Thriving in the shadows of Wal-Mart

Wal-Mart is a monolithic discount retailer that drives everything from product pricing to wage levels in the world economy, but there is plenty of room to survive and thrive in its wake.

So says William Marquard, a former consultant to the retailing giant whose book, "Wal-Smart What It Really Takes to Profit in a Wal-Mart World," gives a utilitarian view of what works and what doesn't against Wal-Mart.

Marquard was a partner at Ernst & Young who helped Wal-Mart develop its strategic plan in the late 1990s, the decade that saw the decline of competitors such as Kmart, Montgomery Ward, and others as Wal-Mart overran retail categories ranging from groceries to grills.

Its strength is its clear plan and simple corporate directives, and Wal-Smart details how the uncomplicated management ideas flow from the bare-bones management offices to the retail floors of nearly 7,000 stores.

"Many businesses err by not being explicit about their economic formula, or more simply, by not defining how they really make money," Marquard says.

He offers an insider's view of successful Wal-Mart practices such as its "productivity loop," the endless cost-cutting process that feeds the company's insatiable thirst for low prices. He also lays bare the company's foibles, including its long-standing indifference to public perception of its stance on wages, the environment, and other social issues.

It used to be you had to ransom your life to get your hands on details of the inner workings at the highly secretive Bentonville, Ark., retailer. Suppliers large and small feared repercussions; few put their livelihood on the line. But Marquard has added his name to a growing list of tomes that promise to reveal Wal-Mart's secrets.

"There's no excuse for not understanding what's going to happen to you and your business as you step into the Wal-Mart arena," said Charles Fishman, author of "The Wal-Mart Effect," a study of how Wal-Mart's drive for low prices has transformed the world economy.

"That's why you read a book like this," Fishman said of Wal-Smart.

While Wal-Mart controls about 10 cents of every retail dollar in the United States, it is clearly not all things to all people, Marquard says.

He gives the reader anecdotal insights into the practices of successful companies that compete with Wal-Mart head on, including Target, Kohl's, and others. He looks at the ongoing give and take between Wal-Mart and its suppliers, from such giants as Procter & Gamble and General Electric to such lesser-known names as duct tape maker Manco Inc.

And Marquard gives examples of where Wal-Mart can't win -- namely in the areas of service and convenience that appeal to the intangible customer experience, where clever players such as Abt Electronics, Trader Joe's, and Costco Wholesale are winning.

Wal-Mart's "value proposition is very appealing, but it doesn't appeal to everyone," he says.