Stealing Share

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From Chain Store Age

Feb. 25 2010
By Tom Dougherty

The Holy Grail in retailing is, of course, how to take
market share from the biggest retailer of them all:
Wal-Mart. It seems impossible given Wal-Mart’s
arsenal of hundreds of billions of dollars in yearly
revenue (more than five times as much as the nearest
retailer).

Wal-Mart has continued growth in both revenue and
earnings and although recent news reported less-than
exciting same-store sales, Wal-Mart is king.
Retailers such as Home Depot, Lowes, Sears, Macy’s
and J.C. Penney continue to struggle against Wal-Mart
-- even direct competitors such as Target continue to
lag behind.

How do you beat that?

The No. 1 rule for those retailers: Stop copying Wal-
Mart. In any category, if you copy the market leader, it
only helps the market leader. It is the reason why beer
companies have had such difficulty cracking into
Budweiser’s ever-growing market share because they
look and sound just like the market leader. What
happens is that the market leader’s messages, from the
point of view of consumers, become category benefits.

So, if you copy Wal-Mart, that only helps Wal-Mart.
Because Wal-Mart competes on price -- and even then
it has become sophisticated about that -- you will lose
if you market on price. Wal-Mart wins that every time.

Many retailers are doing just that, though, which is
one reason why Kmart, once a formidable competitor,
is practically a non-entity right now. From the
consumer’s point of view, why choose Kmart when
there’s a Wal-Mart, in some cases, close by?

That doesn’t even take into account Wal-Mart doing a
better job of marketing price than its competition. It
has a new, brighter and more optimistic look with a
theme (“Save Money. Live Better.”) that allows those
consumers who once thumbed our noses at Wal-Mart
to go there. They now have permission. “Living
better” is a very attractive outlook these days, and it
shows that I’m smart for choosing them.

So when Kmart says, “There’s smart, and there’s
Kmart smart,” it attempts to hold the same position as
Wal-Mart -- and not as well. What seems smarter to
you? To “Live better” or be “Kmart smart”?

What others say

It’s, of course, easy to pick on Kmart, even as its
same-store sales rose in December. Target is Wal-
Mart’s nearest direct competitor. However, despite
holding that position since the mid-80s, it has yet to
make much of a dent in Wal-Mart’s fast-driving
machine.

Target’s revenue has basically flattened -- and little
wonder. It often fights on price as well. “Great
electronics at surprisingly great prices” said one recent
spot.

Based on that, it’s no surprise Wal-Mart took a lion’s
share of the flat-screen TV purchases over Christmas,
stealing Target customers in the process. So, how
effective was “at surprisingly great prices”?
Target promises “Expect More. Pay less.”, a theme
eerily similar to Wal-Mart’s promise. The “Expect
More,” and the sophisticated and trendy nature of
Target’s advertising, suggest that you will get a better
in-store experience at Target.

But something has happened at Target. Its stores are
beginning to seem stale and bizarrely empty now, less
important compared with the bustling, almost
overstuffed, nature of Wal-Mart. Target has even tried
to copy Wal-Mart right down to having grocery
departments: Tiny, little grocery departments with
practically the same goods as Wal-Mart, but not nearly
the range of selection.

What’s next?

If you don’t copy Wal-Mart, then what should you do?
For one thing, you must uncover what is most
important to your target audience. That means
understanding more than just what goods and
merchandise they want to buy. It means understanding
what drives them so they can see themselves in the
brand and covet being a part of it. (Hello, Apple
Store!) It means finding the most intense emotion in
the market and owning it.

There are retailers, for example, that had that kind of
emotional preference but lost it by copying Wal-Mart.
(See Rule #1.) Sears was once a giant, owning its own
position as a man’s place for appliances and other
equipment. Now, its theme, “Life Well Spent,” is a
carbon copy of Wal-Mart’s winner.