New products, lower prices, smaller stores and revamped advertising are all part of Walmart's newest campaign to compete with small retailers.
Last week, the retail giant announced new steps to re-establish its one-stop shopping by broadening its product assortment by 8,500 items, working more closely with suppliers to lower the cost per item and simplifying its price matching policy.
The moves come one month after Walmart introduced plans to add hundreds of small-format stores that will be just one-tenth the size of its 185,000-square-foot Supercenters and will feature a grocery section and a pharmacy.
While the news may seem a daunting threat to small business owners, there are many who believe the proverbial dragon can be slayed using the proper strategies.
Robert Spector, author of "The Mom and Pop Store," (Walker and Company, 2009) online consulting expert Michael Martine and Michael Bergdahl, Walmart expert and author of "What I Learned from Sam Walton," (Wiley, 2006) offered their advice on the top things small business owners can do -- if they work at it -- better than the Walmarts of the world.
1. Target the higher end: Offering higher quality items, Bergdahl said, isn't something Walmart is equipped to do. By increasing the quality of their products, he said, small businesses will be able to attract customers who are willing to pay for better quality. "Walmart tries to be all things to all people on the low end," Bergdahl said. "But not everyone wants the lowest quality and the lowest price."
2. Create a meaningful online presence: Developing customer email lists, writing blogs and getting involved in social networking are all areas in which small businesses hold an advantage, according to Martine. While big-box retailers may have Facebook pages and Twitter accounts, Martine said small businesses have the opportunity to develop deeper ties to their customers by developing personal relationships with them. "People want to do business with other people they know, like and trust," Martine said.
3. Offer specialty items: Small businesses have the opportunity to carry specialty items that Walmart and other big-box retailers can't, Spector said, because small businesses don't have to appeal to the general masses. As a child, Spector's father ran an independent grocery and was able to thrive against the bigger chains by offering European meats that he knew residents were looking for. Carrying items like those, Spector said, gives shoppers motivation to choose your store over Walmart. "You have to have a special reason for existing," he said. "You have to give people a reason to come into your stores."
4. Listen to your customers: While Walmart's iconic greeters are friendly, they can't really do much more than say hello and point you in the right direction. Small business owners, Bergdahl said, have that same opportunity to greet their customers each time they walk in the door -- and the opportunity to make changes based on what they are hearing. "Ask them (customers) about your product mix," Bergdahl said. "Ask them what is missing, and cater to them."
5. Community involvement: Small businesses have the opportunity to make connections in the community by getting involved. While Walmart may be able to donate funds to build an entire new baseball field within a community, Spector said something far less costly -- such as sponsoring one of the local children's teams -- can have a far greater impact by serving as a constant reminder of your business. "It just takes being out there to make that connection," Spector said. "That is something a big-box store isn't capable of."
6. Provide extra services: In addition to selling a product, Bergdahl said small businesses have the opportunity to offer their customers additional services, like repairs and installation. Walmart, which doesn’t offer those services, uses a planned obsolescence strategy, selling cheaper products without repair options in the expectation that eventually the consumer will be back to buy another.
7. Practice top-notch customer service: In a small business, Spector said, every customer can be treated as a VIP. And customers, he said, are much more loyal to businesses that make them feel special. Things as simple as remembering customers' names can give small businesses that extra advantage, Spector said. "As trivial as that seems, it is actually huge," he said. “We all like to be recognized."
8. Change products and vendors: Small businesses can much more easily mix up their product base to consistently meet the changing demands of their customers, Spector said. If one product isn’t selling, he notes, small businesses can look for a new vendor or simply change the product, while Walmart has long-term contracts signed with vendors that don't make it as easy to quickly change things up. "They are so large that they can't change midstream like an independent can," Spector explained.
9. Provide meaningful merchandise: When customers are looking for a special gift, Martine said, a gift from Walmart doesn’t necessarily ring of love. "If I want to get my girlfriend a meaningful gift, I'm not going to get her something from Walmart," Martine said. "I would lose boyfriend points pretty quickly."
10. Establish convenience: Not everyone wants to spend their time maneuvering their way through Walmart's cavernous stores. Spector said small businesses give shoppers a place to quickly and easily get in and out with what they want. "Mom-and-pop stores can use their small size to their advantage by making it easier for people," he said.