Overview:

Penetrated Wal*Mart, Built $8 million Business Unit*:  As president, Associate led effort to penetrate Wal*Mart and built an $8 Million business unit, including a fully staffed office in Bentonville, Arkansas - home of Wal*Mart.

    Problems / Challenges Faced:

·         It is fairly easy for a merchandising company to get initial work in Wal*Mart.

·         The problem is that if you make a mistake, Wal*Mart will know it within 24 hours and exclude you in a heartbeat.  (The "Black List")

·         Wal*Mart is a big risk area for manufacturers.  It is probably 25% or more of their total business.  If a merchandiser messes up, it can hurt the manufacturer badly.

·         The single client call problem:  "A single call in a store will not be profitable, unless it is a 3-4 hour call, which is very unlikely in the early stages."

·         Many manufacturers do not have distribution in all Wal*Marts.  You must be very careful about taking on business that is unprofitable due to excess travel time (this is the "single client call" problem.)

·         When merchandising organizations are breaking into Wal*Mart, they have to "earn their way", by doing 1/2 hour or other small project work initially.  It is unlikely that you will start out with significant continuity work or larger projects.  This means you may need to be prepared to endure some losses while getting established at Wal*Mart.

     Solution:

·         Associate's company had been calling on Wal*Mart for quite a while, winning some small project work.

·         Breakthrough came by leveraging good work they had done for Unilever.  Wal*mart team was not happy with the  existing merchandising organization.    Unilever team took it upon themselves to hire Associate's company to do work that existing merchandising organization would do poorly.  They then showed their management how much better Associate’s company was doing than the incumbent.

·         Associate discovered that to build a critical mass of business at Wal*Mart: 

• You must understand Wal*Mart
• You must be able to “talk Wal*Mart”
• You must be able to convince the manufacturer that you know what you are doing at Wal*Mart and will represent him or her effectively
• You will probably need to invest in an office in Bentonville.   If you don’t have an office in Bentonville, the manufacturer will ask “Are you really committed to Wal*Mart?”

·         Associate was able to hire an ex-buyer from Wal*Mart.  Set up a one-desk office in Bentonville and the investment paid off. 

·         Best approach is to build off of your existing manufacturers and strengths – not reinvent yourself and try to go in entirely new directions

·         Bundling together multiple manufacturers to make a call economic: E.g. in any category, the manufacturers will have people that they use to do merchandising In Wal*Mart (even if they are lower end merchandising companies).  By bundling multiple non-competing manufacturers  together, each manufacturer was able to afford  higher end merchandising work and Associate’s company was able to make a profit doing the work.

·         Watch out for the cost necessary to initially cover the stores

·         One and a Half Hour Minimum Call Rule:  Associate’s company discovered that they needed to put together a minimum hour and a half per call per store to make breakeven.  Any incremental work became very high margin (or allowed them to price more aggressively since the fixed costs were paid.

·         Having Unilever on their resume led to other big name manufacturers in similar categories 

Results:

·         Built from $0 to $7.5 million in annual merchandising work in Wal*Mart

·         Associate’s company did not get rich, but the Wal*Mart work made them a national player and helped cover fixed costs.

·         The Wal*Mart business also led to additional business from other sources