How Snapper’s CEO said ‘No’to Wal-Mart
When he acquired high-end lawn mower manufacturer Snapper in 2002, CEO Jim Wier’s lowest-priced machine sold for about $350. Because Wal-Mart also sold six other kinds of mowers for less than $200, Wier decided to pull the plug on his marketing deal with the giant retailer. But, feeling that he owed an explanation, Wier headed to Arkansas to meet a Wal-Mart VP.
The VP laid out a plan for Wal-Mart to build its mower line around Snapper, going head-to-head against Lowe’s and Home Depot. The VP asked if Wier was ready to “go large.” His reply:
“As I look at the three years Snapper has been with you, every year, the price has come down. Every year, the has gone up. We’re at a position where, first, it’s still priced where it doesn’t meet the needs of your clientele. For Wall-Mart, it’s still too high-priced. I think you’d agree with that.
“Now, at the price I’m selling to you today, I’m not making any money on it. And if we do what you want next year, I’ll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80 percent of our business is over here with them. And I can’t put them at a competitive disadvantage. If I do that, I lose everything. So this just isn’t a compatible fit.”
The VP tossed out options. Wier could create a lower-quality line using the Snapper name. Or he could move the manufacturing offshore.
Wier didn’t bite. He lost almost 20 percent of his business, but his dealers picked up much of the slack.
Naturally, Wier has second thoughts. He likes Wal-Mart. He wonders what he may have lost by deciding not to “go large.” He thinks his tombstone may read: “Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.”
Lesson: Make the best call you can based on the factors you consider most important.
—Adapted from The Wal-Mart Effect, Charles Fishman, Penguin Press.
The VP laid out a plan for Wal-Mart to build its mower line around Snapper, going head-to-head against Lowe’s and Home Depot. The VP asked if Wier was ready to “go large.” His reply:
“As I look at the three years Snapper has been with you, every year, the price has come down. Every year, the has gone up. We’re at a position where, first, it’s still priced where it doesn’t meet the needs of your clientele. For Wall-Mart, it’s still too high-priced. I think you’d agree with that.
“Now, at the price I’m selling to you today, I’m not making any money on it. And if we do what you want next year, I’ll lose money. I could do that and not go out of business. But we have this independent-dealer channel. And 80 percent of our business is over here with them. And I can’t put them at a competitive disadvantage. If I do that, I lose everything. So this just isn’t a compatible fit.”
The VP tossed out options. Wier could create a lower-quality line using the Snapper name. Or he could move the manufacturing offshore.
Wier didn’t bite. He lost almost 20 percent of his business, but his dealers picked up much of the slack.
Naturally, Wier has second thoughts. He likes Wal-Mart. He wonders what he may have lost by deciding not to “go large.” He thinks his tombstone may read: “Here lies the dumbest CEO ever to live. He chose not to sell to Wal-Mart.”
Lesson: Make the best call you can based on the factors you consider most important.
—Adapted from The Wal-Mart Effect, Charles Fishman, Penguin Press.
