Thuggery versus Wal-Mart (2010 Jul)

by Barry A. Liebling

If you are an established retailer you always have to be concerned with competition. Convincing customers to shop at your place instead of somewhere else is an endless activity that takes plenty of time, money, and effort. What should you do if a formidable rival moves into your neighborhood? While that can mean challenging times ahead, you have lots of legitimate options. You might attempt to undercut your competitor’s prices. But if your rival sells really inexpensively that may not be feasible. Alternatively, you might succeed by offering higher quality merchandise, or hard to obtain products, or better customer service, or deliver a more pleasant shopping experience. You understand that legitimate competition does not mean anything goes – doing whatever you can get away with to beat your rival.

You know that it is out of bounds to use force and physically block a competitor from coming into town. Also, it is never acceptable to to commit fraud and lie to your potential customers about your rival or misrepresent yourself.

And even as you know that it is wrong to take on the role of a thug, you should also realize that it is just as odious to hire someone else to be your surrogate thug. Think of the gangster movies where the big boss orders others to commit crimes but is careful not to get his own hands dirty. Of course the boss is just as guilty as his underlings.

Recently Ann Zimmerman of The Wall Street Journal reported on the activities of Saint Consulting Group a company that specializes in using the force of local government to block Wal-Mart from entering new markets.

According to the article several large supermarket chains have hired Saint Consulting to prevent Wal-Mart from entering their territory. Saint consultants visit the town with assumed false identities and try to blend in and direct the local opposition to new big box stores. The consultants make telephone calls and write letters with numerous fake names and return addresses to trick local government authorities into believing that there are many people committed to stopping Wal-Mart. The article claims that Saint Consulting pays attorneys to thwart Wal-Mart’s attempted incursions, but Saint does not disclose which client companies are ultimately footing the bill.

In this scenario we can peel back multiple layers of misbehavior. Look at local governments. In order “to protect” incumbent firms and unions many routinely ban new businesses from their jurisdictions. They feel that the best way to help their favored friends is to make sure there are no new competitors. The inappropriate application of government force is their tool of choice.

Consider what the Saint Consulting Group is doing. According to The Wall Street Journal article Saint’s owner thinks of himself as the “Wal-Mart Killer.” He encourages his employees to be deceptive – to avoid using their own names and to tell stories to local residents about the “evils of Wal-Mart” that are not true. His goal is to cajole government officials into doing what they should not do – block the entry of a business that might change the landscape of the retail environment.

Surely the Saint Consulting Group has talented people within its organization. Those same people could be spending time and effort helping incumbent retailers succeed ethically. The consultants and clients might collaborate to develop marketing and merchandising strategies designed to capitalize on the clients’ strengths and Wal-Mart’s vulnerabilities. This approach is not far fetched as far as Wal-Mart is concerned, since Wal-Mart executives are perpetually worried about losing market share to clever rivals.

And what are top executives in the retail companies that pay Saint Consulting Group to block Wal-Mart thinking? If they are instructing the consulting firm to keep the client’s identity a secret they must know at some level that they are doing the wrong thing. Hiring a firm to tell false stories to residents of a community and to officials in local government is nothing to brag about. Attempting to use the government as a surrogate thug is detestable.

If you are an established retailer you are are right to be concerned with competition. You should understand that legitimate competition is incompatible with the use of force – including government force – or fraud. Make sure that when you look at your own actions you are justifiably proud of the way you spend your time, money, and effort.

*** See other entries at in “Monthly Columns.” ***

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