Who’s Afraid of the Big Bad Box?

Not most smart retailers, according to this CNN/Money story from February 16, 2006:

The common wisdom is that Wal-Mart's competitors sweat bullets when the undisputed 800-pound gorilla of retailing says it's going to play in their backyard.

They fear the king of bottom-barrel prices will steal their business, eventually forcing them to drop their shutters, load up the wagon and scout out a "Wal-Mart-free" zone elsewhere.

However, not everyone is spooked. Industry watchers say some retailers instead are fighting to get a spot right next to Wal-Mart.

"Retailers that sell the exact same thing as Wal-Mart can still thrive if they focus on deepening their product selection," said James Maurin, chairman of Stirling Properties, a Louisiana-based developer of shopping centers.

He offered an example, "Sally Beauty has hundreds of beauty supplies stores. Their first preference is to not only be near Wal-Mart but right next to it."

Why? Because while Wal-Mart does sell beauty products, its assortment probably isn't as broad as that of the specialty beauty supply store.

And sometimes it pays to not be as big as a Wal-Mart store.

"Typically, Wal-Mart is not a convenient store to shop, especially if you have want to dash to the store for a handful of products," said Sandy Skrovan, vice president with research firm Retail Forward.

…

Stirling Properties' Maurin said he's well-acquainted with other retailers who want to happily co-exist with Wal-Mart.

"Some of them are our clients," he said. "When Home Depot or Lowe's enter a new community, they say to us 'show me where there's a Wal-Mart supercenter.' Home Depot perhaps gets the same customer as Wal-Mart but there's less overlap in terms of the product mix."

In that respect, Wal-Mart becomes an ideal neighbor for Home Depot, Lowe's and or even Anna's Linen, a privately held purveyor of low-priced home furnishings such as bedding, window coverings and bath products.

Observers say Anna's advantage over Wal-Mart is its deep assortment in the home category, where Wal-Mart is not yet a dominant player.

"Retailers only have to look at the profile of a Wal-Mart customer and their spending levels. Those retailers that fit the target should try to compete with Wal-Mart on convenience and price," Maurin said.

Hmmmmm, a Wal-Mart Supercenter is an “ideal neighbor” for Lowe’s and Home Depot. That’s a point for Nancy Chaney and the Moscow City Council to ponder.

I hope everyone realizes that Wal-Mart is doing Moscow and Pullman a tremendous favor by choosing to open Supercenters in both cities. Wal-Mart could just as easily open ONE Supercenter in the corridor next to Lowe’s, and both towns could kiss the tax revenues and increased development goodbye. If a Supercenter opening on the Palouse somewhere is inevitable (and it is, like it or not), then why shouldn’t Pullman get the maximum benefit out of it?

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