• Ozzie Paez

Walmart, Guns and Disruptions


Disruptions can make or break organizations and their leaders. If you lead or hope to lead in a competitive environment, then coping with and exploiting disruptions will be critical to your success. Innovations, technologies, and events are disruptive when they fundamentally change an aspect of business, markets, and competition. Innovative technologies are common enablers of disruptions, while innovative business models are frequently the driving force behind them. Disruptions are challenging to decision-makers because they change the rules of competition and often render history and experience obsolete.

Walton's Bentonville, AK store reflects Walmart's roots and connection to rural towns

Sometimes enterprises leave themselves vulnerable to external disruptors when their actions undermine their value propositions and bond with important segments of their customer base. In this context, a key challenge for business leaders is how to expand and manage disparate customer groups without alienating important constituencies. It’s an important consideration in attempting to change and influence broad public perceptions of their brand. There have been many instances where such attempts created unexpected tensions with existing customers that undermined brand loyalty[i].

An interesting evolving case is Walmart’s continuing efforts to attract suburbanites, while protecting its traditional rural customer base. It requires balancing different and often contrasting customer cultures under a common set of policies[ii]. For example, the company recently announced that it would stop sales of some ammunition and firearms, will no longer allow open carry in their stores, and will support some gun-control initiatives. The challenge for Walmart is that it has taken sides, however modestly, in a divisive debate involving its suburban and rural customers[iii]. The potential schism may open opportunities for innovative competitors to disrupt Walmart’s long-standing connections to its rural roots.

Another challenge for the company is that its policies affect all stores nationwide, yet customer perceptions on firearms and other cultural issues vary widely by region. Its one-size-fits-all approach creates opportunities for regional competitors to disrupt the company’s market strategy by more closely aligning themselves with local cultures. Walmart is aware of these issues and has taken steps to ‘respectfully’ explain the rationale behind their new open carry policy. Unfortunately, complex explanations are generally ineffective in dealing with passionate views.

Implications

Large enterprises like Walmart enjoy significant advantages of scale, but these are predicated on using common standards across the chain. Unfortunately, common standards sometimes cause friction among customers with different cultures and value systems. One solution is to reduce centralized control and extend greater cultural flexibility to local store managers. The downsides of this model include potentially greater risks and reduced efficiency.

Walmart’s updated company-wide policy on firearms and ammunition has created opportunities for regional competitors, who can better and more flexibly align their corporate cultures with local community standards. Firearm and ammunition purchases are infrequent, but once customers make the switch in one area, other merchandise will be in play, from clothes to groceries. The key questions are whether and how competitors will attempt to improve their market position by exploit emerging tensions among segments of Walmart’s customer base.

References

[i] Cynthia A. Montgomery, Turn Purpose into Reality, in The Strategist: Be the leader your business needs, Chapter 5, May 2012, Harper Collins.

[ii] Pamela N. Danzinger, Can Walmart attract affluent customers?, June 4, 2018, Forbes, https://www.forbes.com/sites/pamdanziger/2018/06/04/can-walmart-make-its-up-market-move-work/#7cbf97678fe6

[iii] Nathan Bomey, 5 things to know about Walmart’s new stance on guns and open carry, September 4, 2019, USA Today, https://www.usatoday.com/story/money/2019/09/04/open-carry-walmart-guns/2210037001/

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