Is the lack of Wal-Mart actually a tax?

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Creative Commons License photo credit: Lordcolus

A lot of thoughts come to mind both ways about Wal-Mart‘s effect on local businesses and consumers.

No shortage of them are provoked by this Forbes op/ed saying that the lack of access to Wal-Mart in NYC is actually a tax, and continues by stating that building a WalMart in NYC is economic stimulus.

For example, the author ignores the local sourcing that WalMart used to do during its “Buy American” phase. He also fails to discuss that when left enough time in a competitive market devoid of Wal-Mart, poorly run local businesses tend to fail anyway.

What do you think?

David Apple wastes no time, passes Goliath Wal-Mart in music sales

Just a few days ago, I was talking about iTunes passing Amazon and Best Buy in 2007 total music sales.

That’s all kinds – CD and downloaded music.

Didn’t take long for that to become old news. On Tuesday, a leaked Apple memo shows that January 2008 music industry numbers from NPD indicates that Apple has now passed Wal-Mart in total music sales (and remember, this includes Walmart.com’s music store).

Goliath has an Achilles heel. You simply have to look a little harder to find it.

Woolworth had one. Sears had one. K-Mart had one. Now, it’s become clear that Wal-Mart has one as well.

How closely have you looked for cracks in the armor of your market’s Goliath?

If YOU are the Goliath in your market – what would you attack, if you were David?

Don’t Quit: David 2, Goliath 0.

Everyone supposedly roots for the underdog. This weekend, there was a lot of underdog action going on.

On Friday, the unranked Razorbacks surprised #1 ranked LSU 50-48 in Baton Rouge’s “Death Valley”. It was the first home loss for LSU in 19 games on a field notorious for dropping opponents with a lethal combination of humidity, heat, and the loudest fans in the country. The game brought back fond memories of an unranked early 1980’s Arkansas team hosting the then #1 ranked Texas Longhorns, who left Fayetteville that evening without their #1 ranking thanks to a 42-11 spanking the Hogs gave them.

In Saturday’s NCAA Subdivision playoffs, Wofford (1400 students) defeated the Grizzlies of the University of Montana (14000 students), 23-22. Wofford, a tiny school from the warm climes of South Carolina ran an unusual “give the ball to anyone” option offense in 20 degree Montana weather and kept the Griz defense on its heels much of the game.

All of this reminded me of a clip I saw last April about a kid with an attitude named Brock and a wicked football drill called “The Death Crawl”. When I first saw the Brock clip, I didn’t know it was from a movie, I thought it was just a motivational clip from a video production company.

Turns out it was from the Feb 2007 movie, Facing the Giants.  The movie as a whole sometimes gets a little high on the sappy-meter, but it’s worth watching. I think it struck a chord with my wife and I because of our early struggles to have kids, while the football theme and the business lesson also kept it interesting for myself and my youngest son, the Apprentice fan.

In the context of the scene’s location in the movie plot, the scene is even better. For now, this 6 minute clip taken out of context will have to satisfy you.

After my son leaves for Missoula (he’s in the Griz marching band) to end his Thanksgiving break a little early, we watch the movie (it’s on Starz Family). It’s the night before the Griz-Wofford game, and as the movie plays out Im thinking “just like Wofford”.

I’m guessing the only people on the field who thought that Wofford had a chance to beat Montana in 20 degree weather on Montana’s home field was…Wofford’s coaches and players. They didn’t quit.

It’s no different with you and that franchise or that big box store. Whether it’s Starbucks or WalMart or Pizza Hut or whatever, one of the best weapons in your arsenal is being the only one who thinks you’ve got a chance to win. To you, it’s personal.

Competing with Walmart – this guy gets it.

Last week, a story in the Flathead Beacon (a weekly print/internet paper that carries my business column) discussed a Whitefish MT store called Main Street Art and Crafts Supplies.

Main Street offers arts and crafts, but takes things to the next level, by offering classes in cake decorating, stained glass, etc.

One quote leaped out from the Beacon story, telling me that owner Rick Latta gets it:

â??I canâ??t compete with Wal-Mart prices, but Wal-Mart doesnâ??t walk customers through projects, give them ideas, teach them tricks or have a studio with tools where people can come and work and ask questions,â? he said.

This is where you make a difference by hiring the right people (experienced in those crafts), paying them a little more so they don’t have to work at Wal-Mart, and more importantly, doing what Wal-Mart simply won’t do.

It doesn’t matter if your small business competes with Borders, Amazon, Barnes and Noble, Lowe’s, Home Depot, Target, Best Buy, Circuit City or Starbucks: They won’t do the little things like Rick is doing. Will you?

Those stores will focus on price, above all else. You have to change the rules of the game, as Rick has.

What you have in common with an Angel

Tiger boots a birdie putt on 18 at the U.S. Open to lose to a relatively unknown dude from Argentina? Exactly what you were expecting, right? Angel Cabrera beats Tiger Woods.

Angel is in the clubhouse, resting at 5 over. He’s done his best for that 4 days, for that course. Meanwhile, Tiger is still out on the course, chasing him.

Who expects Tiger to lose? Continue reading What you have in common with an Angel

Good, Better, Best

You’ve seen it a million times.

Good, Better, Best.

Yugo, Chevy, Cadillac. Penney’s, Bali, Victoria’s Secret. Regular gas, mid-range gas, premium gas. WalMart, Zales, Tiffany & Co.

And so on.

In every population, marketing tests repeatedly show that there’s a fairly stable percentage of people who buy… Continue reading Good, Better, Best

When does having the lowest price make sense?

Not very often.

Yesterday, I was talking about the folly of competing primarily (or mostly) on price and how silly it is because of the lack of loyalty it creates among your customers.

However, there are a few times where the low price makes sense.

Continue reading When does having the lowest price make sense?

Competing with Walmart on price: Fools do it.

Fools. Some days I feel like I’m surrounded:)

I’ve never written about this “little store”, but I think I should because there’s a lesson about companies like WalMart, IBM and such.

Let’s say you’re the owner of the low price general store in town. All the locally-owned retail store owners despise you because you found a way to buy stuff cheaper than they can. As a result, you keep getting bigger and bigger.

Then, someone else comes to town that does what you do, except that they do it a little bit better: Their prices are just a little lower.

Who are you?

Continue reading Competing with Walmart on price: Fools do it.

You are to blame for so-called cheap customers

I hear SO much complaining about price and how people are so cheap that I just can’t stand it anymore.

Look, if price was the only factor in purchasing, everyone would live in a trailer, drive a Yugo, and buy all their clothes at the second hand store or WalMart.

That’s right. Everyone, even the wealthiest in society, would be standing in line at WalMart. Woohoooo!

Imagine your lifeâ?¦

14,352 people in line.

Embarrassed husbands at the register suffering through a broadcast of “Price check on super earthquake size tampons in aisle 71” blaring over a $1.29 half-rotten old ceiling speaker. Of course, it’s in a scratchy, annoying tone of voice.

137 babies crying because they need a nap, a diaper or a meal. 28 of those are crying because the cheapest diapers on the planet are chafing their cute little bottoms.

4621 other kids in line, tugging on mom’s pants leg to get a toy or candy bar, noses dripping.

Some of those noses are getting wiped on a dirty little shirtsleeve.

Some of those kids are getting smacked and told to “shut up!”, while other people in line are thinking “about time they did something” and still others are now ticked off that the parent hit their child.

Doctor Spock and the HR managers in line both cringe, knowing that you praise in public and criticize in private.

Finally, far too many people looking (and smelling) like they hadn’t bathed in a week.

I guess you get the picture by now:)

If price were the only factor in purchasing, every single one of us would be living some version of this make-believe nightmare. But we aren’t, because “price is everything” just isn’t true. Sure, there’s a small percentage of people who buy everything based on price. Maybe 5%.

Everyone else has their price is no object (or not much of an object) moments about something.

  • They dont buy generic orange soda, cuz it tastes like crap compared to Minute Maid orange soda or Orange Crush.
  • They refuse to eat WalMart brand Pop Tarts because they get half the pseudo-fruit of real PopTarts and the fruit you do get is all dried out and not nearly as corn syrup sweetened as a real PopTart.
  • They won’t buy a laptop at Costco because they like the 1900+ pixel-wide, high resolution laptop screens that Dell offers.
  • They buy Marlboros because GPCs and USA Golds really taste awful and make them look “poor”. And of course they want to feel like that cowboy dude that they think every woman is in love with. Hubba hubba.
  • They drive Honda Accords because they like knowing they’re getting a vehicle made in the USA, rather than those junky Brazilian (or Mexican, Korean or whatever) Heartbeat of America Chevrolet mini-cars.
  • They drink Bass ale because it tastes better than Bud, which tastes better than PBR or Keystone Light.
  • They wear a REAL Seiko because only the lamers wear WalMart’s Casio-lookalike. Or a Piaget because everyone thinks their old Rolex is a $39 knockoff.
  • They swing a Callaway Big Bertha because guys like Tiger don’t swing a Wilson Staff.

Ok, enough. I think you get the point by now. Keep in mind that this applies to everything from toilet paper to corporate jets. Unless you have a mental block about what your software is worth.

Much of the time, it’s YOUR fault that price is such a big issue with your products and services, or at least, the perception.

  • You compare price on your website or in your marketing materials.
  • You don’t bother talking about ROI, value, or time saved in distinct, specific terms.
  • You don’t show that the cheaper competitor delivers less stuff, lower quality stuff, and/or delivers in twice the time you do.
  • Your testimonials, if you have any, don’t say factual, specific things that clearly show yours is the product of choice – regardless of that 97 cent difference in price.

Speaking of testimonials, I have NEVER known a business (particularly a software company) that didnt have a testimonial that sounded something remotely like this from at least ONE client:

“We thought Joe’s software was expensive, until we used it. Now it saves us 42 hours of programming time each month, enough to pay for an extra programmer. Our code is more dependable than ever. While it’s hard to quantify that other than by performance, it’s obvious to us because better code means less support – and that’s exactly what our clients have seen. For example, our support calls due to disconnected sessions with the customer’s server have dropped 27% – which means our tech support lines aren’t as busy. Our clients have told us that our support wait time has dropped noticeably, and they’re happy about it. That happened because our support team responds more quickly since we have 27% fewer “dropped session” calls to handle. Finally, our profit for next quarter will improve even more because we can put off hiring another support person for at least another few months – without impacting the quality of the support our clients receive.”

You’ve got clients that have said these things or WOULD say them if you prompted them to tell them why they think you hung the moon. Ask. And then USE them wisely to get the price that makes actually makes it worthwhile to work your keester off.

Your price issues are marketing problems, not client problems. You can fix it. You have to position your product in some way other than “we’re cheaper”. Someone else can always beat your price, then what do you have?

Hamilton and Walmart – Back on the rails

Sorry folks, been inundated with business this month and unfortunately, the blog has suffered as a result. I’m back in the saddle, so lets get back at helping Hamilton get it together before opening day.

Not long ago, I added a step or 2 to the Hamilton retailers vs Walmart preparation effort. Lets get this down to a cookbook so anyone can follow it – including me:)

Ingredients:

  • Your roughed-out USP
  • 1 large pile of index cards
  • Something to write with.

So far, we’ve talked about your USP, then we covered a few ways to get started figuring out what your USP is. Don’t feel bad if you havent gotten this nailed down yet. The next couple of steps will help you fine tune it.

As I noted in the original list, lets walk around your store. Think hard about everything you carry and why. Write em down. Dont pretend you can memorize everything, WRITE IT DOWN. We used this trick in the USP workshop, so lets use it again here. 1 product or service per index card (no, I don’t have stock in the index card industry). If you’re really stubborn, you can use a yellow pad, but I think you’ll regret it eventually.
We’re doing this for a number of reasons. We need a list and we need it on a media that allows for brainstorming (the cards). Each card can become your little niche market analysis, ready to study after you get back from the Missoula WalMart SuperCenter research trip.

Drive to Missoula and visit the SuperCenter there. It might even be worth visiting both stores. DONT take the yellow pad or index cards into the store. Find the products in the SuperCenter that Bentonville is going to give you a pounding on. Hint: Theyâ??re the ones with the retail price tags less than your wholesale cost, for starters. Make a mental note (mental notes keep you from getting booted out of the store for taking product notes). If you have to go back and forth to the car 20 times to update your notes, do it and get over it. Youll never remember all the details.

Drive back to Hamilton. Use the time to think about the products that you offer that compete directly with them. And be proud of yourself for not letting Walmart happen to you, but instead taking control of the situation. Im not kidding.

Sit down and go over each card. Toss your emotion out the door. I’m sorry, I don’t think too many people are going to care if your family has sold light bulbs for the last 100 years. WMT is going to toast you in that department. As you do this, keep your notes from the Miles City meetings close by. Learn from their mistakes, their successes and what is actually going on there.

That emotion thing is huge. You have got to get the mental blocks out of your head and stomp them. Your thought process has to be all business. Remember, WMT is coming in all business. They don’t care that you’ve sold light bulbs, inexpensive bikes, camping gear, beef jerky, Kudo bars, and toilet paper for 100 years. They have as much right to the market as you – this exercise is what allows you to create an apples to oranges comparison that they CANT win. Dont get me wrong. You aren’t going to put them out of business, and if you work smart – you aren’t going to let them do the same to you.

At the same time, the emotion of the customers in your line of business is critical. Price shoppers arent typically loyal customers. They shop price and little else. You want higher end, rabid customers who could easily sell the products in your store – because they are really into them.

How does this apply to Hamilton v. WalMart? Remember, just because your business has sold inexpensive bikes for 100 years doesnt mean you have to get out of the bike business. WalMart doesn’t carry $900 bikes. You can – and still do what you love doing – just a little differently (and better).

Next time, we start hammering away at the products and services cards you put together on your trip to the Missoula SuperCenter. We’re going to find your $900 bike.