"But it did so well that one of its executives said in the latter part of the '70s that the only way they were vulnerable was if they changed from what they were doing."
Do you have any idea who Walton was talking about? He was referring to K-Mart. It's hard to picture today, but there was a time Walton was concerned about K-Mart overwhelming them and marginalizing them as a retail business. At the time, Wal-Mart (WMT) was only doing about 4 percent of the business K-Mart was.
What did K-Mart do in response? They made it their goal not to change anything at all in the store.
Walton said concerning that time: "They sat for about five years running stores, but did not change a thing. All of us copied everything they were doing and improved upon it. [Kmart] woke up five years down the road, looked around, and saw there were retailers better than they were. They just never caught up."
It boggles the mind to think leaders of K-Mart thought that way. They had to know there was no way their competitors couldn't find out what they were doing - and at the time they were doing it good; that's why everybody was copying them.
Of course the problem was nothing can be allowed to stand still; real life is fluid, organic and dynamic. To allow their competitors to completely copy them, and not only that but to improve on what they were doing while they watched them, is incomprehensible.
I think by the time K-Mart understood what Wal-Mart had done, it was far too late to respond. Suddenly they had become entrenched in a way of doing things that disallowed them from responding to Wal-Mart and other competitors. From that time on they never had any answers.
Vulnerability to competitors comes from not improving on what we're doing; from not working on the right things. To stay in one place and dig down deep while competitors rush by you is the worst decision to make.
K-Mart could have been the Wal-Mart of today if they had continued to improve on what they were doing. They were the market leader in discount retail, and nobody was close at the time.
The lesson learned is we can never stand still. The wisdom we need is how to move forward while staying true to our core values and business purpose.
Wal-Mart learned recently - through their attempt to offer trendy clothing - that they can't stray from their core market and try to be all things to all people. If they don't learn that lesson, there just may be someone coming up behind them that do to them what they did to K-Mart.
Other Sam Walton Sources:
Sam Walton: 10 Rules for Building a Successful Business
Sam Walton - Retail Success Story
Sam Walton: King Of The Discounters
Sam Walton: Great From the Start
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