home : hartbeat : 2004-03-25

03.25.2004

“HartBeat” is The Hartman Group's FREE online newsletter, providing insight, analysis, information and strategy to give business leaders the knowledge and vision to build sustainable brands.

For more Hartman Group articles on RETAIL EXPERIENCE, click here...

November 1, 2002 Mom & Pop: What's in a Memory?" Jarrett Paschel, Ph.D.

August 2, 2002 "The ABCs of Experience" David Moore, Ph.D.

July 26, 2002 "The Retailer as Brand" The Hartman Group

June 28, 2002 " Experience, Expectation and the Shopping Trip" by Kim Bell

April 26, 2002 "Sometimes an Experience is Just an Experience" by David Moore, Ph.D.

Archives »
Click here for an archive of past HartBeat articles

digg
del.icio.us

reddit
twitter

friendfeed

StumbleUpon

Where Wal-mart Can't Dance: changing The Rules Of The Game

In the great Biblical battle betweenDavid and Goliath, all the smart money was on Goliath. The little guys,as a rule, don't beat the big guys, because usually they're playing onthe terms the big guy defines. That's a sure formula for a losingstrategy. Because one thing is for sure - you can't beat the Goliaths ofthe world playing their game. The gods have to be smiling on you, butyou've got to have the guts to buck the conventional wisdom and theknowledge of how to do it.

Wal-Mart is the Goliath on the national retail scene right now, andif it keeps marching unimpeded, soon it will be an international Goliathas well. According to the conventional wisdom, it has everything goingfor it. It's a well-oiled machine with tons of cash, a commandingdistribution system and a ruthless formula for market domination thatanyone in its way is powerless to defend against.

It's understandable that Wal-Mart's success commands respect. The Wal-Mart gameis the perception of price and convenience - it's one-stop shoppingwhere you believe you're going to find most of what you need at "everyday low prices." That's a good formula, but it's a formulaWal-Mart owns because nobody does it better. If any retailer wants toimitate the formula, fine, so long as Wal-Mart isn't on their playingfield. As soon as it comes into town, you can't win if you're going toplay by the Wal-Mart rules. It's a formula of utility.

But if Wal-Mart scores high on the utility index, I'd bet its scoreon the emotional index is about as low as you can go. People go therebecause it's practical, not because they love to go there, in spite ofwhat their ads may try to show. It's about as soulless a place as youcan find on the national retail scene. Wal-Mart's attempts to overcome thislimitation by providing "retailtainment" along the lines of X-menscavenger hunts speaks for itself. White men can't jump, and Wal-Martcan't dance. Ain't gonna happen, and there's no need for the Wal-Martpeople to worry about it. They've got a formula that works, and theyjust look silly when they try to be something they're not.

So, here at The Hartman Group we have been wondering if price andconvenience is really what is the most important factor forcustomers in the long run. We think not. We're not saying it'sunimportant, but we're questioning whether it's the most important. Andwe question whether a lot of people go to Wal-Mart for price andconvenience (and for everything they need!) by default becausesomething better isn't being offered to them. Is it possible that a newgame with new rules can be developed and that as Goliaths gave way to Davids, Wal-Mart's days are numbered aswell.

...

You know the old Joni Mitchell song aboutpaving paradise and putting up a parking lot. The theme was about notreally knowing what you have until you've lost it. Well in the usualway of thinking about it, there's kind of an analogy to the Wal-Martsituation. You know, Wal-Mart equals parking lot; smallneighbor-friendly stores equals paradise. But the thing is that most ofthose small stores in town centers were pretty dreary, not very wellmanaged, and not all that neighbor-friendly. The idea that somehowwe've lost paradise when that Wal-Mart comes into town is largely anostalgic mythologizing of a paradisal past that mostly didn't exist.

Sure, there were exceptions, but they only prove the rule. Mostsmall-town America stores were as mediocre and soulless in the '50s and'60s as anything you could accuse Wal-Mart of being today. Worse, even. They were just Wal-Marts on a smaller scale with a lot less merchandisefor a lot higher prices, more often than not staffed by grumpy, not veryknowledgeable, not very helpful, poorly trained and poorly educatedpersonnel.

When the chains started coming in to the malls that started poppingup everywhere, it just wasn't price, convenience and variety that was atthe heart of their success, it was also a more interesting,higher-quality shopping experience than you'd find in the dreary storesdowntown. The chains ensured a quality standard that you could dependon. You go into a McDonald's, you know what you're going to get; you gointo the greasy spoon downtown, well, you're taking your chances. People were disloyal to the small downtown stores because there wasn'tmuch there to command their loyalty to begin with.

Recently I bought a dog, and at first I was committed to buy all mypet supplies at my neighborhood pet store. But after a while I gave upon it because the store was a disorganized mess; the owner wasdepressive or preoccupied with an animal rights crusade she was on; hermerchandise was expensive, and she seemed continuously annoyed to haveto deal with my routine or insignificant needs. I'm as attracted to yourquirky eccentric as much as the next guy, but the bottom line is that asmuch as I wanted to love her, she spurned me, so I started going to oneof the big-box, national pet store chains. I found the people therehelpful, fun and a lot easier to talk with. And the prices were waylower and the variety and ease of finding what I needed were farsuperior. It was an easy choice to keep going there instead of shoppinglocal. All the same, I wish those people in the big box were the onesstaffing my neighborhood store, because I'd much prefer to shop in myneighborhood.

What's the point? I think people want something they don't get atthe big chains, but when they go to their local or neighborhood storesthey don't find it there. If they did find it, the megastores would bein big trouble. So is there a market opportunity here? For sure, butit starts with local stores offering the kind of value that you don'tget at the big boxes. It shouldn't be that hard, but it's amazing howrare it is to find. Once you do find it, you fall in love, andthat's what keeps you coming back, even if it means paying higherprices. Because ultimately what people want is value, and value meansmore than getting something at the lowest price. It's about what matters to them. As Wal-Mart continues to focus on value to save their customers money,those customers are beginning to focus on the value of "values." Theirvalues, not the values Wal-Mart has prescribed.

Customers want to be in love, and if they don't find it, they'llsettle for price and convenience. We didn't pave over paradise in the'50s and '60s; some smart business people recognized a need, and theydeveloped a very effective way to meet it. Wal-Mart is the logicalconsequence of a trend that began then, and it will continue to dominatethe retail world until customers are offered something better. What isthat better? That's something we'll be exploring in future columns. There are some David's out there taking on the Goliaths, and we believethat in the long run, they'll be changing the rules of the game. Yougotta love the underdog, but that underdog has to show it can win the game ifit's going to have any staying power, that includes having theknowledge as well as demonstrating the guts to do. How to do it is thetrick, but it's one worth thinking hard about.

Watch for more thoughts on Retail Experience in the Soul Age...

Comment »