Flattened in the flat world

The other day I was talking with my friend Heidi and she declared “flat is the new hockey stick!” talking about how many companies will be delighted to have the same profit they had last year, compared with just a year ago when we all still talked about hockey stick (angled) growth.  I thought that was a pretty smart observation.

So yesterday when Wal-Mart Stores  announced yesterday that for the first quarter ended April 30, it had a profit of $3.02 billion, or 77 cents a share, compared with $3.02 billion, or 76 cents a share for the period a year ago, it dawned on me that Heidi isn’t just smart, she’s wicked smart. Exactly the same profit yet it exceeded Wall Street expectations.

Wal-Mart Stores, the company that had so many consecutive quarters of consecutive growth they practically had to build a longer measuring stick, and today people are happy with flat?

I think this is just the beginning and  a lot of companies will be nothing short of delighted with flat in this economy.

As it turns out I think this is really bad news for Wal-Mart.

Why? Because even though they are a low cost store, they are too broad to shoulder this flattened economy.  When you do an internet search on them in my home of Seattle alone (not exactly the sweet spot of Wal-Mart by any means), the location pins practically fill up the map.  In the chapters about ING DIRECT and Eclipse Aviation in the book Rethink I talk about this idea, and for so many companies, right now is the time to focus on specific customer segments and know who they are and what they value (price, quality, trust, speed, etc.) and don’t value and really knock the cover off the ball (or slap that puck in this case) in delivering that to them.

Part of that requires turning your back on some customers, and Wal-Mart is too big to do that, so I think their success is married to the health and wellness of the economy, “in sickness, and in health . . . .”  Not many companies are that big, so I think a lot of you can do this and do it well – but do it now.

Think about it.  Rethink about it.  And if you have some time, pick up a copy of the 1977 movie Slap Shot, the Hanson brothers are still very funny, and it’s a bargain.

-Ric