DALLAS -- Independent operators can use several proactive moves to prepare for the arrival of one of Wal-Mart's formats in a market, said an executive with Associated Wholesale Grocers, Kansas City, Kan.
The executive, Bill Lancaster, vice president, corporate sales, told a group of retailers here at the recent National Grocers Association convention that almost every one of Associated Wholesale Grocers' 840 stores competes against some form of Wal-Mart. "That is a company that is to be admired and studied," said Lancaster, adding that the Neighborhood Market format is going after the pharmacy and drug business in particular. He advised retailers to look at their own format and be sure it is correct for their customers. A retailer might want to emphasize its fresh offerings more, or deepen the selection to compete with a Wal-Mart. Planning special event sales is another tactic, and retailers should pay attention to shelf management and promotion even more than usual, he said.
Retailers can organize ad groups, as Associated Wholesale Grocers has done, according to banners such as the Thriftway, Price Chopper, Country Mart and Sun Fresh groups. A collection of IGA stores on Long Island, N.Y., also does this, printing not only the same circulars but also using plastic and paper grocery bags to list the names and locations of the other IGAs in their area.
In Kansas City, the Price Chopper division has joined with local merchants, such as dry cleaners and restaurants, to offer discounts when the "Chopper Shopper" card is swiped. Lancaster said it's a good idea to form alliances with other merchants that are most likely to feel impact from the arrival of a Wal-Mart in their markets, such as stores selling clothing, shoes, jewelry, hardware and building materials. "These would make good partners for your frequent shopper card," he said.
The frequent shopper card should be kept "pure," he said; that is, saved for great deals. "Do things that Wal-Mart won't match. Use gimmicks that they won't respond to," Lancaster told the group.
He advised the independents to "build a sales cushion before they reach you, and remodel, reset or expand."
One Michigan operator disagreed with this. He commented later that most stores would use up their capital in remodeling, capital they would need to outlast the transition period of about two years, once a Wal-Mart arrives.
"When a supercenter opens up, you hunker down," said the retailer, Marv Imus, vice president, finance, for the family-owned Paw Paw (Mich.) Shopping Center. "You could paint, or put down a new floor, or replace shelving, things you need to do anyway," he said, but he recommended holding the line at fix-ups that take a lot of money.
"Plus, if you were successful before, you may change so much that you destroy the ambiance," Imus said. "And debt is a big issue. To be able to survive is to be able to last through that transition period," he said, when volume can drop 15% to 20%, and profit even more so.