You are on page 1of 1

Bill Nichol negotiates with Walmart Case Study Summary

This case describes the negotiation approach adopted by Bill Nichol, Chairman and CEO of Kentucky Derby Hosiery Co. (KDH), to deal with an ultimatum from their largest customer Walmart, as well as the outcome of this process. It concludes with a number of Nichol's observations about supplier-retailer negotiations. It begins with an introduction to Little Ones Products (LOP), a brand of infant sox owned by KDH, its importance to the revenues of KDH, its market performance and Walmarts seemingly irreversible decision to drop the brand. Thus begins Nichols predicament as he starts to ponder over the impact of this decision on his company. Walmart was their single largest customer, along with whom they had built a sales base of approximately 18 percent of the U.S. market share. This is followed by a description of KDHs history - how and when it was founded, and its evolution ever since. The case then describes the tough times faced by the North American-based sock manufacturing industry and the three different offers that KDH had turned down, including one by Montreal-based Gildan Activewear to acquire the company earlier in 2005. The case then goes on to discuss the defense moves adopted by KDH to prosper under these challenging conditions, and the companys exclusivity arrangement with LOP to produce and sell a line of LOP-branded infant sox. It then describes the emergence of mega-retailers in the words of Nichol and his experience with Walmart. After this, it talks about how Nichol tries to think through a negotiating strategy to rescue KDHs LOP-branded infant sox, how he recalls past negotiations with the company and its policies, how it was different now and how he establishes the urgency of the situation. It then discusses how Nichol involves LOP in their next major meeting with Walmarts buyer and how this led to clarity in their stand with LOP. Next, the case describes Nichols successive negotiations with Walmart, how he tactfully deals with them, understanding their concerns and the situation, how his focus changes from total branded volume to total volume, and how he proposes a collaboration plan for an organic cotton house brand of infant sox, aligned with the companys sustainability initiative. After his proposal was accepted by Walmart, he also had to negotiate with LOP. The case then describes how Nichol convinced LOP to accept the proposal by showing them the larger picture and how it would be beneficial for them and aligned with their expansion strategy in the long term. It then describes in the words of Nichol, how they were able to make what could have been a catastrophic event, and remold it into a tolerable defeat. The case then goes on to describe the events that followed in the company and the industry. The company was eventually acquired by Gildan and Nichol was named the President of Gildans new Retail Division. Within a year however, he was moved to a consulting status and soon left the firm to focus on unrelated business projects. The case is finally concluded with Nichols reflections on dealing with Walmart, how the thinking had changed in business over the years and a summarization of key principles with respect to negotiation by Nichol.

Prepared and Submitted By: Meher Khurana (PG20131091)