Strategy | Ain't Broke? Don't Fix It

If it ain’t broke, don’t fix it. AMERICAN SAYING
Wal-Mart, the global model for low-cost, high-volume, big-box retailers unwittingly broke itself. In sports and politics, they call this an unforced error.

The retail giant for a time abandoned its roots, and tried to reconfigure its basic selling proposition. It altered its product mix and pricing to appeal to a new target customer group: hip, green shoppers with more disposable income.

What happened? Revenues dropped for seven straight quarters.

Core customers wandered the aisles, seeking affordable deals in clothing and automotives and housewares and groceries. Unwilling or unable to cough up more cash for chichi designer jeans or organic arugula, Wal-Mart’s bargain-seeking base started to dwindle. The hip, high-spenders never showed up.

“Wal-Mart just went and broke it,” a long-term customer told the Wall Street Journal.

In April 2011, the company launched a back-to-basics campaign to announce the company's return to its roots. Many questionable and higher-cost items disappeared. Products and deals worthy of the “falling prices” sign started to reappear.

By November 2011, Wal-Mart was reporting its first revenue gain in two years.

The lesson? If you have a solid, well-established customer base that is distinct, identifiable and profitable, make that base happy. Very happy.

When you’re ready to expand to new types of customers who’re distinctly different from your traditional core, test the premise first. Start small and scale up (or down) as the results indicate.

It’s just a suggestion, of course. But nearly two years of losses are a tough way to discover a fundamental truth.

Many of your most loyal and profitable customers like you just the way you are. They're counting on you to deliver on the basics. They're expecting you to continue doing today and tomorrow what you already do so right and so well.

Ain't broke? Don’t fix it.


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WSJ: Wal-Mart Merchandise Goes Back to Basics

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