Quotations from the Chairmen
Susan Dickenson -- Home Accents Today, October 23, 2012
So, if you're a student of world history you'll know this statement I heard recently on a news report about China. It referred to the late Chairman Mao and one of the key tactics he used to take over the country. He said if you won over the countryside and surrounded the cities that the cities themselves would eventually be won over as well.
It got me thinking: Who else adapted such a strategy in business, setting up in the country outside the cities with the eventual goal of winning over the cities too?
Bingo. Chairman Sam. As in Sam Walton of Walmart.
It's a little hard to believe now when the company has thousands of stores all over the place, but for the first 30 or 40 years of its existence Walmart was largely a rural and suburban-based business. It tended to site stores on the outskirts of town - often in areas not yet well populated but certain to be so with the natural expansion of the demographic base. Once it had circled a major metropolitan area, it moved in ever closer, finally setting up stores in the cities themselves.
Except that, unlike Mao, Walmart has never quite accomplished that last piece of its master plan. In city after city all across America the company has failed to penetrate the inner urban neighborhoods it needs to take its business to the next level.
So while there are Walmarts in seemingly every suburban and exurban strip center shopping locale, they are still rare sights in inner cities.
And that is a major reason why Walmart's U.S. business has been flat for so long.
It's certainly not the only one, of course. A general merchandising malaise has befallen the Boys from Bentonville, who never quite know if they want to be Target or Kohl's or Family Dollar on any given day. This ambiguity is reflected in an often directionless product mix that tries to be all things to some of the people but often ends up, in the worst Lincolnian sense, of being not much to many.
But there's more. Walmart, as the biggest retailer in the history of retailing, got blindsided by Amazon, much as the rest of the merchandising industry did. But with its scale and brainpower, it should have never happened to them even if others got hit. Walmart has let Amazon become the goto online retailer, a position it should have taken ownership of back when Jeff Bezos was still only peddling books.
Those merchandising mishaps are a big part of the Walmart story, but the failure to penetrate urban areas is something that most people don't realize has contributed to the difficulties the company is going through today. Its machinations with smaller stores and different formats would not be so necessary if Walmart had figured out how to crack Big American Cities.
It turns out that Chairman Mao was much better as a merchant selling his politics than Walmart has been as a politician trying to sell its merchandising.