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Subject: Wal-Mart's Small Stores Can Do Big Damage

Author:
Dennis S. Vogel

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Date Posted: 23:36:06 08/11/08 Mon

As I expressed before, Wal-Mart doesn't put small retailers out of business. W-M's presence & competition can be damaging because of choices consumers make & because small retailers don't respond in the right ways.

W-M has been developing small store formats. These have been widely discussed. What I've written below is something I haven't read or heard anybody discuss. It should be seriously considered.

Don't feel complacent & think, 'At least W-M isn't competing against me.'

Aldi is successful in the US, but is it a successful grocer or a general retailer? Maybe its grocery format isn't profitable, why else would Aldi stock & advertise electronics, software, clothes & other nongrocery items?

W-M builds small stores & calls them grocery stores &/or convenience stores. It seems grocery & C-stores are mostly owned by big companies. So, the effect of W-M's small stores on locally-based (Mom & Pop) stores would seem negligible? Fewer people will object to a big company competing with other big companies.

But W-M refuses to specialize in any product categories. After the small stores are open, W-M can be like Aldi & add other products. A few nongrocery items won't seem like a threat, so what? No big deal?! Not so fast!

Soon W-M's small stores may compete with any retailer on a somewhat small basis. A few people, every day who would've gone to other stores, see what they want in a Neighborhood Market or a Marketside & buy those things from W-M instead. Since they're in that W-M store anyway, they think they might as well buy other things they want/need.

What happens to other stores (big or small) that are struggling to survive. If they lose another 5% of their sales revenue, they're no longer breaking even. They close down.
Maybe some of W-M's Neighborhood Markets & Marketsides won't be profitable. Those will be closed too. By then the former owners of the other stores are struggling to pay their personal bills, plus the debts of their failed stores. Even with their nemesis gone, they can't afford to reopen their stores.

Since W-M experiments with various products (like upscale clothes), it needs some place to sell those products that aren't moving in their big stores. Why not, put those products in the small stores, just to liquidate them or test responses of upscale shoppers?

The lesson- Big retailers don't have to be highly successful to hurt small retailers. Big retailers can be spoilers (intended or not).

Dennis S. Vogel
Don't expect the same results from your actions after your situation has changed. You need more effective & efficient methods to respond to changes. You can find those methods with these URLs.
http://www.lakefield.net/~thrivingbusiness/
http://www.voy.com/31049/

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