The Challenge of Superstores

I'm sure this has been discussed in the past, but perhaps there are some new
idea out there. Has anyone faced the challenge of a superstore moving into
town and causing serious hardship on local merchants? Did you approach it on
a multi-merchant level or as an individual merchant. Did businesses fail
because of the superstore? Of those that survived, what was their success
strategy.

In article <coi5mt0q36@enews2.newsguy.com>, MusicMan
<gregb@valleyho.com> wrote:

> I'm sure this has been discussed in the past, but perhaps there are some new
> idea out there. Has anyone faced the challenge of a superstore moving into
> town and causing serious hardship on local merchants? Did you approach it on
> a multi-merchant level or as an individual merchant. Did businesses fail
> because of the superstore? Of those that survived, what was their success
> strategy.

One success that I am aware of is Audio King, now called Ultimate
Electronics. They were a small chain located in Minneapolis, and
had the experience of Best Buy growing up and becoming the largest
seller of electronics right in their own backyard. A lot of other
vendors did fold up, like Team Electronics, Shaack Electronics,
and Highland Superstores. Audio King survived by finding niches
that Best Buy was not interested in, such as high end equipment,
quality car installs (rather than the 20 minute Best Buy hack job),
and in-home installs (which Best Buy is now trying to get into).
Audio King also had to do the get big/get efficient thing, and
merged with several other regional chains to become Ultimate
Electronics.

Radio Shack also tried to compete with Best Buy. They did it
by trying to "out-Best Buy" the Best Buy company. Radio Shack
built mamouth stores called Ultimate Universe. These stores
were organized as electroncis department stores, featured hands-
on displays, and they even had their on in-store DJ's. The
concept did not work since people treated it more like an
amusement park experience rather than a shopping experince.
In addition, it was hard to run in and run out just to get one
or two items, so people didn't treat it as an everyday shopping
environment. As a result, they died on the vine after only a
few short years. Radio Shack learned an imporant lesson in
that they were best at being Radio Shack, the store with a
limited inventory but having more locations than McDonalds.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

You might want to contact merchants in Vermillion, SD; Wal-Mart is
moving into the community, much to the dismay of many of the merchants.
Vermillion is a small town, about 8500, but the home of the University
of South Dakota.

From what I understand from my brother-in-law, who lives there,
Vermillion's city council has voted to allow Wal-Mart to come in, and
the town's merchants are up in arms.

MusicMan wrote:
> I'm sure this has been discussed in the past, but perhaps there are some new
> idea out there. Has anyone faced the challenge of a superstore moving into
> town and causing serious hardship on local merchants? Did you approach it on
> a multi-merchant level or as an individual merchant. Did businesses fail
> because of the superstore? Of those that survived, what was their success
> strategy.
>
>
>
>

In article <coj2jm02k5g@enews4.newsguy.com>, **** Morris
<MORRISR@nsuok.edu> wrote:

> You might want to contact merchants in Vermillion, SD; Wal-Mart is
> moving into the community, much to the dismay of many of the merchants.
> Vermillion is a small town, about 8500, but the home of the University
> of South Dakota.

Of course the merchants are up in arms. They have been ripping off
the locals for a hundred years, and now the gravy train is ending
by having someone move in and charge fair prices.

> From what I understand from my brother-in-law, who lives there,
> Vermillion's city council has voted to allow Wal-Mart to come in, and
> the town's merchants are up in arms.

Good move to allow Wal-Mart to move in. If you don't, they have
the option to locate in the next city over, and that will be the
worst case scenario--you lose all your local business, and you
don't get any of the benefits of having Wal-Mart such as the tax
base and jobs. Wal-Mart has done studies that show that people
will drive up to 30 miles to save money, especially if it is a
Superstore that has discount grocery products.

Some cities have tried to exile Wal-Mart to the edge of town
or in some undesirable location. The result is that the downtown
dies with all the business moves out by the Wal-Mart so they
can share in the Wal-Mart traffic. The best plan is to embrace
Wal-Mart, just like they would welcome any other business, and
design their down-town around a big Wal-Mart complex. That will
serve Wal-Mart, help keep the traffic for the downtown stores,
and give the locals the best of both worlds.

-john-

--
================================================== ==================
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
================================================== ==================

How to Survive walmart.

Ever tried to get a money clip engraved at Walmart? Paint mixed? Fabric
purchased? New Tires? It's a bad idea, and if so, you probably got mad
enough to make a monk take up arms.

Walmart has the discount market on lockdown and will continue to do so
into the foreseeable future.
Its true that the importance of service and human interaction is in
decline... and convenience and discount consciousness in on the rise..
but....

..... the exception to this is in your service and exclusivity products
and markets. These don't go over well at walmart.


Understanding this is the key to understanding how to beat walmart,
hands down.

The terrible truth about beating walmart is this:
How tough it is to beat the "big box" depends on your ability to
innovate, and your ability to innovate depends on your flexibility and
how well you have defined yourself by "end result" of customer
experience, not by inventory. You are no longer a business manager. You
are an entrepreneur again.

Slashing prices will not be enough. A good location will not be enough.
Combining with other vendors will not be enough, though all these things
may slow your decline. You have to overhaul your business formula.
PERIOD.

Once the "big box" rolls in, your focus is to quickly begin the hard
work needed to SURVIVE. If you do not immediately shift your focus to
doing what you got to do to survive, you will most wind up like Jonah,
swallowed up by the whale.

Again, you have got to move quickly.

DAY 1:

Immediately shore up any staff problems, lay-off any goof offs,
implement a quality program (one that really works) and hire only the
best. (yes, it will cost you in payroll, but again, do you want to
survive or not?). Let everyone aboard know it may be a long, hard, slog,
but that together you will survive. Make beating the big box your common
goal.

DAY 2:

Grab a shopping cart and go through your store with a checklist. Make
the checklist from the questions below.

If any product gets a yes or check mark in any two categories, that
product most likely represents a less than desirable or unfeasible
purchasing experience at walmart, so you need to sell MORE of that
product-service. Thus you are exploiting the big boxes primary inherent
weakness: Quality service.

THEIR WEAKNESS MUST BECOME YOUR STRENGTH.


Put these Questions on a checklist:

1- Middle class Gift-worthy Item?

2- Item that needs to be customized?

3- Item that requires follow up?

4- Item where trust or confidentiality factor?

5- Item for which there are no cheap duplicates?

6- Item for which there are no cheap duplicates?
(Just keeping you on your toes, lol)

7- Items which require demonstration?

8- Items which require interaction?

9- Items that can be matched to walmart prices (or lower) and still
create profit?

10- Items which can be targeted to an exclusivity market?

11- Item which Walmart does not carry yet?

12- Item which walmart cannot carry?

Put a big note with the words YES over these products/ services. This is
your new bread and butter, pal.

DAY 3:

Your key products are in the cart. Move everything else to the far left,
(from the front entrance) to the back of the store out of the store or.
These are now secondary items, and you will depend upon these for only
10-30% of your sales. Get rid of any lax products altogether.

DAY 4:

Replace the items from your basket back onto the shelves in the order of
demand and according to how many checks you placed beside it. The most
in demand products and those requiring the most help should go into the
center of your store.

DAY 5: Place a customer service kiosk (without a check out lane) in the
center of your store. Place a help button to the kiosk on every isle.
Put a person or two in the help kiosk with a headset on to answer
questions from the isles and to go help people. Smiling genuinely is
mandatory for all personnel.

DAY 6: Clean, Beautify, Brighten, your store and all displays. THIS IS
CRITICAL.

DAY 7: Add Music. Several companies can help you with this.

DAY 8: Change your store slogan to reflect RADICAL customer service.
Good is no longer enough. it must now be second to NONE.

DAY 9: Change your MARKETING and advertising to focus on the markets for
for your new emphasis and the products which lend themselves to CUSTOMER
SERVICE superiority. The customer is now ROYALTY and your ads should
reflect this.

DAY 10: Sign up with a secret shopper service

DAY 11. Walk into your store and INHALE. Does it smell fresh and good?
If not Fix this problem. The key is to compliment all of the 5 senses
that you can... not to offend them.

DAY 12: Clean and fix your sign and re-stripe you parking lot. Plant
some bushes and get a landscape company. You have to be a top looking
store to compete.

DAY 13: Be at your store everyday until you know you have beat the box.
Do NOT go down without a fight. Mr. Sam Walton once indicated that the
stores who fall to Walmart are the stores who were not meeting customers
needs properly anyway. Don't let him be RIGHT!

DAY 14: Extend your hours as soon as the traffic can support it.

DAY 15: When you sustain your market share, throw a big party and give
everyone a cash bonus. And pizza.


The national mentality is becoming one of "practicality".. gen x and y,
and k are not going to be quite as "service sensitive" as boomers were.
Not hearing "thank you" just does not bother them as much, "pragmatic"
is their watchword. Speed is more important and location ranks high as
well, which is why Walmart shoved a grocery store right smack into the
middle of a clothing store, (something the boomer "experts" had warned
him against).

Discounting is also much more important than it was in the past years,
but still, the box can be beat and some are able to do so.
Combination of premium location, Highly specialized wares requiring
interactive assistance and radical customer service... change your
inventory to match those needs and alter your marketing to those
markets.


Oh.... If you are not into praying, now might be a good time to start

~zion~

Thanks for the post. May I use it in my marketing classes?

Tech 22 22 wrote:
> How to Survive walmart.
>
> Ever tried to get a money clip engraved at Walmart? Paint mixed? Fabric
> purchased? New Tires? It's a bad idea, and if so, you probably got mad
> enough to make a monk take up arms.
[ Many lines of quoted material elided by moderator. -JimL ]

John, do you really think the local merchants have been ripping off
consumers? Just because they haven't the buying power of a superstore,
doesn't mean they are ripping people off. What about quality of merchandise?
What about product knowledge? What about service? There is somethng called
VALUE. And if it takes low prices from outsourced crappy products to NOT
be ripping off consumers, I'm happy being ripped off.

Greg

In article <cotmnm0c01@enews1.newsguy.com>, GSBatchelor
<gsbatchelor@verizon.net> wrote:

> John, do you really think the local merchants have been ripping off
> consumers?

Yes...anytime you overcharge someone, you are ripping them off.

> Just because they haven't the buying power of a superstore,
> doesn't mean they are ripping people off.

If buying power was the issue, wouldn't the little stores get
together and buy in mass? Wouldn't they form buying cooperatives?

> What about quality of merchandise?

The big box stores often carry several levels of quality, so you
can make an informed decision about buying the cheap stuff or=20
stepping up a level or two in quality.

> What about product knowledge?

Mom & pop stores often only have one or two people working, and
they haven't updated thier product knowledge since the great
depressions. Superstores, on the other hand, can afford to have
product expects in each department.

> What about service?

With a mom & pop store, you are stuck sending your item back to
the manufacture, which might be overseas. The big box stores all
have customer service counters where you can get your item repaired
or replaced.

> There is somethng called VALUE.

Then please define it. Studies have shown that people will tollerate
a drive of 30 miles or more to go to a Wal-Mart. They must value
the Wal-Mart experience higher than 60 miles of driving and an hour
in the car.

> And if it takes low prices from outsourced crappy products to NOT
> be ripping off consumers, I'm happy being ripped off.

That puts you in the vast minority. The rational person will=20
almost always pick the lower priced product when given a choice
between two equal objects.

-john-

--=20
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3 D=3D=3D=3D=3D=3D=3D=3D=3D=
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=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3 D=3D
John A. Weeks III 952-432-2708 john@johnweeks.com
Newave Communications http://www.johnweeks.com
=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3 D=3D=3D=3D=3D=3D=3D=3D=3D=
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=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3D=3 D=3D

For some inexplicable reasons, "John A. Weeks III"
<john@johnweeks.com> wrote:

:Mom & pop stores often only have one or two people working, and
:they haven't updated thier product knowledge since the great
:depressions. Superstores, on the other hand, can afford to have
roduct expects in each department.

Thank you for the laugh. I'm posting it on the business card
wall by the front counter at work. My employees will get a big kick
out of it.

Do you really think that someone who has spent decades on a
job knows less that the part-timers hired by Wal-Mart, K-Mart, etc?

--
Wendy Chatley Green
wcgreen@INVALID.lycos.com

----- Original Message -----
From: "John A. Weeks III" <john@johnweeks.com>
Newsgroups: misc.business.marketing.moderated
Sent: Sunday, December 05, 2004 1:43 AM
Subject: Re: The Challenge of Superstores

>
> In article <cotmnm0c01@enews1.newsguy.com>, GSBatchelor
> <gsbatchelor@verizon.net> wrote:
>
> > John, do you really think the local merchants have been ripping off
> > consumers?
>
> Yes...anytime you overcharge someone, you are ripping them off.
>
> > Just because they haven't the buying power of a superstore,
> > doesn't mean they are ripping people off.
>
> If buying power was the issue, wouldn't the little stores get
> together and buy in mass? Wouldn't they form buying cooperatives?

I'm sure they would love to, but antitrust laws get in the way of doing
that. It's OK for the consumer to form buying clubs and coops, but for
merchants to do it is a different story.

The solution was wholesalers - the middle man. They buy in huge quantities
and sell smaller lots to
merchants and this also streamlined purchasing channels. BUT the wholesalers
became
greedy and decided to sell direct to the consumer at higher retail prices.
So if anyone is guilty of ripping off the consumer, it's the once-wholesale
big box stores that could be working with the same profit margins they were
as wholesalers and charging the consumer much less.

>
> > What about quality of merchandise?
>
> The big box stores often carry several levels of quality, so you
> can make an informed decision about buying the cheap stuff or=20
> stepping up a level or two in quality.

Most of the big box stores I've been in carry crap, You can get cheap crap
or more
expensive crap, but... crap is crap.

>
> > What about product knowledge?
>
> Mom & pop stores often only have one or two people working, and
> they haven't updated thier product knowledge since the great
> depressions. Superstores, on the other hand, can afford to have
> product expects in each department.

In the superstores I've been in, you are lucky to find an employee that
will actually claim they work in a particular department, and then you're
lucky if they know their own name.

I find Mom & Pops to have extensive knowledge through years of experience,
which is handed down through the generations as well.

>
> > What about service?
>
> With a mom & pop store, you are stuck sending your item back to
> the manufacture, which might be overseas. The big box stores all
> have customer service counters where you can get your item repaired
> or replaced.

I haven't been in a big box store yet that did repairs. Well, maybe Best Buy
computer dept.,
but I find they tend to screw up more than they fix. Most stores send out to
some phantom repair center miles away. And many are reducing the number of
returns allowed in a year, and/or referring you to the "authorized service
center". So, if you have a bad luck streak of crappy merchandise... tough!

I have had exceptional service from the local merchants. I've never had to
send anything back to a manufacturer.

Try buying an appliance from a discount superstore. There it is. Get it
home. Delivery will cost you... to drop it at your front door. The old
broken appliance? That's your problem. Unpacking and setting up the new
appliance? Also your problem. Wrong plug on your dryer to match your
receptacle. Tough. In the end, how much did you really save after delivery
charges, electrician, a new cord, and paying someone to haul the old one
away?

Buying from your local dealer may seem like it costs more, but our dealer
picks up the old appliances, delivers, unpacks and sets up the new
appliance, replaces the cord on the dryer if needed, makes sure everything
is
operating properly, explains all the features of the new appliance and
proper usage. Oh, and the 32 inch TV that I had to haul back to the
superstore 3 times for service so they could ship it off somewhere else
(probably next door to me)... the local dealer picked that up while they
were there, fixed it and returned it in less time and for less than the
superstore wanted for an estimate. I haven't had another problem with it
since.

>
> > There is somethng called VALUE.
>
> Then please define it. Studies have shown that people will tollerate
> a drive of 30 miles or more to go to a Wal-Mart. They must value
> the Wal-Mart experience higher than 60 miles of driving and an hour
> in the car.

I don't doubt it. But, what percentage of people? What are their
demographics?

I think I defined VALUE above. It's not what you pay, but what you get for
your money.
Quality product. The knowledge to help buy the product that will serve its
purpose
properly and therefore not be a waste of money. Service and support.

Take my neighbor as an example. He always goes to the big discount hardware
stores in
town - a 20 mile drive each way. I usually go to the local hardware store 2
miles away. I'm sure I pay a little more, but I have never left without
everything I need to do a job, and do it well. In one hour I can drive to
the store, get professional advice, buy quality products, someone helps load
them, and I'll be home
starting on my project. My neighbor is still wandering around the
superstores
trying to figure out what he needs. Then he stands in a big line. After
paying, he loads his car... alone.
He usually doesn't get it right the first time, so he spends lots of time on
the road and in the superstore, and
little time actually getting the job done. Just about the time he's finally
getting started, I'm sipping a cold Black & Tan and
enjoying the result of my work.

I live near several "Outlet" malls. It amazes me to see how far people will
travel to "save" money. They make a huge trip out of it. They travel a great
distance, eat a nice lunch out, and usually buy a bunch of stuff they
normally wouldn't buy in their right mind. In the end, they have spent far
more than they ever "saved" at the "outlet".

>
> > And if it takes low prices from outsourced crappy products to NOT
> > be ripping off consumers, I'm happy being ripped off.
>
> That puts you in the vast minority. The rational person will=20
> almost always pick the lower priced product when given a choice
> between two equal objects.

No, the rational person will pick the lower cost. If a person buys on price
alone, they are not being rational. If two items are absolutely identical in
value, then the obvious and final decision point is price.

A rational person will pay $10 for a quality wrench with a lifetime
guarantee. The quality of the tool is such that it is unlikely to fail, but
if it does it is replaced with no questions asked. The irrational person
will keep paying $3 for a piece of crap wrench and spend $30 in replacements
over a lifetime.

Many Americans have been brainwashed into buying on price. It's a disposable
economy. Buy it cheap. When it breaks, get a new one. China loves it.