at the cheaper retail price than you would have by selling the item at the higher price. In retailer language, you can lower your markup but earn more because of the increased volume.
• In retail, you are either operations driven – where your main thrust is toward reducing expenses and improving efficiency – or you are merchandise driven. The ones that are truly merchandise driven can always work on improving operations. But the ones that are operations driven tend to level off and begin to deteriorate.
• You see, no matter how you slice it in the retail business, payroll is one of the most important parts of the overhead, and overhead is one of the most crucial things you have to fight to maintain your profit margins.
• You’ve got to give folks responsibility, you’ve got to trust them, and then you’ve got to check on them.
• Sharing information and responsibility is a key to any partnership. It makes people feel responsible and involved, and as we’ve gotten bigger we’ve really had to accept sharing a lot of our numbers with the rest of the world as a consequence of sticking by our philosophy. Everything about us gets to the outside. In our individual stores, we show them their store’s profits, their store’s purchases, their store’s sales, and their store’s markdowns. We show them all that on a regular basis and I’m not talking about just the managers and the assistant managers. We share that information with every associate, every hourly, every part-time employee in the stores. Obviously, some of that information flows to the street. But I just believe the value of sharing it with our associates is much greater than any downside there may be to sharing it with folks on the outside.

I really like this one pearl. From what I have seen on Retailers today in India, I think the scenario is totally opposite - where companies Do Not share this data even among their own people at Head Office. Like he mentioned - there is an overwhelming scare that competitors would learn about our business. I share the sentiment that they would get to know anyways - directly or indirectly - sooner or later (Why, we ourselves do Competitor Store visits, Ask Suppliers about their Purchases & Sales, and so on). Also, estimate that they learn about your data after 5-7 days, if you are sharing everything with your Employees. This still gives you 5-7 days to execute something brilliant - if everybody knew what the Data was and what the Tactical objective was. It would nullify the usefulness of the Data that the market probably now has about your Operations. But, by not sharing data with your own Employees, the organization is effectively hampering its own Mobility and Execution.

• Here’s the point: the bigger Wal-Mart gets, the more essential it is that we think small. Because that’s exactly how we have become a huge corporation: by not acting like one.