Grillzilla Brand

2011-10-31T17:42:00.001-07:00

What’s Luck Got to Do With It?

By JIM COLLINS and MORTEN T. HANSEN

BETTER to be lucky than good, the adage goes.

And maybe that’s true — if you just want to be merely good, not much better than average. But what if you want to build or do something great? And what if you want to do so in today’s unstable and unpredictable world?

Recently, we completed a nine-year research study of some of the most extreme business successes of modern times. We examined entrepreneurs who built small enterprises into companies that outperformed their industries by a factor of 10 in highly turbulent environments. We call them 10Xers, for “10 times success.”

The very nature of this study — how some people thrive in uncertainty, lead in chaos, deal with a world full of big, disruptive forces that we cannot predict or control — led us to smack into the question, “Just what is the role of luck?”

Could it be that leaders’ skills account for the difference between just meeting their industry’s average performance (1X success) and doubling it (2X)? But that luck accounts for all the difference between 2X and 10X?

Maybe, or maybe not.

But how on Earth could we go about quantifying something as elusive as “luck”? The breakthrough came in seeing luck as an event, not as some indefinable aura. We defined a “luck event” as one that meets three tests. First, some significant aspect of the event occurs largely or entirely independent of the actions of the enterprise’s main actors. Second, the event has a potentially significant consequence — good or bad. And, third, it has some element of unpredictability.

We systematically found 230 significant luck events across the history of our study’s subjects. We considered good luck, bad luck, the timing of luck and the size of “luck spikes.” Adding up the evidence, we found that the 10X cases weren’t generally “luckier” than the comparison cases. (We compared the 10X companies with a control group of companies that failed to become great in the same extreme environments.)

The 10X cases and the control group both had luck, good and bad, in comparable amounts, so the evidence leads us to conclude that luck doesn’t cause 10X success. The crucial question is not, “Are you lucky?” but “Do you get a high return on luck?”

Return on luck: We call it ROL.

SO why did Bill Gates become a 10Xer, building a great software company in the personal computer revolution? Through one lens, you might see Mr. Gates as incredibly lucky. He just happened to have been born into an upper-middle-class American family that had the resources to send him to a private school. His family happened to enroll him at Lakeside School in Seattle, which had a Teletype connection to a computer upon which he could learn to program — something that was unusual for schools in the late 1960s and early ’70s.

He also just happened to have been born at the right time, coming of age as the advancement of microelectronics made the PC inevitable. Had he been born 10 years later, or even just five years later, he would have missed the moment.

Mr. Gates’s friend Paul Allen just happened to see a cover article in the January 1975 issue of Popular Electronics, titled “World’s First Microcomputer Kit to Rival Commercial Models.” It was about the Altair, designed by a small company in Albuquerque. Mr. Gates and Mr. Allen had the idea to convert the programming language Basic into a product that could be used on the Altair, which would put them in position to be the first to sell such a product for a personal computer. Mr. Gates went to college at Harvard, which just happened to have a PDP-10 computer upon which he could develop and test his ideas.

Wow, Bill Gates was really lucky, right?

Yes, he was. But luck is not why Bill Gates became a 10Xer. Consider these questions:

• Was Bill Gates the only person of his era who grew up in an upper middle-class American family?

• Was he the only person born in the mid-1950s who attended a secondary school with access to computing?

• Was he the only person who went to a college with computer resources in the mid-’70s? The only one who read the Popular Electronics article? The only one who knew how to program in Basic?

No, no, no, no and no.

Lakeside may have been one of the first schools to have a computer that students could use during those years, but it wasn’t the only such school.

Mr. Gates may have been a math and computer whiz kid at a top college that had computers in 1975, but he wasn’t the only math and computer whiz kid at Harvard, Stanford, Princeton, Yale, M.I.T., Caltech, Carnegie Mellon, Berkeley, U.C.L.A., the University of Chicago, Georgia Tech, Cornell, Dartmouth, Southern Cal, Columbia, Northwestern, Penn, Michigan or any number of other top colleges with comparable or even better computer resources.

Mr. Gates wasn’t the only person who knew how to program in Basic; the language was developed a decade earlier by Dartmouth professors, and it was widely known by 1975, used in academics and industry. And what about all the master’s and Ph.D. students in electrical engineering and computer science who had even more computer expertise than Mr. Gates on the day the Popular Electronics article appeared? Any could have decided to abandon their studies and start a personal computer software company. And computer experts already working in industry and academia could have done the same.

But how many of them changed their life plans — and cut their sleep to near zero, essentially inhaling food so as not to let eating interfere with work — to throw themselves into writing Basic for the Altair? How many defied their parents, dropped out of college and moved to Albuquerque to work with the Altair? How many had Basic for the Altair written, debugged and ready to ship before anyone else?

Thousands of people could have done the same thing that Mr. Gates did, at the same time. But they didn’t.

The difference between Mr. Gates and similarly advantaged people is not luck. Mr. Gates went further, taking a confluence of lucky circumstances and creating a huge return on his luck. And this is the important difference.

Luck, good and bad, happens to everyone, whether we like it or not. But when we look at the 10Xers, we see people like Mr. Gates who recognize luck and seize it, leaders who grab luck events and make much more of them.

This ability to achieve a high ROL at pivotal moments has a huge multiplicative effect for 10Xers. They zoom out to recognize when a luck event has happened and to consider whether they should let it disrupt their plans. Imagine if Mr. Gates had said to Paul Allen after seeing the Popular Electronics article: “Well, Paul, I’m kind of focused on my studies here at Harvard right now. Let’s wait a few years, and then I’ll be ready to start.”

When we examined less successful companies, we saw a generally poor overall return on luck. Some of the comparison cases had extraordinary sequences of good luck yet showed a spectacular ability to fritter that luck away. When the time came to execute on their good fortune, they stumbled. They didn’t fail for lack of good luck. They failed for lack of superb execution.

WHILE getting a high return on good luck is an essential skill for 10Xers, getting a high return on bad luck can be a truly defining moment. Consider the 10X case of Progressive Insurance.

On Nov. 8, 1988, Peter Lewis, the chief executive, received news that shocked the insurance industry. California voters had passed Proposition 103, a punitive attack on car insurance companies. Prop 103 required 20 percent price reductions and refunds to customers, plunging a huge auto insurance market into chaos. Progressive had significant exposure, with nearly a quarter of its entire business from that one state — bang! — severely damaged by a 51 percent vote on a single day.

Mr. Lewis zoomed out to ask, “What the heck is going on?” He placed a call to a former Princeton classmate, Ralph Nader. Mr. Nader had long been a consumer rights activist, at one point leading a sort of special forces unit nicknamed Nader’s Raiders, and he had championed Proposition 103. The message that Mr. Lewis heard: People hate you. Or, in other words, people simply hated dealing with insurance companies, so they revolted, screaming with their votes.

“People were saying, ‘We hate your guts. We’re going to kill you. And we don’t give a damn,’ ” Mr. Lewis said.

Chastened by what he had heard, he called his staff together and told everyone, “Our customers actually hate us.” He challenged his team to create a better company.

Mr. Lewis came to see Proposition 103 as a gift, and he used it to deepen the company’s core purpose and to reduce the economic cost and trauma caused by auto accidents. The company would create its “immediate response” claims service: No matter when you had an accident, Progressive would be available — 24 hours a day, 365 days a year. Claims adjusters would work from a fleet of vans and S.U.V.’s dispatched to policy holders’ homes or even directly to an accident scene.

By 1995, Progressive could note this achievement: in 80 percent of cases, its adjusters would have visited the customer, ready to issue a check within 24 hours of an accident.

In 1987, the year before Proposition 103, Progressive ranked No. 13 in the American private-passenger auto insurance market. By 2002, it had reached No. 4. Years later, Mr. Lewis called Proposition 103 “the best thing that ever happened to this company.”

Progressive and Mr. Lewis illustrate how 10Xers shine when clobbered by setbacks and misfortune, turning bad luck into good results. They use difficulty as a catalyst to deepen purpose, recommit to values, increase discipline, respond with creativity and heighten productive paranoia — translating fear into extensive preparation and calm, clearheaded action. Resilience, not luck, is the signature of greatness.

Nietzsche wrote, “What does not kill me, makes me stronger.” We all get bad luck. The question is how to use it to turn it into “one of the best things that ever happened,” to not let it become a psychological prison.

WE came across a remarkable moment at the very start of the history of Southwest Airlines, described by its first chief executive, Lamar Muse, in his book, “Southwest Passage.”

“The very first Sunday morning of Southwest’s life, we narrowly escaped a disaster,” Mr. Muse wrote. “During the takeoff run, the right thrust-reverser deployed. Only the captain’s instantaneous reaction allowed him to recover control and make a tight turn for an emergency landing on one engine.”

What if the jet had smashed into the ground in the first week of building the company? Would there even be a Southwest Airlines today? If we all have some combination of both heads (lucky flips) and tails (unlucky flips), and if the ratio of heads to tails tends to even out over time, we need to be skilled, strong, prepared and resilient to endure the bad luck long enough to eventually get good luck. The Southwest pilot had to be skilled and prepared before the thrust-reverser deployed.

There’s an interesting asymmetry between good and bad luck. A single stroke of good luck, no matter how big, cannot by itself make a great company. But a single stroke of extremely bad luck, or an extended sequence of bad-luck events that creates a catastrophic outcome, can terminate the quest.

The 10Xers exercise productive paranoia, combined with empirical creativity and fanatic discipline, to create huge margins of safety. If you stay in the game long enough, good luck tends to return, but if you get knocked out, you’ll never have the chance to be lucky again. Luck favors the persistent, but you can persist only if you survive.

After finishing our luck analysis for “Great by Choice,” we realized that getting a high ROL required a new mental muscle. There are smart decisions and wise decisions. And one form of wisdom is the ability to judge when to let luck disrupt our plans. Not all time in life is equal. The question is, when the unequal moment comes, do we recognize it, or just let it slip? But, just as important, do we have the fanatic, obsessive discipline to keep marching, to push the opportunity to the extreme, to make the most of the chances we’re given?

Getting a high ROL requires throwing yourself at the luck event with ferocious intensity, disrupting your life and not letting up. Bill Gates didn’t just get a lucky break and cash in his chips. He kept pushing, driving, working — and sustained that effort for more than two decades. That’s not luck — that’s return on luck.

Jim Collins is the author of the worldwide best seller “Good to Great.” This article was adapted from “Great by Choice: Uncertainty, Chaos, and Luck — Why Some Thrive Despite Them All,” which was written with Morten T. Hansen and published this month.

Pay a fine if you do not own a gun

2011-10-16T11:20:00.000-07:00

Vermont State Rep. Fred Maslack has read the Second Amendment to the U.S. Constitution, as well as Vermont's own Constitution very carefully, and his strict interpretation of these documents is popping some eyeballs in New England and elsewhere.

Maslack recently proposed a bill to register "non-gun-owners"and require them to pay a $500 fee to the state. Thus Vermont would become the first state to require a permit for the luxury of going about unarmed and assess a fee of $500 for the privilege of not owning a gun.

Maslack read the "militia" phrase of the Second Amendment as not only the right of the individual citizen to bear arms, but as a clear mandate to do so. He believes that universal gun ownership was advocated by the Framers of the Constitution as an antidote to a "monopoly of force" by the government as well as criminals.Vermont's constitution states explicitly that "the people have a right to bear arms for the defense of themselves and the State" and those persons who are "conscientiously scrupulous of bearing arms" shall be required to "pay such equivalent.."

Clearly, says Maslack, Vermonters have a constitutional obligation to arm themselves, so that they are capable of responding to "any situation that may arise."

Under the bill, adults who choose not to own a firearm would be required to register their name, address, Social Security Number, and driver's license number with the state. "There is a legitimate government interest in knowing who is not prepared to defend the state should they be asked to do so," Maslack says.

Vermont already boasts a high rate of gun ownership along with the least restrictive laws of any state .... it's currently the only state that allows a citizen to carry a concealed firearm without a permit. This combination of plenty of guns and few laws regulating them has resulted in a crime rate that is the third lowest in the nation.

" America is at that awkward stage. It's too late to work within the system, but too early to shoot the bastards."

This makes sense! There is no reason why gun owners should have to pay taxes to support police protection for people not wanting to own guns. Let them contribute their fair share and pay their own way.

Sounds reasonable to me! Non-gun owners require more police to protect them and this fee should go to paying for their defense!

In God We Trust, all others not so much!

"A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed." ~ Second Amendment to the U.S. Constitution

How much should I charge for my barbecue sauce?

2011-09-04T11:41:00.000-07:00

I get this question often when helping people start their food product business. Many think the “how much” question depends only on the manufactured cost of the product. Wrong! Your selling price depends on the maximum amount a consumer “will spend” for your product in the store. How much is that? It all depends on what store your product are in. If you can have a barbecue sauce in regular grocery stores the product will have to retail for $1.99 but in a gourmet store the same formulation could retail for $4.99. Packaging (bottle size), label design, brand awareness, and other products in the store all have an affect on what your retail price should be. Sounds complicated? It is really not because it comes down to YOUR knowledge of the category and your brand.

When you start to market a barbecue sauce always start with your best guess on what the highest retail price could be. When I started Big Show Foods I had to make that decision. I knew my distribution channel was going to be traditional grocery stores. I knew my customers were going to be middle class working people that enjoyed cooking on the grill (the NASCAR fan which was the JB&B fan). I also had some knowledge of the marketing power to the JB&B Big Show.

With all this marketing knowledge the next step was to study the barbecue sauce category and learn where the retail price levels were. In 1999 the barbecue sauce category had three price levels; Products from $1.00 to 1.99, products from $1.99 to $2.99 and products higher than 2.99. Based on the sales information I had I could see there was a direct relationship between and low price and high case volume. I also noticed that these lower price sauces were manufactured by the leading food corporations (Kraft, Heinz) . Is that a fight I wanted to get in? It’s the “made to sell not to eat” race which did not appeal to me from a marketing stand point. It had been my experience that when your marketing is based on low price you get stuck there with no place to go except even lower. Since your cost are almost always going up it does not take long for margins to disappear. To this day I do not understand why large corporations get in this trap. Kraft tried to get out by creating a new more expensive brand (Bull’s Eye) but most of the time they were buying down that retail to get sales.

My decision was a retail price of $2.99. I was 60% sure our target customer would pay that retail especially when we sold them our brand story on the radio show. If I was wrong I could always buy down the retail with an off invoice allowances. With this retail price decision made I could work down the ladder to get my delivered cost.

How much was I going to let the grocery retailer make? At that time 26% gross profit margin was standard in the category. Based on a $2.99 retail the gross profit was .79 per unit or $9.48 per case.

I knew to get on the wholesaler deal sheets and to guarantee a $2.99 unit retail in the chains I had to have some kind of allowance off invoice to use all year. I decided $4.80 per case would be the correct amount. Working with these numbers I came up with this pricing:

Delivered List Cost $ 31.20 2.60 unit

Less allowance Off Invoice 4.80 .40

Deal case cost $ 26.40 2.20 unit

Retail at $2.99

Case Retail $ 35.88

Case profit $ 9.48

Ok, that is the story for the retailer but what about the profit picture for Big Show Foods?

This is sensitive information that a lot of people are curious about. To get the rest of the store you are going to have to send me an e-mail at mailbag@lizardlick.co and ask by putting “I want the rest of the store” in the subject line.

2011-02-05T04:38:00.000-08:00

Something to think about.....

There is a statistic from June '09 issue of Parade Magazine that states by 2019 over 40% of the work force is going to be independent contractors.

This means that 40% of the population will be their own business identity.

This is a major paradigm shift for how the majority of people earn their wages.

Take a moment to reflect on this…

We all can see the world rapidly changing. But sometimes the hardest change to be made is the change we need to make inside ourselves.

Predominantly, values have been focused on security and benefits. Robert Kioysaki calls this the ‘E’ Quadrant.

If you’re going to be among the 40% who – whether by choice or necessity – are their own business identity, your values will shift to what Kioysaki calls the ‘B’ Quadrant.

How are you getting to the ‘B’ Quadrant?

He says it’s not money that will make you rich, its business skills.

It’s this shift of focus to building business, investing your time into the development of yourself and others and the understanding that the number one asset a person can attain is a business.

Doing so will allow your money to work hard for you, not the other way around.

If you are currently employed you should be thinking about "what can I do NOW to insure my life long security"? The answer? A business you own and control that can be started part time without interfering with your regular work. Click here if you want some ideas.

2011-01-28T09:07:00.000-08:00

Home based business tax benefits

First let me say I am not a tax expert. I can tell you what my personal tax experience has been and how things have worked over the years for me with regards to taxes. I would suggest you get professional help (CPA) for your taxes if you are going to have business related expenses.

If you have a business that is profitable or unprofitable there is legal tax benefits associated with that business. This is true even if the business is part time and operates from your home or apartment. If you have a regular job you can save taxes by operating a part time business because of these deductions. If the part time business has a loss, that loss lowers your taxable income form your regular job (saves you taxes). Your business does not have to be incorporated for this to happen. In today’s world if you can lower your tax bill you have made money! It is really nice when you have a professional prepare your taxes using your home based business expenses and you get a nice refund check. It’s like getting a raise from your regular job!

How does all this work. Very simple, first get involved with a good home based business. Click here for my suggestion. Pay for everything with a check so you know exactly where your money is going. If you use a credit card keep all the statements so you can pick out the business related expenses at the end of the year.

When you start making money from the home based business you may have to pay quarterly estimated taxes (why you need a CPA) to avoid penalties. You will get a 1099 from the company paying you so all income will have to be reported on your personal 1040 form. That is why keeping up with the expenses each month is so important.

Almost every new business is unprofitable the fist few years. This is when these losses will be taken away from your regular job income. Your goal with the home based business is to “grow” the business to the point that you no longer need your regular job. One of my life’s biggest mistakes was working for a company I did not own.

The list below is some examples of expenses you can use in your home based business.

- Internet costs
- Education (seminars, ebooks, reports, other info products)
- Advertising (Adwords and any other advertising costs)
- Hosting
- Domain Registration
- Professional services (software development, graphics, coding etc.)
- Child care (daycare)
- Healthcare costs
- Computer and accessories
- Charitable contributions
- Home office furniture
- Office supplies
- Postage
- Car/Truck Mileage for travel related to the business
- Business use of home
- Utilities
- Cell Phone and service
- Financial services (tax preparation etc.)
- Business meals/drinks
- Legal fees including LLC/Inc. formation
- Renter/Homeowner Insurance
- Real Estate/Personal Property tax

There maybe more depending on your business. Remember you need to keep good records and get the help of a CPA.

Go here to learn about the home based business I like.

2011-01-26T10:27:00.000-08:00

How do you pick the right home base business for long term success?

The basic requirements for a long term income producing home based business are:

(1) You should be personally interested in the product or service
(2) The product sold must have a consumer advantage and be competitively priced
(3) The business must be sold by NON-sales type people (everyone is not a sales person)
(4) The Pay plan must be fair and offer weekly checks
(5) The business should be at least three years old

You should be personally interested in the product (business) because you then will be motivated to show it. You can have unlimited knowledge about the business but without personal motivation you will not work your business. Keep in mind you are "the boss". You are the one that has to put out the effort on a regular basis to see positive results.

You should also be using the product or service on a regular basis yourself. When people see you use the product they will see the value and become interested too.

Your business has to be all about the product. If the product is not competitive you will not be able to hold on to customer’s long term. A jazzy, high pressure presentation may get people to sign up, but if they just got caught up in the sales pitch, that’s not going to last long with most people. The product must be competitive and offer a consumer advantage. The product has to be one that people will not get tired of using. It has to offer long term benefits to the user. It can’t be trendy. The product has to solve a problem to make you and your team money.

Everyone cannot "sell". Do not get into a home based business that requires people on your team to have selling talents. You need an army of "customers" on your team with each making you a small amount of monthly income by using the product. The business has to automatically duplicate without individual sales talent. You should "show" your product not "pitch" it. You want people to ask you about the product (after they see it) then you can "show" the features and benefits.

Do not be a recruitment mill. You want people on your team with ambition, instead of a “sucker list” of people who will buy into something but never do anything with it. By that I mean the dreamers, newsletter junkies, or people in such a bad financial situation they’ll fall for anything.

Finally the company itself has to be stable if you want your residual checks to keep coming for years down the road. You can spend countless hours working your business and it is all for zero if the company goes out of business. My rule is not to look at any home based business opportunity unless the company has been in business three years or longer. Companies that pay a weekly benefit along with deep down line monthly checks without balancing or break-a- away are the best. Weekly benefits are important because when team members make some cash fast they get (and stay) excited. Build your team wide for income and deep for long term security.

If you would like to see information about a company that meets the aforementioned criteria click here. Go to my web page here to learn more about me.

2010-08-27T09:18:00.000-07:00

I get some good questions from people wanting advice. When the questions answer might help more than the person asking it I publish to my blog.

Question:

Deborah Mahon August 27 at 8:04am Hi Tom, nice to meet you! I have started my own line of products and I write a food blog based on my life growing up on a 8 gerneration farm in Ohio.I have been researching on how to publish a cookbook along with getting some of my ideas into the market place. Take a look at www.thegourmetfarmgirl.com. any suggestions would be appreciated! The Gourmet Farm Girl www.thegourmetfarmgirl.com

My Answer:

Deborah Congratulations on starting your food business! If you have not already found out, there are a bunch of things you could be doing that are not as hard. You have picked a very tough way to make a buck.

Now if you are the type of person that does not get discouraged and you have enough cash to survive the build up I have a few tips for you.

FIRST; marketing on the internet can be successful if you use the following tools. I have listed them in order of importance.

1. A high TARGETED traffic web site

2. A face book page with a minimum of 10,000 fans that are interested in YOUR subject/work/idea.

3. A entertaining YouTube channel

4. Multiple twitter accounts (minimum of six) targeted at different aspects of what you are doing.

5. A well written entertaining blog that is up dated several times per week.

THE KEY IMPORTANT FACT about using these five tools is YOU and YOU alone have to master the use and development of them. Why? Because (unless you have lots of money) you cannot afford to pay a full time person(s) to do this work for you.

OK Tom, how do I learn all about these tools. The first step is do research by reading and studying everything written about the marketing tools listed. This is as simple as a Google search. I have spent about 20 hours a week for the past 2 1/2 years and I am just starting to understand how to use these tools.

Do not get discouraged. It takes four years and $100K to get a BS degree. Learning internet marketing will not take that long and the cost is $0. All this information is free. DO NOT pay for anything until you have read all the "free" stuff.

One exception to this rule; BUY TODAY for $299 the program at this link - http://bigtom.org/websitebuilder.aspx. This program will guide you step by step in creating a high targeted traffic web site. A nice web site (like you now have) is worthless unless it gets lots of FREE targeted traffic. This program will teach you everything.

One last bit of advice. You are "The Gourmet Farm Girl." I spent about 2 minutes on your web site and did not see a picture OF YOU??? The first thing anyone visiting your web site wants to see is YOU. Internet marketing is all about building "trust". A picture of YOU is the first step in this process. If you are going to be successful with internet marketing you have to let go of some personal stuff.

Wal Mart's Merchandising Direction

2010-06-29T11:34:00.000-07:00

If you are interested in Wal Mart merchandising read this article for their latest direction.

By JON SPRINGER
If there's any retailer that knows how uncomfortable the murky middle can be, it's Wal-Mart , which over the past 30 years has plowed scores of its smaller competitors there, frequently contributing to their ultimate demise.

But after a year of economic hardship for Wal-Mart shoppers — and changes in consumer behaviors learned during the recession — it's not without some irony to find the world's largest retailer in some danger of slipping into the middle itself these days. Paradoxically, this vulnerability is at least partly a by-product of Wal-Mart 's own attempt at nuanced strategic transformation, the ongoing merchandising and branding program known as Project Impact.

While Wal-Mart Stores officials express strong confidence in Project Impact, particularly for the long term — citing multiple financial and retail successes that they insist are only just beginning — disappointing sales and store traffic results in recent months have prompted the chain to tweak some tactics and reverse course on others. It has also sparked some debate among industry observers as to exactly what is ailing the Bentonville, Ark., chain and the extent to which its issues can be solved. They cite stronger competition — retailers that not only better challenge the giant on price, but also those running store formats that capitalize on Wal-Mart 's shortcomings. Changes in consumer behavior — not only the effects of high unemployment, but the recession-borne emphasis on value gaining wider applications as the economy improves — are also a factor, they say.

“ Wal-Mart is still a hugely, incredibly successful company,” Craig Johnson, president of Consumer Growth Partners, New Canaan, Conn., told SN in an interview. “But I think it's missed half a beat.”

Officially launched late in 2008, and rolled out throughout last year, Project Impact brought new methods of marketing and merchandising items at Wal-Mart , showcased in a softer, redesigned store and tied together with a brand message that shifted emphasis from price to value at Wal-Mart stores. The program was designed to capture a larger and more economically diverse shopper base — particularly the wealthier shoppers who'd begun to frequent Wal-Mart as a means to save money when economic conditions first became threatening.

Remerchandising at Wal-Mart took the form of an SKU rationalization program designed to weed out brands and sizes in categories considered to be slow growing or without the potential for Wal-Mart to dominate, and devote their space toward those categories with strong growth potential. Dubbed “Win, Play, Show,” the remerchandising focused Wal-Mart 's pricing and promotional power on key growth categories, many of which were also vital to its supermarket competitors.

It hasn't worked quite as planned, company officials confessed to analysts in a meeting earlier this month. Certain category cuts went too deep, necessitating the company to reintroduce some 400 grocery products, while in other cases, Wal-Mart wasn't aggressive enough in establishing its high-growth “Win” products, said John Fleming , chief merchandising officer.

By making choices for Win, Play and Show designations across the entire U.S. store base, Wal-Mart mistakenly implied “that all customers are the same,” added Eduardo Castro-Wright , corporate vice chairman and president of Walmart U.S. He said the chain is currently revamping the process using more demographic precision, making decisions for stores in various clusters.

A recent Nielsen Co . study suggested that retailers that hacked brands which resonated with particular shoppers stood to lose more than sales of the particular product, but often lose entire baskets and store trips as well. “If I have to go to Lunds in Minneapolis because my favorite coffee is no longer at Wal-Mart , then I'm going to be buying a lot more at Lunds now, aren't I?” said David Rogers, president of DSR Marketing, Deerfield, Ill. “The fact that Wal-Mart 's now putting 300 or 400 items back onto the shelves indicates their judgment was poor about what to take out. There's no way around that.”

Burt P. Flickinger III, managing partner of Strategic Resource Group, New York, added that many of Wal-Mart 's competitors have taken advantage of the situation by featuring brands and sizes that were cut by Wal-Mart .

Customers Under Stress

Castro-Wright said the SKU cuts were only one factor contributing to sales falling below company expectations recently. He also cited a shopper base under particular economic stress, especially in areas with high unemployment. Of Wal-Mart 's U.S. stores, he said the 25% in areas with lowest unemployment are outperforming those elsewhere by 2.5%. “Unemployment is a major part of the shortfall in sales,” he said.

The company saw benefits from many of those especially hard-hit markets leading up to the recession, Flickinger noted. “ Wal-Mart hurt itself to some extent by oversaturating its key Sun Belt states from Arizona to the Southeast,” he told SN. “Those areas were once growing in population and income but they're seeing tough economic times right now, and as a result Wal-Mart is seeing tough economic times.”

Wal-Mart has also been feeling the effects of hotter competition over the last year, as retailers adjusted pricing to compete in the recession. Wal-Mart in the meantime slowed its pace of temporary price reductions, known as price rollbacks, while it introduced its new merchandising programs in 2009, Castro-Wright said. Wal-Mart has responded this year with a “very robust” new rollback program aimed at addressing pricing gaps and, said Castro-Wright, “ensuring that we remain the undisputed price leader in the marketplace.”

The rollbacks are being supported with more prominent advertising in circulars and in stores beginning this spring, observers noted.

While some analysts predicted the return of rollbacks would accompany “price wars” between supermarkets and Wal-Mart , others said such battles on price with Wal-Mart are more likely to erupt at the level of the growing hard-discount grocers like Aldi and small discounters such as Dollar General . The growth of these formats is showing consumers that Wal-Mart can be matched and beaten on prices, sources said.

“ Wal-Mart is still a low-price leader but it's not the low-price leader,” said Flickinger, noting his firm's studies showing Aldi beating Wal-Mart on items such as canned vegetables and milk.

“As good a concept as Project Impact is, Wal-Mart is having a tougher time shifting sales than it used to, because so many of its competitors have gone out of business, and the surviving stores — particularly the hard discounters, price-impact players and wholesale clubs, have gotten very, very tough on price,” he added.

Wal-Mart 's sales and traffic woes earlier this year indicated “it was losing the customer it had gained during the recession by allowing the price gap with supermarkets to narrow,” Deborah Weinswig, an analyst at Citi Investment Research, New York, said in a note to clients. “We believe shoppers no longer consider the price savings offered by Wal-Mart to outweigh the experience and convenience of shopping the supermarkets. Wal-Mart realizes it must act now to keep the customer.”

Others said they feel Wal-Mart 's more aggressive rollbacks are serving mainly to spark store traffic. “They have a good price image and probably don't need to take their prices down,” Andrew Wolf, an analyst at BB&T Capital Markets, Richmond, Va., told SN. “What they're doing is trying to get customers in the door. They're promoting.”

Promotional Profile

David Dillon , Kroger 's chief executive officer, in a conference call this month said that Wal-Mart 's new rollback program has transformed its competitive profile, saying the company more closely resembles a high-low supermarket competitor using hot prices to draw traffic.

“ Wal-Mart is a lot more consistent with a traditional grocery-supermarket operation than it is consistent with what Wal-Mart used to do,” Dillon said. “It uses a lot more feature items. Sometimes those features are on for more than a week, but it's [still] feature items, and when you operate that way there may be items that come down in price and get a lot of publicity, but there are others that go up in price that don't get that much publicity. We see the behavior as a lot of marketing noise.”

Making a stronger emphasis to promote price seemingly comes into conflict with some of the changes Wal-Mart introduced as part of Project Impact. Emphasizing “fast, clean and friendly” stores, the retailer used more subtle signs, lower shelf heights, improved lighting and cleared merchandised pallets from the “Action Alley” aisle running alongside its grocery aisles in U.S. Supercenters.

Wal-Mart 's “Clean Action Alley” initiative has done wonders for store navigation and won acclaim from shoppers, retail observers and Wal-Mart itself: Mike Duke , president and CEO, this month said store conditions at Wal-Mart were the best in the company's history. However, Fleming acknowledged the changes to Action Alley came at the cost of a sense of “promotional intensity” inside the stores. Castro-Wright said Wal-Mart would consider reintroducing some features from Action Alley into other areas of the store — but like its merchandising initiative, do so only in certain stores.

“Project Impact is not about Action Alley,” Castro-Wright told analysts. “It is a holistic approach to how we go to market, and that is not going to change.”

Dave Marcotte of Kantar Retail, Cambridge, Mass., said he senses these changes as a harder approach from Wal-Mart to counter some of the unintended effects of Project Impact.

“The rollbacks to me indicate that they're saying, ‘We've tried the soft approach, now we're going to go hard. We're going to be the biggest, toughest guys on the block in pricing,’” Marcotte said. “That's somewhat in conflict with Project Impact. The rollbacks are great but I don't know if it will work any better. They seem to be caught in a box of their own design.”

Johnson of Consumer Growth Partners said he sees Wal-Mart 's troubles not as a result of its changes but rather as a result of changes in shopper behavior. He believes the recession has served to increase consumers' propensity to make convenience and mission-specific shopping trips while reducing their appetite for stocking up. The latter is a Wal-Mart strength; other retailers in the meantime have gone after the former occasions, knowing they tend to be weak spots for Wal-Mart .

“ Wal-Mart does a lot of things right but at the margins it's losing a fraction of these non-stock-up trips, which are being better served by other retailers,” Johnson said. “You have convenience trips well-served by Walgreens and CVS, which have sharply ramped up food offerings and morphed into convenience stores without fuel pumps. At the same time, you have retailers who are in more direct competition with Wal-Mart really stepping up their game in a challenging and margin-pressure environment. Kroger has stepped up its game, as have the strong regionals out there — H-E-B, Publix and Meijer.”

Small Competition

If there's a trait all of Wal-Mart 's competitors share, it's that their stores are smaller — and as a result tend to be easier to shop — than Wal-Mart . Some analysts have argued that consumers during the recession learned bargain-hunting behaviors they will now apply to non-price facets of their shopping experience. This again bodes well for stores that can demonstrate their value lies in a more convenient experience than Wal-Mart . Some, like Aldi, are doing so in combination with everyday low prices — and pose a real threat. “Aldi drives [ Wal-Mart ] crazy,” Marcotte said. “I don't think they know how to compete with it.”

Several sources said they feel Wal-Mart would be ultimately well-served to bolster its U.S. Supercenter business with a smaller concept store (see related story, Page 24). “Long term, we believe Wal-Mart needs to experiment with smaller formats,” Johnson said. “They need to serve the convenience and mission-specific shopping trip better.”

The continued proliferation of dollar stores and hard discounters in the meantime are also weighing on Wal-Mart , Rogers said. “Each dollar store does only $1.2 million [in sales] a year, but when you've got 25,000 of them and they're opening 5,000 a year, it starts to hurt,” he contended. “They all take a little bit from you, and it starts to add up.”

Castro-Wright in remarks at Wal-Mart 's analyst conference suggested it was alternative formats — and not mainstream supermarkets — absorbing sales “leakage” from Wal-Mart , noting that Wal-Mart 's comparable grocery sales have matched or outpaced comps in the larger grocery channel.

Wal-Mart 's message to consumers has also shifted some recently. In addition to making a stronger effort to communicate price rollbacks, the retailer is now airing television commercials featuring its truck drivers and warehouse workers demonstrating how Wal-Mart 's internal productivity efforts contribute to lower prices in store. Officials refer to this as “price transparency” and consider it an advantage for Wal-Mart as consumers become more sophisticated about shopping.

The productivity cycle — what officials called a “virtuous circle” that invests cost savings into lower prices, creating greater sales and more opportunity for leverage — remains at the heart of Wal-Mart 's strategy.

“The business model at Wal-Mart is alive and well and stronger than ever,” Duke said at the investor conference. “And even as the world changes, and customers are finding new ways to shop, the Wal-Mart business model is going to work even better.”

The world is changing (fast!)

2010-01-27T10:57:00.000-08:00

Something to think about.....

There is a statistic from June '09 issue of Parade Magazine that states by 2019 over 40% of the work force is going to be independent contractors. This means that 40% of the population will be their own business identity.

This is a major paradigm shift for how the majority of people earn their wages.

Take a moment to reflect on this…

We all can see the world rapidly changing. But sometimes the hardest change to be made is the change we need to make inside ourselves. Predominantly, values have been focused on security and benefits. Robert Kioysaki calls this the ‘E’ Quadrant. If you’re going to be among the 40% who – whether by choice or necessity – are their own business identity, your values will shift to what Kioysaki calls the ‘B’ Quadrant. How are you getting to the ‘B’ Quadrant? He says it’s not money that will make you rich, its business skills. It’s this shift of focus to building business, investing your time into the development of yourself and others and the understanding that the number one asset a person can attain is a business. Doing so will allow your money to work hard for you, not the other way around.

I am involved in a non-profit company that teaches life skills to kids. Please visit our web page at http://jrgrillers.com to see what we are doing.

Start thinking today how you can get ready for the future.

Marketing a small Barbecue Business

2009-11-24T02:17:00.000-08:00

I got this e-mail this morning which motivated me to write a response that may help others.

Hi Tom, I know you from facebook, and wanted to email you. I own and operate a small bbq catering company called Tiny's Bar-b-que and we are located in central, PA. (near penn state U.) We are fully licensed with the state and insured as a mobile food service, We operate out of a fixed up salvation army canteen truck along with two mobile smokers. I always seem to struggle marketing our business, We don't have much of a budget for advertising. We relay mostly on word of mouth, which has been working, but would like to get our name out there more. I have no other prior business experience, and the catering extends from my passion for bbq and competition bbq. I think we could greatly benefit from your knowledge and information you have to offer. We also have our own bbq sauce we get bottled and sell when we are vending, I just really need help on marketing. How to go about approaching companies about doing company parties, picking a location to setup roadside, getting our sauce into small stores, etc. Greatly appreciate any info you could share, Your book sounds very interesting. and I enjoy reading your post on facebook. If there is a way that you could help me with some info, let me know and I'd greatly appreciate it, Take care and have a great thanksgving holiday.

My response.........

Thanks for asking me about Marketing. In your e-mail you gave me a lot of questions I can start writing about on my blog which is a good thing.

So far you have the hardest part worked out--You are legal with the food police. Congratulations! That is something I have not accomplished.

I assume your food is competition quality. If so there is another major accomplishment for you. It's really a trick to have good food all day when sales are slow.

On the marketing side I will give you two ideas today and promise more to come as time permits.

Visit your local Harley Davidson dealership and talk with their marketing director. Offer to put your BBQ truck at the dealership every Saturday and other days when they have events. Most HD dealerships have events to give their customers someplace to go (a ride reason). Ask to attend their HOG meetings (I think you can even if you do not ride). HOG = Harley Owners Group. Ever dealership has a active HOG chapter. After a while these people will accept you. Then you can go on rides with them and be their personal meal provider. Many opportunities will open up for you when you connect yourself with motorcycle groups.

Find a local farmers market you can set up for a reasonable price. Be prepared to sell lots of food to go in bulk. Example a pound container of pull pork bbq for $7. You will also sell food consumed there too. Add a good hot dog to your menu if you do not have one. When I was going to the Farmers Market I was selling $200 to $250 an hour. The market was small and only lasted three hours on Wednesday and Saturday. After you go several times you will develop regular customers who will buy the same amounts each week. You will also get catering opportunities you never expected.

I found both places will also give you very important eye to eye contact with your customers. You will come to understand fast if you are producing the right food. Same people buying same thing over and over = success!

My facebook page (search ncbigtom if we are not now friends) has lots of pictures taken at both places to give you more ideas. I approve all friend requests and will follow every person that follows me on Twitter at Grillzillabrand.

Let me know if I have helped you grow your business. Remember, millions are counting on you to be successful so you can pay more taxes!

Twitter is a powerful tool if you use it correctly

2009-11-12T06:42:00.000-08:00

Twitter is becoming more popular everyday. If you are a new twitter fan then do not make these common mistakes.

1. Not setting up your Twitter page properly:

Make sure you have a decent photo that people can connect with. This is one of the first things I look for before engaging with a new person. Like you, my time is valuable and I scan photo’s because it’s easy and fast, if someone doesn’t have a decent photo I move on to the next one.
Use your name instead of your @twitter username in the name section. I like to use a persons name when sending out tweets. Having a name is a great way for people to connect with you on a first name bases.
When filing out your bio use quality words, these words are searchable through many of the 3rd party tools that integrate with Twitter. Focus more on key words then sentence structure will give others a greater chance of finding you.

2. Not following up:

Follow up with the people that tweet you and send them a tweet back. This only takes a few minutes a day and by doing this will help you build a strong following.
When someone retweets your tweet send them a thank you or compliment. Retweeting others that retweet you will help you spread quickly into other people’s followers.Check your @replies and DM’s at least once per day.

3. Trying to get a large number of followers:

When I first started using Twitter all I heard about was you need to get followers. This is true, however; I quickly discovered that the quality of followers was much more important then having huge numbers of followers.
With all the 3rd party tools out there that help you auto follow people, it’s hard to focus on the quality of followers you are following. Make sure you focus on keywords that will locate the type of people you want when using these types of programs or tools.
Using keywords and the hashtag is a great way to locate people in your niche. Use alerts and key word tracking to locate people and save time.

4. Self promoting:

I see many people sending out tweets with links that are trying to sell something. Remember, people hate to be sold but love to buy. Sometimes I see tweets with just a link with no description to what the link is, talk about a waste of time.
If you are going to send out links in your tweets you should send them out in moderation. Send out other tweets in between the tweets with links. Providing value in your tweets is the key to getting people to trust you. Don’t send out to many tweets per hour. When someone fills up my twitter page with tweets going out every 3-5 minutes it doesn’t take me long to un-follow them. Using your DM is a great way to keep the twitter stream from getting over crowded.

These are just a few of the Twitter mistakes I have either made myself or have seen others make on Twitter. Just use a little common sense and you will do just fine. Ask yourself, am I tweeting to others like I would like to be tweeted to?

Read this story and then I will tell you the truth

2009-11-10T05:27:00.000-08:00

The Wal-Mart You Don't Know
By: Charles FishmanWed Dec 19, 2007

The giant retailer's low prices often come with a high cost. Wal-Mart's relentless pressure can crush the companies it does business with and force them to send jobs overseas. Are we shopping our way straight to the unemployment line?

A gallon-sized jar of whole pickles is something to behold. The jar is the size of a small aquarium. The fat green pickles, floating in swampy juice, look reptilian, their shapes exaggerated by the glass. It weighs 12 pounds, too big to carry with one hand. The gallon jar of pickles is a display of abundance and excess; it is entrancing, and also vaguely unsettling. This is the product that Wal-Mart fell in love with: Vlasic's gallon jar of pickles.

Wal-Mart priced it at $2.97--a year's supply of pickles for less than $3! "They were using it as a 'statement' item," says Pat Hunn, who calls himself the "mad scientist" of Vlasic's gallon jar. "Wal-Mart was putting it before consumers, saying, This represents what Wal-Mart's about. You can buy a stinkin' gallon of pickles for $2.97. And it's the nation's number-one brand."

Therein lies the basic conundrum of doing business with the world's largest retailer. By selling a gallon of kosher dills for less than most grocers sell a quart, Wal-Mart may have provided a ser-vice for its customers. But what did it do for Vlasic? The pickle maker had spent decades convincing customers that they should pay a premium for its brand. Now Wal-Mart was practically giving them away. And the fevered buying spree that resulted distorted every aspect of Vlasic's operations, from farm field to factory to financial statement.

Indeed, as Vlasic discovered, the real story of Wal-Mart, the story that never gets told, is the story of the pressure the biggest retailer relentlessly applies to its suppliers in the name of bringing us "every day low prices." It's the story of what that pressure does to the companies Wal-Mart does business with, to U.S. manufacturing, and to the economy as a whole. That story can be found floating in a gallon jar of pickles at Wal-Mart.

Wal-Mart is not just the world's largest retailer. It's the world's largest company--bigger than ExxonMobil, General Motors, and General Electric. The scale can be hard to absorb. Wal-Mart sold $244.5 billion worth of goods last year. It sells in three months what number-two retailer Home Depot sells in a year. And in its own category of general merchandise and groceries, Wal-Mart no longer has any real rivals. It does more business than Target, Sears, Kmart, J.C. Penney, Safeway, and Kroger combined. "Clearly," says Edward Fox, head of Southern Methodist University's J.C. Penney Center for Retailing Excellence, "Wal-Mart is more powerful than any retailer has ever been." It is, in fact, so big and so furtively powerful as to have become an entirely different order of corporate being.

Wal-Mart wields its power for just one purpose: to bring the lowest possible prices to its customers. At Wal-Mart, that goal is never reached. The retailer has a clear policy for suppliers: On basic products that don't change, the price Wal-Mart will pay, and will charge shoppers, must drop year after year. But what almost no one outside the world of Wal-Mart and its 21,000 suppliers knows is the high cost of those low prices. Wal-Mart has the power to squeeze profit-killing concessions from vendors. To survive in the face of its pricing demands, makers of everything from bras to bicycles to blue jeans have had to lay off employees and close U.S. plants in favor of outsourcing products from overseas.

Of course, U.S. companies have been moving jobs offshore for decades, long before Wal-Mart was a retailing power. But there is no question that the chain is helping accelerate the loss of American jobs to low-wage countries such as China. Wal-Mart, which in the late 1980s and early 1990s trumpeted its claim to "Buy American," has doubled its imports from China in the past five years alone, buying some $12 billion in merchandise in 2002. That's nearly 10% of all Chinese exports to the United States.

One way to think of Wal-Mart is as a vast pipeline that gives non-U.S. companies direct access to the American market. "One of the things that limits or slows the growth of imports is the cost of establishing connections and networks," says Paul Krugman, the Princeton University economist. "Wal-Mart is so big and so centralized that it can all at once hook Chinese and other suppliers into its digital system. So--wham!--you have a large switch to overseas sourcing in a period quicker than under the old rules of retailing."

Steve Dobbins has been bearing the brunt of that switch. He's president and CEO of Carolina Mills, a 75-year-old North Carolina company that supplies thread, yarn, and textile finishing to apparel makers--half of which supply Wal-Mart. Carolina Mills grew steadily until 2000. But in the past three years, as its customers have gone either overseas or out of business, it has shrunk from 17 factories to 7, and from 2,600 employees to 1,200. Dobbins's customers have begun to face imported clothing sold so cheaply to Wal-Mart that they could not compete even if they paid their workers nothing.

"People ask, 'How can it be bad for things to come into the U.S. cheaply? How can it be bad to have a bargain at Wal-Mart?' Sure, it's held inflation down, and it's great to have bargains," says Dobbins. "But you can't buy anything if you're not employed. We are shopping ourselves out of jobs."

Ok, now the truth about WalMart............................

What the pickle story did not tell you is the top management at Vlastic Pickles was first greedy and second stupid. They were greedy because all they were thinking about was the multiple truck loads of pickles Walmart was going to buy and how much their bonus would increase from the relationship. Greed is a good thing in that it motivates people to increase business because of the rewards. Walmart buyers are masters at working the “psychology” of greed on vendors. That is their job and they do it very well.

Stupid because they should have known their business well enough to understand how selling Walmart a year’s crop of pickles would affect their profitability. Even I know the more a pickle is processed (cut, sliced, diced, etc) the more value you add thus the more you can sell it for. Vlastic is the pickle packer leader. Why did they not know this fact? Truth is they did but Vlastic management was looking for a short term gain and not looking at the long term results (very much the case for companies in the US). Again they were stupid and WalMart buyers are masters at taking advantage of stupid executives.

This is my point; you call on Walmart you are in control of what happens. You can say “no” in any meeting. You just have to be smart enough to know when to say it.

The #1 objective at Walmart today is to increase profits so their stock price will increase. Walmart’s current dilemma is sales growth has slowed and new store expansion will come in higher cost areas (bad for profits).

What is their plan? If I were President of Walmart I would be tapping into the major suppliers marketing/slotting funds which they use to buy shelf space with every retailer except Walmart. This money can go right to the bottom line for Walmart increasing their profits without additional capital investment.

How? Easy, just appeal to suppliers top managements greed by making a realistic projection of how much they can increase their sales and market share because there will be less product assortment in their category (read my blog about win/play/show).

Walmart controls over thirty percent of the grocery sales now. If a major vendor doubles sales at Walmart then their overall category share increases dramatically, which may result in savings thru less promotional spending with other customers. What is the down side for major suppliers? Stay tuned for my next blog post to see.

Walmart shoppers noticing a difference on the grocery shelves

2009-11-09T09:05:00.000-08:00

Consumers aren’t finding the variety of products they used to on Walmart shelves, as the retailer offers fewer flavors, sizes and forms of many grocery products.

Columbus, Ohio-based Retail Forward in its October WalMart World reports some indication of consumers shopping less at Walmart because they can’t find what they want. About 24 percent of shoppers reported going to Walmart less this year compared with a year ago, while 14 percent of shoppers reported going to Walmart more often, according to the WalMart World report by Jennifer Halterman, Retail Forward senior consultant. Those numbers are from Retail Forward’s Shopper-Scape surveys from December 2007 to August 2009. The Shopper Scrape survey asks 4,000 people each month about their shopping habits.

“WalMart’s SKU (stock keeping unit) rationalization and reduction efforts as part of Win, Play, Show may actually be a point of contention with shoppers; some report reduced inventory as a reason for shopping Walmart Supercenter less often,” the Wal-Mart World report stated. Shoppers filled in explanations for some reasons they go to Walmart less, including “too crowded, reduced inventory, no longer carries items I previously purchased” and “they’ve cut out a lot of items they used to carry,” according to Retail Forward’s WalMart World.

WalMart’s win, play, show strategy means it wants to be well-stocked in major brands and categories that sell well; and will play in other brands that shoppers want, but won’t offer as great a selection. WalMart will devote even less shelf space to the “show” products, items it carries because some shoppers buy those items but they aren’t the biggest sellers or perhaps aren’t national or dominate brands.

Consumers get cranky if they’re used to buying a certain item which gets discontinued. Sometimes, they will try another brand in its place, but if it’s important enough some will shop elsewhere to get what they want.

Time will tell if Win-Play-Show increases WalMart sales and profits.

Why Wal Mart Is Important to Food Companies

2009-09-06T08:15:00.000-07:00

If you are in the food business and you do not have distribution with Wal Mart you are missing almost 40% of the consumer grocery traffic in the south. Wal Mart’s average market share in ten southern states is 38.3% and growing. Wal Mart has taken business from every retailer in the south except Publix. The only state Wal Mart is not ranked number one is Florida (Wal Mart now ranked a weak #2). Wal Mart’s highest market share is in states with the lowest average income and poorest level of competition. In the past fourteen months Wal Mart has grown to the number one market share position in North Carolina and Virginia which were dominated by Food Lion. Current grocery market share information is listed below. Wal Mart will control 50% of grocery sales in the next few years if the current trend continues.

Wal Mart’s management has taken a “less vendor – product assortment” direction in dry grocery categories which has hurt small companies. It is impossible to get shelf space in dry grocery categories unless you are a category leader nationwide. Wal Mart’s direction is now focused on private label and market leaders only. This move so far has resulted in increased sales with less item selection. I predict this marketing plan to spread to meat, deli, and dairy soon.

Shopping at Wal Mart you will notice that all private label packaging has changed to a standard white package. This makes private label products very visible on the shelf. Wal Mart’s newest supercenters are also merchandised without the “action alley” pallet displays. Action alley was the floor space between grocery and general merchandise and an equal area on the other end of the store thru general merchandise. Both action alleys are now gone in new supercenters. End cap displays have been re-designed to give Wal Mart equal display space lost to action alley. The result is a real improvement in store appearance.

Grocery Share Of Total Business

State Wal Mart

Mississippi 56.36
Louisiana 50.09
Alabama 48.18
Kentucky 40.00
Tennessee 40.27
S. Carolina 36.25
Georgia 32.82
N. Carolina 32.19
Florida 24.80
Virginia 22.00

How to solve the health care problem

2009-09-04T09:57:00.000-07:00

The health care problem can be solved by doing three things:

First: Require everyone to have health insurance or pay out of pocket for their health care when it is provided. That would lower the total cost because there would be no free rides. If you do not pay you do not get treated, period.

Second: Let public for profit insurance companies operate WORLD WIDE without any restrictions or government mandates. Competition between for profit insurance companies will take care of lowering cost (along with everyone having insurance) , maintaining quality and providing supply. People with preexisting conditions will be able to buy insurance at a competitive cost (there will even be insurance companies that specialize in this coverage). Unrestricted competition will solve the problems. It works for car insurance and it will work for health insurance too.

Third: Punish people that do not buy health insurance the same way they are punished if they do not buy car insurance. You must show proof of health insurance before you can get a drivers license. Require all school children (Kindergarten through college) to have health insurance before they are allowed in public, private or are home schooled (just like their shots). Reform the tort laws so doctors do not have to be subject to unlimited legal claims.

Who thinks this will not work?

Now the question what about the people that are so poor they don't have a car? I am working on that. Back later.....

The Grillzilla Story

2009-08-24T10:33:00.000-07:00

What is Grillzilla? Grillzilla is a twenty four foot trailer equipped to cook the best smoked meats you have ever tasted!

How did the idea for Grillzilla start? People ask me that question all the time.

It happened after the Big Show Grilling Team won first place in a Memphis in May barbecue competition in Charlotte North Carolina. The team members were Carl Lewis, Fred Overman, Eric Krause and me. As usual the team celebrated hard after that win and stayed over Sunday night to share the win with John Boy and the Big Show radio audience. As he normally did John Boy made our win sound much larger than it really was by spending the entire Monday morning show talking about how The Big Show Team won first place. Looking back I think our ribs were good that day but I also think the association with the John Boy and Billy Big Show influenced the judge’s decision especially on the second team visit. Anyway, we won a first place!

I got to thinking how good John Boy made winning first place in ribs sound on the radio. It was especially good marketing for the John Boy and Billy Grilling sauces. That’s when the idea of cooking in more competitions came in our minds. If we were going to be competitive competition barbecue cookers we had to have the best equipment money could buy. By the way in those years we were making so much money with the Grilling Sauce success we needed something to spend it on that was business related anyway.

Since I was busy with the day to day business operation Carl took on the project of finding us the right equipment. Carl knows how to cook barbecue. He was interested in something custom made to his ideas based on his life long experiences with barbecue. At some point Carl had some experience with Southern Pride barbecue smokers. He contacted Southern Pride and got us a demo smoker we could play with. Unfortunately we could not work out an acceptable business relationship with Southern Pride. We were both disappointed because that type of barbecue smoker was perfect for what we had in mind to do.

We started looking for a replacement. That is how we discovered the Ole Hickory Barbecue Pit Company. Their pit was a very similar design to the Southern Pride. They did not give us a demo pit but did help us find some Ole Hickory Pit owners near us in North Carolina we could visit. The Ole Hickory management was also interested in the promotional value of having the Big Show Grilling team using their equipment. I liked the fact that the Ole Hickory Pit had heaver steel than Southern Pride. I was also impressed with the fact that almost all replacement parts could be purchased from Grainger or other local parts distributors. The pit was also easy to work on. I knew having a pit on a trailer bouncing up and down the road as much as we traveled had to be built good to take that punishment. It’s a big difference for a pit sitting on a restaurant kitchen floor and one riding a trailer every day!

We worked out a deal with Ole Hickory. Carl and Fred drove over to Cape Girardeau Missouri and picked up the trailer with the Ole Hickory Pit mounted. I met them back in Charlotte and we backed the trailer down the sidewalk to the front door of the Big Show studio. On their first break of the morning Billy walked out the door and saw the trailer and Ole Hickory Pit and the first word out of his mouth was “Grillzilla”. I said “you just named it” thanks!

It took almost a year to get Grillzilla built out the way it is today. We had several friends that built race cars and grills do the work. We also got another friend in the sign business to build the sides and put all the logos in place. All in we had maybe $60,000 in the total project. A big part of the expense was making mistakes. We had built on so many things that the weight over loaded the existing trailer suspension. That was a $3,000 fix in itself! The whole project was like a couple of red necks building something in their garage then discovering that it is too big to go out the door! I could build the next Grillzilla for half the money. Let me know if you want more details on a project like that.

Now keep in mind the entire project was started so we could be competitive in barbecue competitions. How did that work out? Not too good! The first competition we went to we finished third from last in total points. Ok, we would cut back on the party and really focus next time. At our second competition we finished bottom third (lot less partying too). As John Boy said “it’s hard to make this sound good if you guys finish last” and he was right. There is a lot more to competition cooking than the equipment. I would say the equipment is maybe 40% of the total picture.

We continued to competition cook without getting much better. I looked at the expense and decided maybe we should re-think this marketing strategy. We finally stopped competition cooking unless someone paid us to go.

The last few years we used Grillzilla for some Food City race night events around the two Bristol races and some big parties we had with radio stations but for the most part it stayed parked and was not used much. We were still doing a lot of grocery store events with our other grills but we found Grillzilla was just too big to fit in front of a grocery store. It also took lots of diesel fuel to pull it (8 MPG ).

When I sold my half of Big Show Foods to Carl we split the grills. Since Grillzilla was not used much by Big Show Foods it made more sense for me to take it so Carl could keep the “work horse” grills we called Grill #1 and Grill#2. For about a year Grillzilla was parked at my house. Every time I walked passed it I saw some new rust. I knew it was foolish not to be doing something with Grillzilla. That will start my next blog story about getting in trouble with the “food Police” (Wake County Health Department).

I have posted pictures of Grillzilla on my facebook page at http://facebook.com/tprice1 If we are not friends just ask. I am also publishing the pictures on my web site at http://bigtom.org.

I take the easy road

2009-07-31T04:58:00.000-07:00

I get lots of questions about how I cook barbecue. The simple answer is I don’t! My ole Hickory barbecue pits do the work. I learned a long time ago that I am too old to stay up all night tending a wood barrel fire to keep a smoker slow cooking a pig. There is always plenty of work to do after the meat is cooked so why wear your self out actually smoking it?

For those of you that don’t know Ole Hickory, based in Cape Girardeau Missouri, makes a wide selection of smokers. I own a CTO model (holds about 150 pounds of meat) and an EL-ED model (on Grillzilla) which holds over 700 pounds of meat. Both smokers do an equal job smoking. The CTO is best for small loads because it’s easy to clean up. The EL-ED is the only way for big loads but takes longer to clean.

The ole Hickory secret is its automatic. You set the temperature, add charcoal or wood, and fifteen hours later you got perfect smoked meat. It even turns itself off and holds the load at a warm temperature. How easy is that?

On the EL-ED I put in about fifteen pounds of Kingsford charcoal, a few sticks of apple wood (when cooking pork for pulled barbecue) and set the thermostat at 225 degrees. A gas burner comes on and starts the charcoal and wood burning. When the temperature hits 225 the gas cuts off the burning wood/charcoal maintains the temperature. Pork only takes in so much smoke so that happens in the first two hours as the apple wood burns. The next twelve to thirteen hours the charcoal supplies most of the heat and some more smoke flavor. The gas will automatically turn on to maintain temperature especially on cold nights.

What comes out is tender, moist, pork with just the right amount of wood smoke. Then the real work starts which is pulling the pork and adding the spices.

Now you might think “Tom you are missing the fun of hanging out with friends and tending the fire”, well actually no, we still do that we just get to bed at a normal time.

Stay tune and I will tell you how the barbecue is perfected on my next post. If you would like to learn more about my new book “How to make $5,000 a month from your driveway” or just have questions about barbecue visit my web site at http://bigtom.org.

Wal*Mart Saves Money by going green

2009-07-27T04:58:00.000-07:00

General Electric ran TV commercial a few years back in which a young executive pitches improved energy efficiency to his corporate board.

"Why should we care about this stuff," his boss demands.

"Because it can save us 40 percent on our energy costs," he replies.

With that, Disneyesque animated birds and rabbits appear to playfully nuzzle board members who suddenly discover the joys of going green.
Something very similar — absent the animated birds — may have taken place four years ago in Arkansas. At a two-day conference, America's largest retailer, Wal-Mart, committed to a greener course.

It's taking suppliers like GE, as well as competitors and retailers, along on the journey.

The latest evidence of Wal-Mart's eco-evolution is its work to develop a universal sustainability index.

Appliance buyers can now get information on energy efficiency before making a purchase. In the future, Wal-Mart hopes consumers will base buying decisions for everyday products on labels detailing their environmental and social sustainability.

That's quite a departure for a company that once was known for low prices and scorched-earth capitalism. But Wal-Mart has proven that it can do well by doing the right thing.

Last year, it earned $12.7 billion. Those profits come not only from its traditional cost-cutting, but by savings from reducing packaging and improving energy efficiency.

The changes aren't just good for Wal-Mart; they're good for the environment, too.

In 2007, Wal-Mart made a commitment to highlight sales of environmentally friendly compact fluorescent light bulbs that last longer and use less electricity. Doing so meant suppliers like GE had to ramp up production.

Wal-Mart still sells more traditional incandescent bulbs. But the potential energy savings from compact fluorescent bulbs are staggering, especially with sales juiced by Wal-Mart.

In 2008, it began selling only concentrated liquid laundry detergent. The giant retailer says customers have saved more than 400 million gallons of water as a result. The switch also saves 95 million pounds of plastic resin that would otherwise have been used in packaging. And, not coincidentally, Wal-Mart saves more than 500,000 gallons of diesel fuel by not having to transport heavier, bulkier products.

A universal sustainability index has the potential to be even more important. It would let consumers see the true costs of wasteful packaging and products; they then might make better buying decisions.

Not all customers will take that into account. But where Wal-Mart goes, other retailers will follow. It's showing them that there's real money in going green.

My advice to small Wal Mart vendors; Get on board and use environmental sustainability as a competitive advantage as soon as possible. Larger companies are going to be slower to act (because of their size) which gives smaller companies a short term advantage. With the current category management standards at Wal Mart a minor brand could keep their distribution with this edge.

2009-07-24T12:40:00.000-07:00

Walmart To Develop A Worldwide Sustainable Product Index

Wal-Mart announced plans to develop a worldwide sustainable product index during a meeting with 1,500 of its suppliers, associates and sustainability leaders at its home office. The index will establish a single source of data for evaluating the sustainability of products.

“Customers want products that are more efficient, that last longer and perform better,” says Mike Duke, Wal-Mart’s president and CEO. “And increasingly they want information about the entire life cycle of a product so they can feel good about buying it. They want to know that the materials in the product are safe, that it was made well and that it was produced in a responsible way.

“We do not see this as a trend that will fade. Higher customer expectations are a permanent part of the future,” Duke continues. “At Wal-Mart, we’re working to make sustainability sustainable, so that it’s a priority in good times and in the tough times. An important part of that is developing the tools to help enable sustainable consumption.”

The company will introduce the initiative in three phases, beginning with a survey of its more than 100,000 suppliers around the world. The survey includes 15 questions that will serve as a tool for Wal-Mart’s suppliers to evaluate their own sustainability efforts.

The questions will focus on four areas: energy and climate; material efficiency; natural resources, and; people and community.

“The survey will include simple but powerful questions covering familiar territory, such as the location of our suppliers’ factories, along with new areas like water use and solid waste,” says John Fleming, chief merchandising officer, Wal-Mart U.S. “The questions aren’t complicated but we’ve never before systematically asked for this kind of information. The survey is a key first step toward establishing real transparency in our supply chain.”

Mr. Fleming also said the company will ask its top tier U.S. suppliers to complete the survey by Oct. 1. Outside the United States, the company will develop time lines on a country-by-country basis for suppliers to complete the survey.

As a second step, the company is helping create a consortium of universities that will collaborate with suppliers, retailers, and government to develop a global database of information on the life cycle of products -- from raw materials to disposal. Wal-Mart has provided the initial funding for the Sustainability Index Consortium, and invited all retailers and suppliers to contribute.

The company will also partner with one or more leading technology companies to create an open platform that will power the index.

“It is not our goal to create or own this index,” says Duke. “We want to spur the development of a common database that will allow the consortium to collect and analyze the knowledge of the global supply chain. We think this shared database will generate opportunities to be more innovative and to improve the sustainability of products and processes.” The final step in developing the index will be to translate the product information into a simple rating for consumers about the sustainability of products. This will provide customers with the transparency into the quality and history of products that they don’t have today.

No time frame was outlined for the index's use in the stores. This project will have an impact on companies competitiveness and future consumer impressions of their products.

2009-07-09T12:31:00.000-07:00

Understanding Merchandising at Wal Mart

Key Wal Mart manager:
John Fleming – Chief Merchandising Officer. Primary person in charge of the merchandising transformation that is now in play at Wal Mart. Prior position was in the marketing department where he identified who Wal Mart’s customer is and how best to serve them.

I will attempt to communicate Wal Mart’s merchandising direction so suppliers I work with will understand how to best operate in concert with the world’s largest retailer. First, let’s define some terms;

Save money – Live better – This is Wal Mart’s primary direction and mission. Wal Mart will have the lowest price on everything in their stores and on line so their customer can live a better life with the savings. Undisputed low price leader period! Clear low price leadership. Profit margins are secondary to lowest prices on all products. All management decisions are made with this concept in mind.

Clarity of offering – Having a limited number of brands/products in low growth categories. Spreading out on top selling brands in growth categories. Result is the elimination of the #2, #3, #4 products and giving more space to the #1 product. This eliminates out of stocks, increases turns, and Wal Mart’s belief is the consumer will adjust to the lack of assortment especially in the slow growth categories. This strategy is common place merchandising in Europe.

Conversion- This is store merchandising designed to motivate the Wal Mart customer to purchase from as many departments as possible on each shopping trip.

Who are Wal Marts target customers?
Value Seekers – Wal Marts primary customer. Three groups; price value shopper – looking for low price points on popular brands. Price sensitive affluent – quality seeker at a great price. Brand aspirational. Contact tom.price@earthlink for a complete discussion about types of consumers.

Wal Mart is focused on growth categories. They believe that success comes to companies that have their merchandising investment in the growth categories. Their goal is to increase market share in these growth categories.

There are 96 defined categories in Wal Mart. Contact tom.price@earthlink.net for a discussion about these categories.

They analyze product categories from three dimensions; growth potential, scale advantage, and credibility with the customer. Wal Mart calls this approach the Win – Play – show.

A win category is a category that will grow twice the rate of the business unit. Scale advantage relates to power with suppliers thru access of a full range of products and use of the logistics network. Customer credibility is to what degree customers perceive Wal Mart as a creditable source of information.

A play category is one with lower growth or stable business with Wal Mart having a scale advantage and some degree of customer credibility.

A show category is declining in sales, Wal Mart has little credibility with consumers and no scale advantage. This category of products is in the store to fulfill the “one-stop shopping proposition”. Example; it is important that Wal Mart have tape measures but they do not need an assortment. Limit assortment will not harm the shopping experience and will drive productivity so they can invest assets in “win” categories.

If the category is defined as a win or play (grow) Wal Mart invests in the range assortment and visual presentation. They study their competition and strive for quality products at competitive prices. Brands within categories can have a win-play-show rating.

If the category is defined as “show” Wal Mart is reducing suppliers and SKU’s. This results in productivity gains that allows them to invest in the growth categories.

In food examples of “show” categories are ketchup, mustard, barbecue sauce, flour, batters, and soft drinks. Examples of “play” categories are marinades and Mexican.

Along with this merchandising change has come a management structure change called “customer experience”. This group does space allocations, adjacencies, and visual presentation in all stores. Goal is consistent shopping experience throughout all stores.
This group is also about planning, replenishment, pricing, and category management.

Future growth will come from “multichannel integration”. This is defined as customers shopping multiple channels before they make a purchase decision. The online channel will be critical to future growth. The “site to store” program will be a growth platform at Wal Mart. Under this program products available on line only at Wal Mart dot com are delivered to the store free for customer pick up.

Companies supplying products to Wal Mart need to develop product offerings in the “Win” categories and look for on line opportunities. Suppliers should create a world class on line model of information to support consumer buying decisions at Wal Mart.

Contact Tom Price at bigtom@bigtom.org for ideas on how to gain and keep Wal Mart distribution. I can also help you with your web site and social media marketing development.

Visit:
http://bigtom.org
http://youtube.com/ncbigtom
http://twitter.com/grillzillabrand

Thriller On The Griller

2009-07-08T08:54:00.000-07:00

2009 was 8Th year for Thriller On The Griller at Food Lion stores located from Myrtle Beach SC to Atlantic Beach NC. We visited a total of fourteen stores. Over $50,000 was raised by this event for Children's Miracle Network (CMN). Thriller was started by Joe Stock, operations manager for Food Lion, after he visited a hospital his daughter was working as a nurse. There was an equipment need for the Childrens ward which Joe raised funds to buy. From fulfilling that need Joe continued to raise donations which now go to CMN hospitals. In my opinion Joe Stock is the "Jerry Lewis" of CMN. This cause has to be on his hart because he is tireless in the fund raising effort for the past eight years. Every day he is out front of the Food Lion for five hours (sometimes longer) in 90 degree heat pushing for donations. My small part of making Lancaster's Barbecue sandwiches wore me out! I do not know how Joe does it except for the love of the kids driving him to raise more and more money each year for them. I could not get Joe to video an interview. He does not desire to be in the "spot light" for his efforts. That is why I am writing about him.

We had other vendor partners that also worked very hard on the Thriller tour. Charles King with Cheerwine has a two man team helping him with the tents, food wagon, and silent auction. The whole deal was like a traveling circus without the elephants. Everything had to be set up and torn down at each store. With the travel, hot weather, and physical work, we did not have any trouble sleeping every night.

Johnsonville Brats supplied a grill for the South Carolina stores (plus all the brats we cooked) and Uncle Yammy's (Steve Johnson) Grilling Sauce supplied the grill for the North Carolina stores. I took the Lancaster's Barbecue trailer and cooked/made barbecue sandwiches at the North Carolina stores (Lancaster's Barbecue is not in the South Carolina Food Lion's (yet).

Budweiser and Miller beer had people and tents at every store selling hat's, shirts, and other things to increase the fund raising. Kelloggs employees came to all the stores to help push silent auction items, sell coolers, and sample some great Special K products (I am hooked on the protein tea mix). Other companies that gave products to sell or give away were Lance, Hawaiian Tropic, Frito Lay, Snapple, and Coppertone.

Over $50,000 was raised for Childrens Miracle Network this year. Food Lion is lucky to have an Operations Manager like Joe Stock that would take on this extra work to organize and be a part of this yearly event. Many people commented positive words about Food Lion for having Thriller in front of their store.

You can see pictures by clicking here and video by clicking here