Great Companies & Great Distributors Succeed Because They Have Their Eye on One Thing. Back then, could anyone have known how significant the year 1962 would be to the future world of retail shopping? In Garden City, Michigan, a five-and-dime store president opened the first discount department store and called it "Kmart". Down south, in Rogers, Arkansas, Sam Walton, another small store merchant, opened his version of a discount department store and called it "Wal-Mart". From their mutual success, discount retailing was obviously an idea whose time had come.
For four decades these two mammoth retailers have done battle in the marketplace, essentially selling the same goods to the same audience. Wal-Mart of course has gone from being a small country store, servicing the rural communities of America to become the world’s biggest retailer. With close to 3,000 stores throughout the world, and over 1.2 million employees, on a single day last fall the company’s worldwide revenue was $1.43 billion. That’s billion, with a “B”. On one day!
Kmart on the other hand, has struggled to find its way through the complexity of business. For a while it was one of the nation’s foremost retailers, but then it began to stumble. One leader after another came to the table, trying one strategy after another. Each seemed, for a moment, to have the answer. But in the end nothing has worked. Between 1990 and 2000, Kmart’s market share plunged from 30 percent to 17 percent, while Wal-Mart’s rose from 30 to 55 percent. Deep in debt, with losses mounting, in 2002 K-mart was forced to seek bankruptcy protection.
Why the difference? These companies sell essentially the same stuff to essentially the same customer!
Although there are copious reasons why these companies have had their good or bad fortunes, one message seems to cry out louder than all the others: Focus.
Wal-Mart decided it was going to be the best discount retailer in the world, and that meant providing its customers with reasonable goods at rock bottom prices. In order to do this, it had to have its operational systems finely honed. Inventory turns became the most important statistic in the company. Every manager paid attention and contributed their ideas to improving the number. Over time, the company has become the undisputed champion of the world in leveraging its inventory turns. No one has ever done it better than Wal-Mart. What does this mean to the customer? Wherever a Wal-Mart store is located the cost of living drops approximately 16% in the local communities! And Wal-Mart has never parted from its narrow focus to be the best discount retailer in the world.
On the other hand, Kmart had no focus. It tried to be all things to all people. Not trusting that it could squeeze more money from the narrow market of discount retailing, it chose to diversify. In a major detour from its core business, Kmart became a specialty retailer, buying such stores as Builders Square, OfficeMax, Payless Drug Stores, The Sports Authority, the Borders Group, Waldensbooks, and Pace Membership Warehouses. These were businesses servicing clients in niches Kmart knew nothing about. Its focus was nowhere, certainly not in its stores, where it was increasingly less able to compete. Kmart was known for nothing. It has no focus, and fewer customers.
The same principle applies in the direct selling industry. Whether you’re on the management side of a business, or on the distributor side, your success is pretty much based upon how well you focus on One Thing. The real world examples of this principle are the best testimony of its validity:
Long term distributors have come to appreciate the wisdom of working one business. Although there are a select few who can work multiple programs at the same time, the vast majority cannot. Stick with one and represent only one company. The companies that have fewer products in fewer lines tend to grow more quickly and have fewer problems than companies who believe their skin care experts can just as easily sell nutrition. Success comes in providing a simple, focused offering to the consumer and to the prospective distributor. The industry is fraught with failed network marketing companies that were started by successful distributors who had neither the skill, understanding nor core abilities to run a company. The mindset is “Hey, if I can do this, then I can do that!” Not true! Stick with and expand your core talents. Running a successful company requires skills that are 180 degrees different than running a successful downline.
At the end of the day, our lives would be more joyful and less stressed if we chose to abide by Henry David Thoreau’s counsel to “simplify, simplify, simplify.” We can do this by deciding what we are, and what we are not, and doing that One Thing well.
Craig Case
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