Doug DavidoffThe Washington Post has an excellent article on Wal-Mart’s plan to go “upscale.”
There is one excerpt that I find extremely interesting:
Since the first Wal-Mart was built here in 1962, the company has focused on one goal: low prices. That no-frills approach still defines the retailer. Founder Sam Walton drove a 1979 Ford pickup truck even after he made millions. Top executives today work in shabby offices surrounded by cubicles. And at a reception for reporters here this week, the fare included Crab Rangoon, shrimp skewers and lasagna -- all from Wal-Mart or its wholesale division, Sam's Club, of course.
Such single-minded drive has turned Wal-Mart into the world's largest retailer. But in recent years, it has also resulted in sluggish sales growth, as the company has been consistently outstripped by its cooler, more innovative rival, Target Corp.
This supports my theory that the only reason Wal-Mart is trying to do this is to support its stock price. It needs a story to tell Wall Street (I’ve been there), so analysts will continue to pump up the stock.
Sam Walton did not build a great company by focusing on “sales” or “stock price.” He focused on being something exceptional to a core group of people. Sam didn’t worry about the people who didn’t come into the store – he made sure the ones that did come in came back. When the focus stops being on what it takes to be great and, instead, focuses on short-term issues such as stock price or this year’s revenue, it’s the beginning of the end.