Author Tells How To Take On Wal-Mart

By RUTH SOLOMON Staff Writer
Posted November 22, 2007

While the Wal-Mart giant has mowed down ma and pa retailers and big boxes alike, some companies have not only survived — they've thrived.

Take Glenview-based Abt Electronics, for example.

Abt emulates Wal-Mart's idea of having one big huge store and has many prices that are close to rock bottom. But it has set itself apart with an eye-popping shopping experience, including a huge fountain, a section that displays top-of-the line kitchen decor, and a room-size aquarium with multi-hued fish that shoppers can use to test how well video cameras work.

In his recent book, Wal Smart, What it Really Takes to Profit in a Wal-Mart World (McGraw Hill, 2007), Glencoe resident Bill Marquard talks about thriving businesses such as Abt, Northbrook-based Crate and Barrel, and businesses based elsewhere but with North Shore presences — Trader Joe's, which has stores in Northbrook and Glenview, Costco, which has a store in Glenview, and Target, which has stores in Glenview and Evanston.

Competing with the giant is tough. Nearly 1 out of 100 workers works at Wal-Mart and 9 of 10 Americans shop there, according to Marquand's book. And Wal-Mart does more business than the total of its four closest competitors — Home Depot, Kroger, Target and Sears.

Wal-Mart has been a "major catalyst" in the closing or bankruptcy of 27 supermarket chains, Marquard's books states. So while Wal-Mart creates jobs, it also leads to their loss.

But Marquard believes you can compete with Wal-Mart, and said in a recent interview that his tips can be useful to any business, not just retailers. His advice also may be helpful to North Shore retailers who face increasing competition not only from Wal-Mart, whose closest stores are in Skokie, Buffalo Grove and Niles, but also from a slew of big box and chain stores opening along Willow Road.

Be different

Marquard was a strategic planning consultant for Wal-Mart between 1996 and 1999, while a partner at Ernst & Young. The retailer has not reacted to his book, he said, adding, "I was very careful to be sure I was faithfully representing them."

The key is not to ignore Wal-Mart when it comes to town, Marquard's book says.

Marquard warns against trying to compete with Wal-Mart on its terms, particularly its hallmark — "every day low prices."

"You can't win by taking the giant head-on," he said.

Instead, companies must do what Wal-Mart cannot do — offer one-on-one customer relationships in "nurturing" environments that are conveniently located.

"You have to be noticeably different" to succeed, and come up with innovative ways to market your product, he said.

While many shoppers take advantage of Wal-Mart's "every day low prices," this type of shopping can get boring, Marquard said.

Other stores offer what is called "hi-lo" pricing, making the hunt for bargains more fun, he said. "The American consumer loves the treasure hunt."

Retailers also can profit by offering products Wal-Mart does not. Marquard notes Northbrook's Crate & Barrel offers trendier houseware items, and Target and Kohl's carefully scout out the latest fashions and color schemes to bring to their shoppers.

Go 'hi' or 'lo'

In general, Wal-Mart does not try to compete with stores on both the very high end and very low end, Marquard said.

The latter market is left to the dollar stores. It is a market filled with shoppers "buying from need: How far can I stretch $50 to feed my family? They buy smaller items, in three-packs," he said, adding they often go home by bus to small homes, which makes bulk purchases impractical.

Stores such as Costco appeal to higher end shoppers, who drive from their large homes with ample storage space — and who have bank balances large enough to buy in bulk.

Cracks in edifice

The author is not shy about mentioning the many criticisms of Wal-Mart, including charges that women are not treated equitably and employees lack adequate health insurance.

Wal-Mart misstepped by not realizing just how important social and environmental issues are to the American consumer, Marquard told Pioneer Press. "They were asleep at the switch."

But it may be waking up: Wal-Mart just recently announced it is improving its employees' health plans.

The Wal-Mart edifice has some other cracks, too, Marquard said. The awesome impression made by the stores' huge layout may have peaked, he said: Many shoppers now crave a more "intimate" retail experience.

"The corner store of 30 years ago is coming back. As gas prices go up, people are nesting and starting to shop more locally," he said.

Pat Horne, the owner of Multiple Choices, a Winnetka gift shop, said she sells no merchandise available in Wal-Mart. "I would not buy something that would be a mass produced item. We try to be more unique and unusual," she said, adding her vendors are too small to sell to the giant.

In her store, Horne sells wood frames and heart-shaped dishes with local schools' names on them. She's using what Marquard calls "micro-merchandising, tailoring to the needs of your community," Marquard said, adding it's a huge opportunity.

Horne said her customers are loyal not only because of her products, but because they know her and feel a loyalty to their community. They want their dollars circulating at home, she said.

© Copyright 2007 Digital Chicago, Inc.