Small businesses and competing with Wal-mart

NPR’s “All Things Considered” piece on Wal-mart opening 50 new stores in urban areas and offering seminars to small businesses on competing with Wal-mart. It will be very interesting to see how this is received.

I suspect that it may be perceived as disingenuous since Wal-mart wants the revenue of those mom-and-pop stores (oh come on Wal-mart, admit it!). What I see playing out is Wal-mart, when getting flack for putting these smaller stores out of business saying “but we taught you how to compete with us!”.

Look, I get that the point of business is to make money (I don’t buy into the “evil:” moniker). And I believe that what Wal-mart is offering is an attempt at greater acceptance (read: better PR) in the markets it is entering. If it works then it’s smart. But I also think that Wal-mart may be under-estimating the sophistication of some of those small business owners (I hope).  I’d be willing to bet that they (small business owners) know enough to go to these events but not to take too much advice from the people that are trying to take their customers. In this case, scepticism is good.

I have to wonder if free lunch will be served at these seminars.

Comments (9)

  1. bleh says:

    Substitute "unethical" for "evil" and you’ll come closer to the truth much of the tme 😉

    If you’re going to be rolled over, you might as well get one free meal out of it 🙂

  2. Dudley says:

    Most mom-n-pop business are good at what they do, but what they do isn’t business.  It’s flowers, hardware, dry cleaning, etc.  That’s usually why these businesses start small and stay small.

    The trick to Wal-Mart is to do profitably what they can’t.  They don’t have butchers in their stores, so you only get what they cut in Indiana.  No bakers, so you only get what they stock or insource.  As long as you want buttercream icing on your basic wedding cake, you’re set.

    Where small businesses will do well is in customization.  The checkerboard fondant, or the tightly trimmed rack of ribs, or the cool braided thorny bread.  Wal-Mart doesn’t deliver.  These places will continue to do well, because they can handle the customization aspects of their products, and their customers know enough to pay a little more for exactly what they want.  Wal-Mart could expand into these areas, but that’s not how they make their money, and the returns wouldn’t suit their business model.

    We have a new Wal-Mart supercenter and Target right across the street from our flower shop.  Despite predictions to the contrary, we’re doing better than ever.  They can sell their dying pre-wrapped bouquets; we never had that business anyway (the grocery stores sucked that off years before we got into the biz).  Neither can do the custom work we do, and get it to the proper place at the proper time.

  3. HeatherLeigh says:

    bleh- yeah, I guess. : )

    Dudley- we still hear about Wal-mart putting people out of business. So it must be the "general store" types of shops. Telling these folks to specialize is kind of silly though…it’s basically like telling them to start over with something else. I bet Wal-mart would love to have all your customers if they decided that going the customized route was good for their business. At this point, it’s probably the stores that are not serving a niche that will suffer. People had to be buying their general goods somewhere. I’d love to be a fly on the wall at one of their seminars.

    Don’t get me wrong. I think goodwill is a good thing. Just wonder whether these seminars are going to be perceived as goodwill or something else.

  4. bleh says:

    Ultimately, its all about the consumer. If a Mom’N’Pop store can offer her and him what Walmart can’t, then they’ll continue to do business. They’ll just have to evolve, and learn how to survive just as people everywhere do in predatory situations.

    Thats more or less the point Dudley was making…if you have the ingenuity and grit, you *can* survive. Just being the first mover in a place gave you an advantage that lasted for ages….times up!

    Those seminars do illustrate one thing – Walmart isn’t going to change its strategy or refuse to bulldoze the small competition…but it does see the ill will it gets from its methods. And rather than ignoring it (as other people have been accused of doing, including in the past your own employer) they’re taking some action…doing *something* – and doing something that isn’t just PR either, as their targets here are the business owners, not consumers.

    Ultimately, the seminars are unlikely to get people *more* worked up about the situation….at worst. At best, people use them to morph their businesses and so feel favorably disposed towards Walmart in general (Stockholm Syndrome?).

    (The seminars may very well be about Walmart getting small business owners to do what they *dont* want to do.)

  5. Dudley says:

    I hear that bit about Wal-Mart closing down small businesses all the time, too.  I’m not 100% sure most of these wouldn’t have gone under if simply a better competitor opened, rather than a mega store.  It’s a lot easier to place blame on the mega store than to look at our own faults.

    I know Wal-Mart has damaged the grocery industry, but the vast majority of those are chains beset by their own inefficiencies.  Ditto for K-Mart and Toys-R-Us.  Wal-Mart doesn’t sell educational toys–only the hottest and most profitable ones.  I’d really like to know what categories of shops have been closed down due to Wal-Mart.

    I work with small businesses a lot, and there’s this romanticized vision that small business owners are really on top of things.  For a large part, so untrue.

    I despise Wal-Mart, but for other reasons.  I have to be dragged in there kicking and screaming.  I have a feeling that for the most part, these seminars won’t even be noticed.

  6. George says:

    Dry cleaning made the Jefersons well-to-do. They even got a delux apartment in the sky.

  7. Tim says:

    It’s sad to hear, Heather. Thanks for passing along.

    I agree with Dudley. But that being said, neither I nor my family will ever go into a Wal-Mart, or a Costco. And try to buy most things from the little guy. Even if the little guy may not be pleasant (which, at hardware stores, they may not be). I just don’t like the direction the Box Stores taking the country and I don’t feel comfortable selling out my neighbors and their businesses just to save $2.50 on a hammer. You can buy cheap goods, and a lot of them, but where does that get everyone really?

    (Sorry, this is my soapbox subject).

  8. HeatherLeigh says:

    George-good point but I believe the Jeffersons started out in dry cleaning…at least according to Weezy.

    Tim-I know exactly how you feel. Aesthetically, I find Wal-mart a little dismal. I prefer Target. As far as Costco, it just isn’t worth the trouble for me. Trying to figure out where to store 20  boxed of Kleenex and 15 pounds of chicken. Plus having to deal with the crowds, etc. I’m not sure I was saving more than I was spending on membership. I can get why someone with a big family would go. But doesn’t make sense for me.

    At this point, I’m willing to (heck, happy to) pay extra if I have a positive shopping experience. It means I don’t come home angry. And I have to admit that by the time I get home from Costco, I’m a cranky gal. So I have let my membership lapse.

  9. M Payne says:

    Wal Mart is like a giant indoor flea market. I stopped shopping there years before I opened my own business.

    It’s true they have low prices and that’s what drives most people to their stores. I have customers that look at a particular item in my store and say, "I can get it for less at Wal Mart."

    But, Wal Mart also sells a lot of "cheap", low quality, merchandise. There is one thing I’ve learned in my short time as a business owner, "You get what you pay for." It’s my opinion that if you pay $15.00 for a pair of jeans at Wal Mart its’ probably worth a lot less and very low quality, 2nds at best. But despite all of this, people still shop there and their profits continue to increase.

    I try to offer services to my customers that Wal Mart simply won’t. When you have a store as small as mine you get very close and personal with your customers, you really get to know them, something you won’t get at Wal Mart.