Wal-Mart Is In Deep Trouble--Ask Its Customers.

Bruce Nussbaum

I posted an analysis of Wal-Mart on November 30 suggesting it needed a new business model and so far, I've received 127 comments from people, most of whom are really mad. Every CEO who reads this blog should go to these comments. And top management at Wal-Mart should certainly see them--and learn. These comments are worth a fortune of "management consultant" money because they are authentic responses by real people who feel betrayed by Wal-Mart on a whole host of issues. Go to the Innovation & Design channel to post your own comment.

The issues are clear. Customers are very angry at the poor service they receive at Wal-Mart. There aren't enough employees to help them, the employees themselves are not very helpful, either because they are rude, ignorant or don't speak English well-enough to communicate with customers. Employees chatting while customers wait to get service also gets people angry. This is a big cultural issue that drives Wal-Mart customers nuts.

People are also mad at how Wal-Mart treats its employees. There are dozens of comments from people who worked at Wal-Mart, including many from managers, describing how bad management is at many stores. Being forced to work overtime and low pay come up again and again.

People are mad at Wal-Mart doing away with layaway before Christmas. This is the time of year that many want to go into debt to buy presents for their family. Ending layaway is seen at ending a major service for customers.

There are plenty of comments from people happy at the new low-priced drugs and low prices in general. But many more are not happy with dirty stores.

If you read through all 100 plus comments, it is clear that Wal-Mart is facing a management crisis, especially at the local store level. Employees are not trained to deal with customers. And there are far too few of them in many stores. Customer service is terrible at many locations and, again, people are really mad.

It sounds a lot like Home Depot, which used to have a sterling reputation with customers. In recent years, it cut employees and service and annoyed its once-loyal customer base.

At a time when consumers are playing a greater role in the design and creation of new products and services, it is madness to anger them by cost-cutting. The cost-cutting business model that sacrifices service and customer loyalty will prove increasingly harmful to CEOs and their companies if they insist on holding on to the past and not embracing the future.

Before it's here, it's on the Bloomberg Terminal.