You know the charge: Wal-Mart kills small businesses. If one of the retailing juggernaut's Supercenters moves into your town, the logic goes, all the mom-and-pop shops that have faithfully served residents for decades will soon have no choice but to shutter their businesses.
But it doesn't always work that way. In some cases it actually makes sense for businesses to locate next to a Wal-Mart. You may be able to entice some of those throngs of bargain-hunters to stop by your establishment and spend a few bucks. But before you consider this strategy, be sure you can compete head-on with the retailing Goliath on price or selection.
I recently wrote about how Goodwill Industries -- one of the top thrift stores in the country -- is locating more of its stores adjacent to Wal-Mart Stores, Inc. (NYSE: WMT). In fact, that has become standard practice in the state of Ohio apparently. Why? Goodwill explained that both it and Wal-Mart serve the same types of customers ( or "demographic" as they call it in retail-speak). Sounds like a smart strategy to me.
But what about other retailers? From what I have seen, Wal-Mart Supercenters are retail anchors almost everywhere they are built. You see Blockbuster Inc. (NYSE: BBI), RadioShack Corp. (NYSE: RSH), Dollar Tree Stores (NASDAQ: DLTR) and chain restaurants like McDonald's Corp (NYSE: MCD) and Wendy's International (NYSE: WEN) pop up right next to Wal-Mart Supercenters. Why? Seems simple -- to get the traffic Wal-Mart has in and out of its parking lot.
Same goes for Blockbuster Video (even though Wal-Mart did test several DVD-renting offerings), and even Dollar Tree, which targets the same core demographic as Wal-Mart. Those are customers who shop based on one criteria above all else -- price. Even Wal-Mart can't compete with Dollar Tree's "$1 for everything" strategy despite the fact that much of the product selection is very similar if not identical in some categories. I think Wal-Mart's main suppliers would go out of business if the world's largest retailer started trying to compete with dollar stores, even in limited categories.
So, the moral of the story, you may ask? While neighbors of Wal-Mart are there to feed off of Wal-Mart traffic for the most part, they also can serve niches for customers that Wal-Mart simply can't provide. And some of us thought Wal-Mart sold just about everything!
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Reader Comments (Page 1 of 3)
1-04-2007 @ 2:29PM
Charlie Altom said...
WalMart is a great traffic generator for many retail businesses. Those businesses need to be prpared in the event that WalMart picks up and moves. They have done it 3 times in my hometown of 100,000.
1-04-2007 @ 2:28PM
Charlie Altom said...
Retailers need to beware as WalMart will pick and move to new locations in a hurry.
1-04-2007 @ 5:48PM
perry said...
It's about time someone got the truth out there. Wal-mart will close mom&pops but it will open a lot others peolple don't only shop at a wal-mart.
1-04-2007 @ 2:51PM
Bc said...
So, If I run a used merchandise business, it would be good to locate next to a Walmart? What a line of hooey! Have you been in middle America Lately? Have you been in a Walmart lately? Cheap (Some might even say dumped.)Chinese merchandise sold by Walmart in the billions of dollars has not only collapsed the Mom and Pop economy in our Country, it's crushing the economy of the US as well. Our balance of trade and national debt to the Communist Chinese is in the trillions of dollars. Sound good to you?
1-04-2007 @ 2:55PM
fandffashions said...
Dont trust walmart,the first chance they get to bie your goods at there price they'll burn you.
1-04-2007 @ 3:00PM
oscar said...
i agree with charlie altom i think as walmart gets bigger it will have to move to a diffrent location leaving retailers who built there stores next to them in a bind so those who do build next to a walmart should be informed about to store so that when before walmart moves they can sell there store and lose less money
1-04-2007 @ 3:53PM
Sharron Mercer said...
Wal-mart does have a lot of traffic, but they are for up and moving. And Bargain hunters galore are becoming a real PAIN.. We all like to get good prices, but there is a BIG difference between GOOD and CHEAP! Wal-mart hires people withouth correct papers, and then what happened to the publicity of them NOT paying for the HOURS people worked. Because there illegal they get away with it, or because the Waltons have so much money!!!!
1-04-2007 @ 4:22PM
Concerned Business Owner said...
Wal-mart can be good for all if you don't fight it. Why can't the small mom and pop stores supply Wal-mart with an item or service to remain at the top of their game? The economy and your surroundings will always change. It doesn't matter if it's Wal-mart or Taco Bell, or John Doe Inc. that moves into town, somebody is going to get hit with an economic burden no matter what. These people are smart, and they are spending time making money while others are spending time worrying about not making any--Don't fight them, find a way to make money with them. They are an excellent company to do business with if you keep your prices tight and your service, quality, or product top notch! Think about it, somebody has to repair their plumbing, wire the stores, paint the building, and supply them with the millions of items they sell- that can just as easily be you instead of somebody else, you just have to WORK at it instead of WORRY about it!!! Wal-mart can be great for the local economy and local business if you get creative and look for ways to make money WITH them.
1-04-2007 @ 4:38PM
Ervin said...
Listen people...
Who comes up with these articles? They must be paid very generously. It is not only Walmart, but all of them who import junk and send our money over to China. We are helping China become more and more powerful, and potentialy the next super power. All the big guys are leaving, and whoever has not yet, will do so in the next 5-10 years, and our unemployment rate will jump. Most Americans realize now what a huge problem it is, but decide to do nothing about it. All of them continue to shop at Walmart because it is cheaper, but in 5 years when they dont have any money, it doesnt matter how cheap it is anymore. I thought we were the smart ones...at this point, we look super stupid. Good going idiots!
1-04-2007 @ 5:10PM
Sean Fox said...
Both Ervin and concerned business owner both make sense. I am small business owner of magnetic jewelry company. I make all my products here in America with American hand. I have to deal with consumer who have bought manufactured product from China. That is junk and knows way would work for them because they are not strong enough Gauss. Most magnetic Jewelry doesn’t have a strong enough magnets, because magnets don’t add up. You need 2400 gauss in one magnet. I am small growing company my products have work for thousands of people.
1-04-2007 @ 6:39PM
end is near said...
theres no competing with wal mart \they will dominate the area until you are crushed out of bussiness /as all big bussiness does crush the little guy till hes sufocating
its been proven in the past and will continue in the future
good luck to all who survive
1-04-2007 @ 6:38PM
end is near said...
one more thing its true its not just walmarts that are destroyin this country ,its all you people that are helpin to promote these big corpps ,the time has come to revoke people take this country back while theres still a country ,the farms are gone,the mom pop drug stores are done ,
1-04-2007 @ 6:22PM
carl said...
don't fool yourself for a minute. mom and pop shops can't sell to walmart, because they can't mass produce.
1-04-2007 @ 6:16PM
Dan Main said...
Walmart just stocks the stuff. They don't hold a gun to anyones head to make them buy. I can guarentee that everyone of the people who have written here shop at some form of discount store. They are like a bunch of communist. Free trade is great if you are the one who is benefiting from it. But let the free market take dime one from you and your story changes. Go to China if you want businesses to be control.
1-04-2007 @ 6:26PM
Concerned Business Owner said...
Sean Fox- visit Wal-mart's website and learn how to become a vendor and sell your jewelery at Walmart- it's much easier than you may think and they have incentives for companies that manufacture items in "GREEN" conditions. Use energy saving products and procedures and recycle what you can, they want to sell your product, or any other quality AMERICAN made product!- just keep your pricing tight and your production "GREEN"!!- !!!!!!!-and to comment on the "illegals" employed by Wal-mart, have you ever seen a set of fake papers? Being an employer myself, they are incredibly realistic looking and I guarantee that you couldn't tell the difference. It takes social security up to a couple of years to notify an employer that a social security number doesn't match a name or date of birth.It is somebody's job to check these papers so somebody did't do their job, that's all that happened. We all work with people that sometimes don't do their job, I'm sure nobody at corporate Wal-mart sent out a memo saying to hire "illegals"
1-04-2007 @ 7:19PM
Karel Smith said...
Where do you get off defining " Demographic "
If I didn't know that word , it would be a bit odd for me to read a " Business page " .
I personally think the richest family in retail are unpatriotic to shill for those "fascist " communists the Chinease.
1-04-2007 @ 6:26PM
Concerned Business Owner said...
You don't have to mass produce, start by contracting with one store, then slowly add more. It's not that difficult. Go to your local Wal-mart. Speak with the store manager, and the department head where your item would be located. Promise them a specific amount of goods and gently raise that amount as the items sell...DONE
1-04-2007 @ 6:43PM
michelle said...
I for one am employed at WM, I love my job, but, I totally disagree with some of the crap they are trying to sell the employees. They have taken a lot of young people off of the streets, and mothers off of the welfare rolls, and allowed them to become employed at WM, allowed them to get their dignity back as well as their self-respect. I have been employed there for 7 years, and no one twisted my arm and held a loaded gun to my head and forced me to stay there. I knew what side my bread was buttered on, and by whom. They have allowed me to buy my very first home, put food on my table, put a roof over my head, have a nice warm dry bed to sleep in every night, and to pay my bills, and have good benefits, as well as a nice nest egg for my retirement in 2 yrs. and 5 more months, if I can persevere, and I will. I have seen some pretty slim times and been thru much worse than what is coming up, I come from some pretty tough stuff. I consider myself pretty fortunate and very blessed to stay employed for the past 7 years, and to be able to retire at the age of 62, with a nice 401K, a lot of stocks in WM, good benefits, and a car that is paid for, and a home that is almost paid off. How many of you out there can say that, not many, I do bet you all!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1-04-2007 @ 8:20PM
Travis said...
First of all... communists are not fascist's, nazi's are, learn your vocabulary or don't use it. second, wal-mart has the same story that starbucks has... one-time small business that became HUGE and decided to forget their roots/past and destroy every business and manufacturing job in america. ie: levi strauss, ya know...americas no.1 denim jean co. no longer has ANY manufacturing plants in....america. why you ask?!? because of wal-marts tactics. they go to a business and say we'll put your product(s) on our shelves but we're gonna pay you (the manufacturer) whatever we want (which is NOTHIN) or no deal. the companies think here's a way to get our products on the shelves in americas biggest retail store we're the top brass of this company so our job's are safe...screw our employees. then they sell out to MALL-WART your source for cheap plastic CRAP. cause why??? THEY DON'T CARE. if other companies wouldn't sell out to wal-mart we wouldn't have this problem. and as for you people who are bad mouthing China... throw away 95% of the crap that's in your house and try to live without it. christ after a few days you'll be SWIMMIN to China just to get your stuff back. and to concerned business owner... you can stop pretending you don't work at wal-mart it's only TOO obviuse that your one of their corporate stooges. HEY EVERYONE...CHECK OUT THE MOVIE: WALMART THE HIGH COST OF LOW PRICE. & you'll see them in a WHOLE new way.
1-04-2007 @ 8:40PM
Marissa said...
Play on player!Don't be player haters!If your in a business and you can't survive unless your near a Walmart then maybe your in the wrong business!Don't hate the player hate the game!I have a small business and I do great with or with out a walmart right next door.