How To Beat Wal-Mart Without Going Broke

Beat WalMart Everyday

By Tom Dougherty

break out and beat WalmartThe Holy Grail in retailing is, of course, how to take market share from the biggest retailer of them all: Wal-Mart. Hundreds of billions of dollars in yearly revenue, more than five times as much as the nearest retailer. Continued growth in both revenue and earnings. Wal-Mart is king.

Meanwhile, retailers like Home Depot, Lowes, Sears, Macy’s and J.C. Penney continue to bleed money, and even direct competitors such as Target continue to lag behind.

How do you beat that? How do you beat the Market Leader?

The first thing all retailers should do is stop copying Wal-Mart. If you copy Wal-Mart, that only helps Wal-Mart. If you market on price, you will lose. Wal-Mart wins that every time.

beat WalmartMany retailers are doing just that, though, which is one reason why Kmart, once a formidable competitor, is practically a non-entity right now.

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

What Some Say

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”?

beat WalmartKmart, of course, is an easy target. (No pun intended.) 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 engine.

Target’s revenue has basically flattened and no wonder. It often fights on price. “Great electronics at surprisingly great prices” said one recent spot. So it’s no wonder that many news outlets reported that Wal-Mart took a lion’s share of the flat-screen television 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.

Target Does Not Have The Answer in beating Wal-Mart so don’t Copy Target

But have you been in a Target store lately? They seem stale and bizarrely empty now, less important compared to the bustling, almost overstuffed, nature of Wal-Mart. Target has even tried to copy Wal-Mart right down to sporting grocery departments: Tiny, little grocery departments with practically the same goods as Wal-Mart, but not nearly the range of selection.

beat WalmartIf you don’t copy Wal-Mart, then what should you do? Are there inherent weaknesses in being a market leader? 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.

A Lost History of a Weakness in a Market Leader

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.

beat Walmart

Sears or any other retail brand that has lost its once-proud luster (RadioShack, Foot Locker, Gap) would regain their position if they’d embrace change and dig deeper into today’s consumer than simply understanding usage and attitudes.

It’s time for retailers to start embracing change and think about transforming its model because, right now, everyone looks and feels and acts the same from the perspective of the consumer. (Read our blog on discounting.) In department stores, for examples, the differences between Macy’s, Dillard’s, Kohl’s, JC Penney and Belk are paper-thin. How can a consumer choose among them?

Even the specialties copy each other. Office Depot vs. Office Max vs. Staples. The same. Family Dollar vs. Dollar Store vs. Dollar Tree. The same. Advance Auto Parts vs. AutoZone. The same. Petsmart vs. PETCO. The same.

It’s insane.

Wake Up. You Can Win. You Can Beat WalMart

Retailers are expecting to win by being exactly the same and those chasing Wal-Mart are trying to duplicate its model and messaging without the buying muscle.

The lesson is that if you want to beat Wal-Mart, stop trying to be Wal-Mart. If you want to beat the leader in your category, stop trying to be them.

It’s no wonder that the ones gobbling up market share – GameStop or Wegmans, for example – are the ones most different from their competition, both in model and messaging. That’s living better.

(Read our market study of the retail category here)

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