The City of Bristol is very unique in that it is one very few American cities whose borders transgress a state line. Some of the city is in the state of Tennessee while the rest of the city is located in the state of Virginia. What is not unique about Bristol, TN/VA, is that the local newspaper, The Bristol Herald Courier, quoted store manager Leon Peters as blaming the business failure on Kmart and Wal-Mart.
In an interview with Peters, Multicultural Business Council’s Together News discovered that although he did mention to national retail chains, he emphasized it was only part of the problem. The root problem, according to Peters, is that competition of the major chains and Internet businesses caused deterioration in JJ’s sales volume.
Once known for offering custom guitars and other musical instruments, the store eliminated those items from their merchandise mix about a year ago. They were finding it difficult to sell these items while the chain stores offered opening price points at mass-production retails as opposed to JJ’s higher-priced handmade products.
People tend to want to believe discounters like Wal-Mart are detrimental to local businesses. This view fails to understand guiding principles behind the Wal-Mart merchandise philosophy. The secret behind Wal-Mart is very simple - sell only items they create tremendous volume. Each merchandise category consists of the best-selling items that can be ordered in bulk. This creates tremendous efficiencies throughout their entire distribution network.
Their philosophy requires Wal-Mart to carry only those items appealing to broad demographics. This leaves local businesses with the outstanding opportunity to reach out to sub-demographics. These sub-demographics include unique local cultures, ethnic diversity, and other categories not reported by the U. S. Census Bureau or Nielsen.
In the case of Bristol, opportunities existed by reaching out to the South American, Latin American, and African students attending the local colleges. Creating a cultural experience for these customers along with the local instrument-making and grass roots musical talent would have resulted in a differentiated marketing plan - one that Wal-Mart would not even attempt to compete against.
Local communities will continue to suffer the loss of local businesses if they do not realize that local demographics are changing faster been Wal-Mart can or will adapt, according to Multicultural Business Council (MBC).
“Wal-Mart's distribution and merchandise philosophy prevents it from addressing localized sub-demographics, ” says Rick Weaver, MBC spokesman and retail expert. “For Wal-Mart's pricing structure to work, they need to ship truckloads to a single distribution center. For example, in some suburbs of Metropolitan Detroit, the South Asian population represents up to 15% of the population. This is far below what Wal-Mart can address, however it is hundreds of millions of dollars in annualized shopping power throughout the region - certainly enough to support anywhere between 100 and 200 local businesses. ”
MBC works with local and international companies helping them develop strategies to compete in the local and international marketplace. They find local businesspeople tend to focus on competing with Wal-Mart on a price basis. With Wal-Mart’s volume and low mark-on structure Wal-Mart is guaranteed to win any price-war. However local businesses are successful when they reach out to customers with products and services that cannot fit Wal-Mart’s high-volume requirement. When this occurs, local businesses become more successful than they were before Wal-Mart entered their community.
Rick Weaver is an accomplished business executive with a wealth of experience in retail, market analysis, supply chain enhancement, project management, team building, and process improvement.
Rick career began in retailing as a stockclerk, eventually becoming the Director of Vendor Development at Kmart Corporation during it’s heyday. In this position he worked with hundreds of Kmart’s suppliers to improve mutual processes, procedures, and profits.
As a consultant, Rick has worked with companies in various industries to develop leadership and business strategies.
As an entrepreneur, Rick has founded or co-founded six successful organizations, including non-profit and for profit.
Now in his role as president of MaxImpact, Rick uses his vast experience helping individuals connect to their dreams and teams connect to a common vision.
Rick’s presentation style of blending humor, real life examples, and easy to implement ideas has made him a popular speaker at seminars, workshops, and conferences in in 43 states, Canada, and Puerto Rico.
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