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June 27, 2006
Thriving in the Shadow of Wal-Mart
The Detroit News profiled several independent specialty stores which are surviving and even prospering--in spite of, and often because of, the competition from big-box retailers like Wal-Mart:
. . . Independent specialty stores, boutiques and cafes are surviving -- and even thriving -- in the shadow of the retail giants through a mix of personal service, specialized skills and unique products. They fend off the mega-stores by catering to a specific clientele or carving out a niche that's small enough to keep the big retailers out.
A 2005 survey of small-business owners found that 52 percent of those already in business changed their tactics and either retained their market share or actually increased business when a Wal-Mart, Target, Kohl's or other "big box" retailer opened nearby, according to DollarDays International Inc. of Scottsdale, Ariz., an Internet-based wholesaler to small businesses. . . . [emphasis mine]
"If a store has a niche that means they are highly specialized, and the big guys can't compete," said Bruce Wood, a retail analyst with Farmington Hills-based Kenneth J. Dalto and Associates.
One tactic small operators can take is to avoid competing with the powerhouses altogether and focus instead on offering service and merchandise that the big businesses can't. In some cases, a small business can ride the big stores' coattails, such as servicing items sold by the big-box stores.
"You can go to Wal-Mart and get a clock and it does the same thing, but they can't do what we do," explained Mai Pin, whose family runs the 30-year-old Roseville Clock Shop. The store -- within a mile of a Wal-Mart -- sells clocks ranging from $20 to $2,000, but 80 percent of its business is repairing and servicing broken clocks.
Besides the low-price outlets, Pin's shop also has to compete with big furniture chains, such as Art Van and Gardner White. They sell some of the same grandfather clocks as Roseville Clock, but nobody at the furniture stores can repair the massive time pieces.
Customers have been coming to the store for years and tell their friends about the service the shop offers. Repairmen are called out as far as Port Huron and Ann Arbor to fix broken clocks, Pin said.
That's why Leo Festian of Clinton Township has been bringing his clocks to the store for the past 15 years. He recently brought his mother's antique mantel clock to the store after it fell off a table and the pendulum broke off.
"You're friend or neighbor can't fix it," Festian said. "Department stores can't help you, but they'll sell you a new one."
The mass-merchandising approach of the mega-retailers also creates opportunity for small stores, noted Charlie Owens, Michigan director for the National Federation of Independent Businesses.
"The weakness of big boxes is that they carry standard products," Owens said. "Nothing is specialized." . . .
The article goes on to offer tips, from the book The Secrets of Retailing, or How to Beat Wal-Mart!, for small retailers as they compete against larger chains:
Think small: While large chains can buy in very large quantities, they can't buy in small quantities. They can't benefit from the true closeouts, which are broken lots or left-over goods that a manufacturer needs to unload.
Go unique: There are many new products that, because the supply is limited, chains pass over.
Find small manufacturers: Many small manufacturers will not sell to chain stores because one year the chain may gobble up most of their production, and the next year the chain will take that item and make a knock-off overseas.
Overhead cost: Instead of teams of buyers, batteries of lawyers and layers of accountants, an independent business can be run by a true entrepreneur and their trusty staff.
Simpler shopping: A store that is 2,000-5,000 square feet is much easier to shop than a 100,000 square foot giant.
Location, location, location: Under-served neighborhoods are an opportunity for independent stores to thrive where the giants are not.
Personal attention: People like to shop where they feel comfortable, where they feel the owner cares about their wants and needs.
Incidentally, I went to the Roseville Clock Shop website and saw that they make house calls. See if you can get Wal-Mart or your local department store to do that.
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