business news in context, analysis with attitude

Last Friday, MNB featured a guest column from the Hartman Group's Jack Whelan entitled "Where Wal-Mart Can't Dance," in which he explored the David vs. Goliath nature of competing against Wal-Mart. This column elicited a number of email responses that ran the gamut. One MNB user wrote:

Great article! I happen to agree. I will be watching for future articles about the David's you find in our industry.

But another MNB user disagreed. Vociferously.

The Whelan column was pure drivel, typical of a consultant providing something free and offering knowledge worth just as much. In what town, or world, does he really shop and study markets? Wal-Mart isn't about perception of price and convenience; it is a market of price and convenience! You don't "believe" you are going to get everyday low "get" everyday low prices. With the real world economy in the tank, customers go there for exactly the reasons Whelan offers as perception. Then the customers go back - again and again.

People go there because it is practical, as he states. But he feels they don't love it? Nonsense. They love that they can save money. They are not after the same esoteric experience Whelan and other retail observers feel is important - they just want to see their economy of time and money well spent. They are after entertainment that Wal-Mart provides, contrary to his belief. That entertainment comes from saving money to allow some of their income to be spent on things other than the higher-priced offerings at other stores not trying to compete. If they throw in other marketing draws, such as scavenger hunts or activities for the kids, it is because they can afford to do so. And, obviously, it works.

If a store is still on business after Wal-Mart "invades", it is because they are well-managed. I don't know what town Whelan shops in, but stores in areas across the country that wish to compete for market share do not do so by being dreary or poorly managed. Of course, many stores are all about convenience and being dreary doesn't bother them or the people stopping in to pick up items with no expectation of entertainment, good manners and service or lower prices.

Not sure of Whelan's age, but stores in the 50's and 60's were anything but soulless and mediocre. Where was Whelan shopping back then - the Soviet Union? As any student of the industry knows, those years were the golden age of innovation in retail convenience, service and shopping charm. If it weren't for those retail principles born in those decades, Wal-Mart would not be the success it is. After all, isn't that when it started? Loyalty is a two-way street and his analogy of moving to a chain store because his independent pet store owner's passion for animals (eccentric as it may be, Jack) usurped his selfish need to be handled like a prima dona...well, it shows he cares less for the community than being treated like the celebrity he isn't. Maybe some heartfelt advice from him could have helped this person's retailing skills and longevity. After all, well-meaning retailers will listen to their customer's needs. Perhaps Whelan felt that the independent couldn't afford his retainer so the advice was not worth the solicitation. The same way I feel about his column…

As an independent retailer, I realize that there are needs of customers that Wal-Mart cannot provide. But I am not naive enough to believe that they will only shop with me, no matter what I can provide. The type of loyalty Whelan alludes to is not in real America. People are in hard times and Wal-Mart is cheaper on soap and staples than any of the neighborhood stores I know. It is not about David and Goliath. It is about capturing as much market share as you can and looking for ways to capture more of it. Whelan thinks someone will knock off Wal-Mart? Of course, history shows that things change over time…

Retailers, especially independents, worry about the weekly recap, the payroll percentage and the grosses on the next inventory. They worry that the new checker is scanning properly and being nice to the customers. They may even have some time to ponder the line of credit for a new store or some new refrigeration. But, winning...and knocking off the Wal-Mart's not even in the dream. Your high and mighty words are non-productive.

Those that can, do. Those that can't teach. And those that can't even teach, consult.

Another MNB user wrote:

Jack makes some very interesting points of which I question "why does everyone feel that they must attack Wal-Mart at every opportunity merely because they are, as Jack puts it "a Goliath?"

I shop and support Wal-Mart in our area of Buffalo, NY because of many of the reasons Jack writes about. I grew up here in Western NY with Kmart coming in and being the Goliath of the area. They battled Gold Circle, Twin Fair, Hills, Ames, and Sears to name a few. GC, TF, Hills and Ames all closed, all of whom I shopped at their stores. I welcomed Wal-Mart here because there was little that other retailers could offer me. I am proud that we have an American-grown retailer that is successful in what it does for the economy and what it has to offer me as a consumer…Why does everyone need to attack an American success - because they feel they are too successful and need to be cut down to a size they presume is better?

I simply don't understand why America isn't proud of success. Writers who think Wal-Mart should come down should start up competition just like Sam Walton did and give the big W a run for its money. Impossible you will say to me, so there you have it, Sam had the right idea at the right time and a true success story is before us being inundated with attack by the same industry that can't produce another Goliath in North America.

And another MNB user wrote:

Ask Roundy's if there is a way to compete against Wal-Mart. Roundy's is perhaps one of the best, but often overlooked examples of a successful regional operator, who has no fear of the giant (at least not openly). They have one of the highest market shares of any regional retailer in the country and are one of the few that are as aggressive as Wal-Mart in building stores (or buying them), and more importantly, remodeling them.

Imagine, a retail chain, (Pick N Save) whose original marketing plan was "low price" who realized that they could not continue to compete on price alone, and subsequently turned around their entire image over the past ten years into a beautiful, upscale, convenient grocery store (PickNSave Market). In the meantime, Wal-Mart has built some 30 Supercenters in Wisconsin and has affected Roundy's very little in terms of market share and earnings performance. My wife and I shop at Pick N Save because it is a well laid out, clean store, has great service, and excellent meat and produce departments. I have no idea whether the prices are competitive and I really don't care.

And yet another member of the MNB community wrote:

People don't know good service until they get it. I would argue that people are shopping where they are today because they perceive that store to be great until one day they make a switch and someone does something they never thought about and they go "WOW", And they'll switch - you want to know why? -- Because people are loyal to themselves FIRST. No company has been put out of business because of competition, people put themselves out of business. Sure, Wal-Mart comes in with great prices etc etc, but they can only be as successful as the existing retailers let them.

I find it interesting that there are plenty of retailers surviving even though Wal-Mart is there competing - why is that? Because those retailers are giving SUPERIOR service, not just average service. Wal-Mart's service is not superior, it's just better than most. Price is always a factor, but it's not the only factor - too many retailers are touting Wal-Mart and letting them have the business. It's as if Wal-Mart does ALL the business - but they're not. Look around at the competition against Wal-Mart and you still see plenty of customers in those stores. How come? Ever return something at Wal-Mart - they make you feel like a criminal by checking the receipt carefully and marking it off as though you might try to return it again. Compare that practice to Nordstrom's - BIG DIFFERENCE.

I'm amused at retailers' practice of checking and double checking on returns - does Wal-Mart think people buy things to return them? Sure, Wal-Mart is doing a lot of business, but so are a lot of their competition- the name of the game isn't to be number one, the name of the game is to be profitable.
KC's View: