The dumbest CEO who ever lived?
Sunday, July 9, 2006 at 10:55PM “Snapper’s sales tactic of selling its products through independent dealers who provide pre and post-purchase service has worked for half a century. Jim Wier was now faced with the decision of whether the marketing strategy that had worked for them would work for them in the future. Wal-Mart was at their door wanting more of Snapper’s products.”
Jim Wier, the CEO of Snapper an acquisition of the Simplicity Corporation, a company that manufactures lawn equipment, had to make a decision, a big decision. He had to decide whether continuing his relationship with Wal-Mart, the king of retail stores, was the best direction for his company. He had to decide if his higher priced, higher quality, Snapper brand of lawn mowers should become what Wal-Mart wanted it to be, a line of lawn mowers that’s price and quality would compete with what Home Depot and Lowe’s stores were offering to their consumers. Wal-Mart wanted Jim to 
agree to let them sell more of his Snapper lawn mowers. To the thousands of entrepreneurs and established companies who make daily pilgrimages to Wal-Mart’s headquarters in northwest Arkansas, the decision would have easy; like deciding if they should accept a winning lottery ticket. But Jim Wier wasn’t so sure that joining hands with Wal-Mart would be the best thing that ever happened to Snapper. With a company as big and as powerful as Wal-Mart, sealing a deal with them might be more like letting a wolf watch over his sheep.
Simplicity bought Snapper in 2002, a company that complimented what Simplicity was already offering. *Simplicity purchased Snapper who had for decades operated by selling value to its customers. Value as defined by Snapper was not defined by low prices. It was defined by providing high quality merchandise and personalized service at above average prices.
*Simplicity was formed by W.J. Niederkorn in 1922. Initially, Simplicity began by selling a boring & grinding machine for reconditioning automobiles. The demand for its product ceased in 1936 when Detroit started selling rebuilt automobile engines. In 1937, they moved in to the lawn mower arena and sold its line of 2 wheeled lawn mowers though Montgomery Ward & Company. Since that time, they have continued to develop their line of outdoor lawn and garden equipment for both personal and commercial use. In 1985 they became an employee owned company but in 1994, the ESOT (Employee Stock Ownership Trust) sold many of its shares to Kohlberg & Company, an investment firm. Many of Simplicity’s employees still own a large number of Simplicity shares. Value and employee recognition has been a long standing management principle at Simplicity.
Today, Snapper’s push lawn mowers start in the $350 range. Consumers buying lawn mowers at Wal-Mart are buying lawn mowers for around $100. Despite selling their lawn mowers at more than 3 times the price that Wal-Mart sells lawn mowers for, Snapper still has a loyal customer base. Snapper’s sales strategy of selling its products through independent dealers, who provide pre and post-purchase service, has worked for half a century. Jim Wier was now faced with the decision of whether the marketing strategy that had worked for them would work for them in the future. Walmart was at their door wanting more of his company’s products. Undoubtedly, Walmart could expose Snapper lawn mowers to a flood gate of buyers. Jim sat in his lawn chair pondering all of the ramifications.
Like Snapper, Wal-Mart also has a loyal following of customers. It has been reported that there are over 100 million who walk through their doors every day. Since they began, they have emerged from being merely a department store to fully stocked service centers. Wal-Mart has become an expert at the logistics of getting products to its customers. Customers who walk in to Wal-Mart stores today can buy merchandise ranging from groceries to websites and just about everything in between. The products they sell are made by workers in manufacturing plants around the world. Morality and merchandising don’t often walk hand-in-hand however, and plenty of controversy exists about how Wal-Mart is able to offer products to its customers at rock bottom prices. You must admit there aren’t many places that you buy a rake for under $4, or a gallon of Vlasic pickles that weighs 14 lbs for a little over $3.00. Most grocery stores currently sell a quart sized jar of Vlasic pickles for the same $3. A gallon of pickles for the same price you pay for a quart of pickles? To the average working American, the decision about where they should buy their Vlasic pickles is a no-brainer. Wal-Mart is open 24 hours a day in most places. Just in case, you get the urge to have a pickle in the middle of the night.
During what has been a struggling economic times for many of America’s citizens, Wal-Mart’s low prices have undoubtedly provided consumers with price tags that are hard to resist. Despite many of its consumers knowing of the controversies surrounding the low wages that Wal-Mart pays its employees and the worldwide impact it has by offering products that are “always at the lowest prices”, consumers keep coming back. Many customers may walk through Wal-Mart’s doors with gritted teeth, but the bottom line for Wal-Mart is that they keep coming back. Wal-Mart’s strategy of low prices is working very well. Wal-Mart has experienced tremendous growth, to put it mildly, since opening its first store in Arkansas in 1962. Wal-Mart is bigger than General Motors.
That being said, Jim Wier arrived at Wal-Mart headquarters in Arkansas dressed in a suit. He went there to meet with their Vice President. Upon arriving, Wier was immediately struck by the lawn chairs that awaited vendors hoping to cut a deal with Wal-Mart. Lawn chairs that Wal-Mart most likely got for free, he thought. He selected a lounge chair for himself and straddled it so he could sit down and felt conscious of the fact that he was situated so close to the floor. His senses were tuned in as he listened to one of the most important deal makers at Wal-Mart. Wal-Mart’s VP wanted to know if Jim would be willing to expand its line of Snapper lawn mowers for the customers that frequent Wal-Mart’s 3,811 retail stores. Opportunity was knocking at Snapper’s door but Jim was feeling uneasy about inviting Wal-Mart inside.
Jim knew his company’s needs and his customers’ needs too. His customers were willing to pay for the quality and service they offered to them. They were willing to pay three times of the price of the lawn mowers that Wal-Mart offered to its customers. They were willing to pay more to have an independent dealer to talk to about any problems they might have with their Snapper lawn mower. They were willing to pay extra for feeling secure that the dealer they purchased from wanted them to be a satisfied customer. Wal-Mart’s offer to “help” Snapper surely made Jim think. What would happen to the customers who purchased Snapper lawn mowers at Wal-Mart? Who would be there to answer their questions about his products? Who would be there to stand behind his products? Yet, sealing a deal with Walmart would mean he would be able to offer his products to millions of Wal-Mart customers which, in turn, would make his sales skyrocket. But would an increase in volume really improve his business?
In the end, Jim Wier felt that getting married to Wal-Mart wasn’t in the best interest of Snapper. He decided that the future of being a corporate spouse of Wal-Mart would result in collapsing prices, offshore manufacturing, and the collapse of the quality and service that Snapper was founded on. Jim Wier said “no thanks” to Wal-Mart and told them that their prior engagement of selling a line of Snapper lawn mowers in their stores was over. Jim Wier decided that Snapper would remain true to the guiding principles that had worked for them for 50 years.
Editor’s note: I must say that I admire Jim Wier for making the decision that he did. I wish him the best of luck in continuing to provide America with a business that’s goal is to provide high quality and service its consumers. The sales philosophy of quality and service that was prevalent 50 years ago still works for me. I’ll take quality and service over cheap and unreliable anytime and I’m willing to pay for it. And if I had a choice, I think I’d rather meet with Jim Wier than the VP of Wal-Mart. Anyone want to bet 2 gallon jars of Vlasic pickles, that Snapper offers nicer chairs for the guests that come to meet with them? :)
Dawn Turner
Blog Development and Management
The SearchLogix Group
Reader Comments (1)