Beware The Big Box?

New Mexico Business Journal, May, 2001

There's a familiar pattern repeating itself in Farmington. A Home Depot is about to open its doors, followed closely by a Wal-Mart Super Center. Locally owned businesses do not look upon the arrival of big box stores as merely competition; they see them as mortal threats. According to Ken Stone, an economics professor at Iowa State University and a student of the impact of megastores on communities, they needn't so worried--but they had better pay close attention to their business. Stone says when a Wal-Mart or another big-box store enters a community, overall gross receipts increase. Stone recently conducted a seminar in Farmington for retailers, according to the Farmington Daily Times.

So what's a small, competing business to do? "Analyze your market," Stone says. Check census data and target customers by age, income and lifestyle. Determine what your local competitive advantage is--and you do have one. It could be local ownership, or the ability to offer additional services such as delivery and in-house repair. Go shopping and check out the competition. Find something you can offer that the big box stores can't." It's true, incidentally, that it's tough to win a price war with a Wal-Mart on common-use items, there are always products to be found that can be priced competitively.