MARCO ISLAND, Fla. -- A record number of supermarket executives attending the General Merchandise Marketing Conference here got a rare insider's view at the success of Wal-Mart, the industry's major competitor.
Consultant Jack Shewmaker, Bentonville, Ark., a former top Wal-Mart executive who serves as a member of its board of directors and executive committee, spoke at the gathering sponsored by the General Merchandise Distributors Council earlier this month. According to Shewmaker, the primary reason for Wal-Mart's retailing success has been the building of a corporate culture capable of responding to rapidly changing consumer needs.
Estimated conference attendance was up 10% with approximately 800 general merchandise executives, spouses and guests. Preliminary attendance figures listed the number of participants as follows: 128 wholesalers and retailers representing 70 companies and 501 suppliers from 279 companies.
Shewmaker, who spoke during the business session on Sept. 12, said during his 20 years with the retailing giant he saw the company become the country's No. 1 retailer with sales that soared from $30 million to $87 billion in 1994.
"The culture that evolved at Wal-Mart stores is the principal and foremost reason for whatever success they have achieved. Sam Walton was the principal reason that culture developed but not the only reason," stated Shewmaker.
He said the attitude of the people within an organization, their approach to business, and the speed with which they can execute a consumer-driven, consumer-focused strategy are the only two "sustainable competitive advantages" in today's rapidly changing markets.
Shewmaker discussed "power blockages" that exist within corporate cultures that prevent them from responding to consumer demands and changes in the marketplace. Power blocks usually come about by controls and restraints set up by people and processes within the organization, Shewmaker stated.
"We've established organizational silo structures, bureaucracies and processes -- 'You do your job. I'll do mine.' " However, at Wal-Mart it was not impractical for somebody heading up the management information systems to eventually become a head buyer, Shewmaker explained. "The idea that credentials are the only prediction of success is fallacious. Some of the best merchandisers Wal-Mart ever had came from backgrounds other than merchandising." Industry efforts to move ahead with partnering, electronic data interchange and quick response -- areas of business in which Wal-Mart excels and has won a competitive advantage -- also can become power blocks, Shewmaker warned. This happens, he said, "whenever you take a position of saying to a new vendor, 'We can't add your product to our assortment because you don't have EDI. This guy may have the greatest product to come along in a century, and we are not going to buy and sell it because it doesn't facilitate our systems. That's nonsense.
"Our business is taking care of customers and selling merchandise to customers. Unless you do this there is no basis for business. Sam Walton was a master at this."
Growing a Corporate Culture
The 15 points underlying Wal-Mart's corporate culture and its ability to respond more successfully to the changing moods of the consumer.