How To Beat the Wal-Marts

I get lots of calls to come in and speak to merchant groups when they learn that another Wal-Mart is moving to town. The fear of course is that they assume they can’t take on Wal-Mart and win. The truth is you can beat Wal-Mart or any other chain, you just can’t fight them.

Unfortunately, the secret to competing with the giant of your industry is pretty simple, but it’s hard.

Simple part is don’t try to compete with them. Hard part is it’s a bit more work than turning on the lights and doing what you’ve done for years.

To beat a giant, you’ve got to offer something they don’t (that’s the secret to competing with anyone really.) Wal-Mart does low price, what do you do. I hope it’s not low price. Rainy Day Books, an independent bookseller, hosts almost weekly author events and often sells out theaters for authors who agree to speak sign books for books sales only. If you buy a book, they drop you a note when a similar book shows up.

To beat a giant, you’ve to take advantage of their weaknesses – don’t be afraid to point them out. I saw a sign in a local hardware store that said “Our prices are higher than Wal-Mart because we take care of our employees.” Pretty bold, but perhaps an effective way to make a point.

To beat a giant, you’ve got to provide better information and community. I know a woman’s clothing retailer that puts on monthly events unrelated to clothing and packs her store with clients who come to learn and network.

Business is a tough game, but the bottom line is that there are plenty of people out there (like me) that will pay a premium for place that knows my name, caters to my needs, adds value through information sharing and community and isn’t shy about providing and then charging for value.

You get that I’m not just talking about retailer here, right? There are giants in every industry that you beat with the same principles.


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  1. The key point is that a major change in the competitive landscape means that your business may have to change. All too many business owners try to stick with the business model that worked in the past, and then complain bitterly when it doesn’t work.

    Nice post.

  2. You’re right on target, John. In fact, I posted about this a few weeks ago. I WANT to give my business to smaller local merchants and I WILL pay more, but I expect them to differentiate themselves in service, friendliness and familiarity.

    Interestingly, our town has the smallest Wal-Mart store in the world (it was recently a Jeopardy! question), but the new Super Wal-Mart is under construction. I wonder if the local merchants will get the message.

  3. Harvard professor Michael Porter says there are 3 basic strategies for beating your customers… (1) On price (ala Walmart)…(2) On differentiation (ala Nordstroms)…(3) Using a hybrid price-differentiation strategy where you lure some customers on price and some on differentiation (ala Target)…

    (The parenthetical asides to Walmart, Nordstroms, and Target are mine.)

    But back to point: The rather simple but powerful insight of Porter’s is on point here: You could beat Walmart on price but it’d be far easier to beat them on differentiation … or by targeting a particular customer group with a combination of pricing and differentiation.

    I run a CPA practice in a Seattle. On one level, I compete with H&R Block in that we both prepare taxes. But I have no trouble competing with Block’s low prices.

    In fact, if someone calls asking first about price, I encourage them to call like Block. The “price shoppers” aren’t my niche.

    If someone asks why I charge $350 for something that Block will purportedly charge $125 for, I say, “Hey, look, it’s not the same product. If I do your return, you get someone with two masters’ degrees and 25 years of experience… If you go with Block you’ve maybe got someone who’s been through a 10 week course who is making $10 an hour”

    Yes, I lose the price-sensitive shoppers to Block (as I should). But high income, high-net-worth taxpapers happily consider my more expensive service.

  4. For a very similar message check out the new book by Bo Burlington call Small Giants (www.smallgiantsbook.com). He points out that intimacy is the one thing that small companies can do really well, that big companies can do not at all.

    [disclaimer: I have nothing to do with the book, but love the idea.]

  5. I become amazed at the way customer care has fallen through the cracks and what you say here is soooo needed… for the soul as well as for profits…. Thanks for the great post.

  6. Great article John. I think you make a critical point for all small businesses. Large businesses have several advantages over small businesses – the major one being price. I think competing on price is a loser’s game for ANYONE in small business. The advantage that all small businesses have is that we are closer to our customers. The owner of every small business can (and should) be in constant communications with their customers. We can provide a personal touch that companies like Wal-Mart will never be able to match.

  7. Very good article. It is always a shame to see small businesses losing (or lose) to Wal-Mart, marketing mainly on price. Readers beware: PRICE DOESN’T SELL. Value sells. Just as said in this article, small businesses should create and build upon existing strong ties with their local communities. This is something Wal-Mart will not offer because they don’t have to, and will not as it’s not part of their strategy.

    Very well put, John.

  8. Amen! It’s all about providing an experience that is superior to that of Wal-Mart’s – which isn’t that difficult, by the way. While it isn’t as easy as it sounds in reality, If I don’t have to walk as far, wait in line as long, dig through piles of unwanted merchandise for my need… I’d buy that.

  9. I think this is a great post. We need to be more creative in how approach customers these days. I think that people don’t mind paying a little more for something as long as “the experience” of the sale is more appealing and essentially brings them and their friends back for more. Price isn’t always the most important factor.

  10. I have many customers that refuse to go to Wal Mart Simply because it’s the fast food of retail. For a good meal you don’t go to Mc Donalds or Burger King.

    Customers are usually willing to pay a little more for the personal touch.

    Enjoyed the article.

  11. Harvard professor Michael Porter says there are 3 basic strategies for beating your customers… (1) On price (ala Walmart)…(2) On differentiation (ala Nordstroms)…(3) Using a hybrid price-differentiation strategy where you lure some customers on price and some on differentiation (ala Target)…

    (The parenthetical asides to Walmart, Nordstroms, and Target are mine.)

    But back to point: The rather simple but powerful insight of Porter’s is on point here: You could beat Walmart on price but it’d be far easier to beat them on differentiation … or by targeting a particular customer group with a combination of pricing and differentiation.

    I run a CPA practice in a Seattle. On one level, I compete with H&R Block in that we both prepare taxes. But I have no trouble competing with Block’s low prices.

    In fact, if someone calls asking first about price, I encourage them to call like Block. The “price shoppers” aren’t my niche.

    If someone asks why I charge $350 for something that Block will purportedly charge $125 for, I say, “Hey, look, it’s not the same product. If I do your return, you get someone with two masters’ degrees and 25 years of experience… If you go with Block you’ve maybe got someone who’s been through a 10 week course who is making $10 an hour”

    Yes, I lose the price-sensitive shoppers to Block (as I should). But high income, high-net-worth taxpapers happily consider my more expensive service.

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