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How to Keep Wal-Mart at Bay

The toy wars continue. Wal-Mart, with all of its muscle, is on one side welding its “Rollback” sword. Their goal is to use pricing to drive traffic into the store and away from the competition. Every toy store in America has a target painted on its door.

Many independents and e-commerce retailers fell quickly, followed by the well established FAO Schwarz and KB Toys. Toys R Us is wounded, maybe mortally, and they all point the finger at Wal-Mart and the price war. After listening to the victims bemoan their fate, you have to wonder if any toy store will survive this war.

I am reminded of the old saying “Every time you point a finger at someone, three point back at you!” The postmortems of these companies should begin with a review of their internal issues. Wal-Mart’s price war may have dealt the final blow, but they were already dying.

If you look carefully, you will find stores that are not only surviving, they are thriving! There is a store in Asheville, called The Toy Box, which is expanding its business while others are closing their doors. It is different because, well, it’s different. There are no floor to ceiling displays of Barbie, Elmo, or GI Joe. When you enter, you see a collection of toys, crafts, puzzles, and tools that will never see Wal-Mart’s Rollback Ranger. The store is a parent’s dream and a child’s fantasy. It is filled with all sorts of items that unleash a child’s imagination.

A casual “May I help you?” from the smiling clerk distracts you from the wonder of it all.

“No, I am just looking,” receives a warm response and plenty of time to rediscover the fun stuff of childhood. Price is suddenly very unimportant.

Owner Gary Green lists several reasons for his success while others are failing: Neighborhood convenience; unique products; knowledgeable staff; and specialized services, such as gift wrapping, that is not available in the super-center environment. He goes on to say, “If you compete with Wal-Mart on their terms, they will always win.”

Wal-Mart will continue to fight the battle with the remaining toy stores and move on to other departments. Any company carrying products that can be found on Wal-Mart’s shelves will soon be targeted. (Take warning, Best Buys, Circuit City, & Bed, Bath & Beyond.) The management team at Wal-Mart has redefined loss leader marketing. They are utilizing product classes to drive traffic because they know that the buggies will be filled with items from other departments. In addition, as a bonus, competition will be eliminated and the next season will yield even greater profits.

So, how do you keep Wal-Mart from knocking at your door? Follow the example of the Asheville toy store.

1. Find your niche. It may be defined by product, selection, service, or price. Anything goes as long as it fills a need and provides something that customers’ love. Unless you are Wal-Mart, Target, Costco, or Sam’s leave mass-market merchandise and price wars to the discount super-centers. Niche marketing requires searching for new and unique products, understanding and fulfilling the expectations of your customers and loving the business you are in.

2. Don’t stand still. Newton three laws of motion say it best. Law one: an object in motion remains in motion and an object at rest remains at rest. If you stop or pause, your competition will move ahead. Finding the force to kick-start the momentum is extremely challenging. Law two: It accelerates in the direction that you push with the equivalent velocity. Start driving your business before the movement stops. Constantly seek improvement in merchandising, marketing, and operations. Law three: Every force has an equal and opposite force. Newton promises it won’t be easy. Expect many challenges throughout the initiative. Search diligently to find the force to overcome them.

3. Define the rules of engagement. If there is a war, battle on your terms, not theirs. If it is a price war, offer selection and service. The same assets that strengthen also weaken. Wal-Mart’s size and market power allows them to define the pricing. It also limits their flexibility and reduces their reaction time.

4. Build relationships with your customers. True relationships are built with feelings, not technology. The customer relationship management solutions that provide name, preferences, and buying patterns are great tools with limitations. They will never replace genuine interest in the customer’s needs and wants, appreciation for a customer’s call or visit, and the desire to serve.

5. Change your perspective. Think like your customers, vendors, employees, and competition. Search for your weaknesses and then work to eliminate them. Periodically utilize external services to review your internal workings. The new perspective will help you find new horizons.

There is only one guarantee in business – when evolution stops, it is the end. Competition is everywhere and it is not just Wal-Mart! New companies are created every day. Established companies are expanding. There is a world of opportunity for companies willing to forge ahead. Don’t be the one left behind!

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