Strategy

Downsizing Wal-Mart

Have you ever noticed how many people hate “Wal-Mart” people? I’m not one of them, but the fact that there is a popular website and a best selling book dedicated to the people who are consider “Classic” Wal-Mart customers is pretty telling about the store.

These are people who are willing to subject themselves to large parking lots and overwhelming amounts of choices with no one to help. What about those people who won’t shop at Wal-Mart because it’s too big? They might shortly. That’s because they could be your competition even more than today.

Back in 2000 Wal-Mart made it clear that the plan was to build Supercenters, and then fill in the spaces between the Supercenters with “Mini Wal-Marts”. They have started to do this in 2011. The new “Wal-Mart Express” http://blogs.wsj.com/in-charge/2011/04/01/mini-wal-marts-coming-to-main-street will be about 15,000 feet and will go after Walgreens and Grocery chain stores. Should you be concerned?

It depends on a few factors:

A) Am I in retail? Wal-Mart is one of the best movers of goods on the globe, and being big, they get better pricing and live on a narrower margin than most small businesses do. But they don’t do service very well, so if you are a plumber don’t be concerned.

B) Do you sell things that the masses are looking for? If you sell things that you can find in most drug stores or groceries, then this is a threat to your proximity advantage. Many local stores survive by being nearby to neighborhoods. This new concept will get into these neighborhoods, particularly in urban areas where the Superstore is very very expensive to develop. Also, remember all the activists who worked to keep Wal-Mart out of their communities? They did it by limiting the size of the store. This new concept is resistant to such zoning restrictions.

C) Do you cater to “The People of Wal-Mart”? As much as Wal-Mart has glamed up their stores in recent years to capture a more upper middle class, they still dominate the lower and middle income and still struggle with the upper middle income populations. The big win they have with this move? Smaller stores are easier to navigate and can be closer to where people live. This attacks your advantage of the savings of time. If I can buy my shave cream for less at Wal-Mart Express in the same amount of time at your store, then I might be compelled to go there instead.

Most people who subscribe to this blog won’t have much to worry about. That’s because you are a fan of marketing and you likely built a strong Unique Selling Proposition for your business that has already considered Wal-Mart. It’s just interesting to know that your marginal regional grocer or drug store might become a Wal-Mart soon.

Read about “Wal-Mart Express”

http://walmartstores.com/sites/AnnualReport/2011/financials/Walmart_2011_Annual_Report.pdf

Unique Foundation

I subscribe to a very expensive data service. This is the type of service the national chains use to determine where they are going to build. I use it for small business. I also use it completely backwards.

Take a store like Starbucks. They know their USP: Their Unique Selling proposition. They understand that they offer a tightly managed daily experience to people who are; generally orderly and seeking consistency, actively employed and in a hurry, have a need to express their membership in a group. Many brewed coffee retailers could also claim this, but Starbucks only wants these people.

Starbucks uses products like ESRI to find locations between where these people live and where they work. They know their unique offering to the market.

Every try to lounge in most Starbucks? It’s not really as comfortable as most local coffee places. It’s also not hugely friendly for kids either. This means they are not very concerned about people serving as parents or with lots of free time as their core customer.

What is your core market? You may have never thought of this before. Looking for more customers? Pick a market. Do something completely unique for a population near you. Change the experience, or the products that do a good job of connecting with your neighborhood, or the people who drive past your business. With a little promotion, you will start growing, if you are truly unique.

This is where market research comes into play when I work with a small business owner. Chances are if you have an existing business you already have your location. Using the research I can tell you what types of people leave nearby, how much they have to spend and even things like how much they will spend on Budweiser or Disneyland.

By knowing this, you can begin to understand how you could become more appealing to a group of people. This is what the USP is all about. Do you have a USP?

The popularity of the term “unique selling proposition” has caused it to lose a large part of its definition. Today’s modern meaning, it seems, is more akin to “selling proposition.” We have seemingly lost sight of the most vital word.

Unique. Unique. Unique. What are you willing or capable of doing that others in your category won’t or can’t?

To most business owners, this is a question they love to answer until they fully understand what we mean. Things such as dedication to good service or quality are certainly admirable, but they are not unique among competent businesses.

Selection, variety, speed of service, or price, in lieu of anything else, can be a USP, but each of these qualities or claims must be substantiated with particulars. If you deem one of these to be your USP, you need to be ready with detailed examples as proof. Nothing is as ineffective as unsubstantiated claims.

No company is as forgettable as the one similar to all the others. To communicate a different and better way of doing business is your fundamental goal.

What makes you Unique?