How Wal-Mart Helps Small Business

Many people have the false impression that Wal-Mart is a destroyer of small businesses and is so large of a company that no small business can compete.

Not so says the Detroit News Online:

Thriving in Wal-Mart’s shadow
Small retailers rival big-box foes by creating customer niche

Conventional wisdom says that once mega-retailers such as Wal-Mart, Home Depot, Starbucks and other mega-brand juggernauts roll into town, mom-and-pop stores on Main Street are bound to get crushed.

That’s news to Trish Wolfbauer.

The 26-year-old entrepreneur says business at her Roseville coffee shop has never been better since java giant Starbucks came to town. The fact that two of them opened within miles of her Trixi’s Coffee shop only helped get Macomb County residents hooked on gourmet lattes, espressos and cappuccinos.

“Now that Starbucks is around, more people are willing to pay $4 for a cup of coffee,” Wolfbauer said.

Besides, Wolfbauer says, her young, artsy customers would never set foot in the yuppie-oriented Starbucks.

“There’s so many uptight places around here, and they’re mostly chains,” said 29-year-old Melinda Collins of Mount Clemens as she lounged on the shop’s red corduroy couch. “People in suits make me uncomfortable.”

Independent specialty stores, boutiques and cafes are surviving — and even thriving — in the shadow of the retail giants through a mix of personal service, specialized skills and unique products. They fend off the mega-stores by catering to a specific clientele or carving out a niche that’s small enough to keep the big retailers out.

A 2005 survey of small-business owners found that 52 percent of those already in business changed their tactics and either retained their market share or actually increased business when a Wal-Mart, Target, Kohl’s or other “big box” retailer opened nearby, according to DollarDays International Inc. of Scottsdale, Ariz., an Internet-based wholesaler to small businesses.

That should be encouraging news to retailers from Fowlerville to Livonia to Rochester Hills to Southfield, where new Wal-Mart and Target stores already are on the way.

“If a store has a niche that means they are highly specialized, and the big guys can’t compete,” said Bruce Wood, a retail analyst with Farmington Hills-based Kenneth J. Dalto and Associates.

One tactic small operators can take is to avoid competing with the powerhouses altogether and focus instead on offering service and merchandise that the big businesses can’t. In some cases, a small business can ride the big stores’ coattails, such as servicing items sold by the big-box stores.

“You can go to Wal-Mart and get a clock and it does the same thing, but they can’t do what we do,” explained Mai Pin, whose family runs the 30-year-old Roseville Clock Shop. The store — within a mile of a Wal-Mart — sells clocks ranging from $20 to $2,000, but 80 percent of its business is repairing and servicing broken clocks.

Besides the low-price outlets, Pin’s shop also has to compete with big furniture chains, such as Art Van and Gardner White. They sell some of the same grandfather clocks as Roseville Clock, but nobody at the furniture stores can repair the massive time pieces.

Customers have been coming to the store for years and tell their friends about the service the shop offers. Repairmen are called out as far as Port Huron and Ann Arbor to fix broken clocks, Pin said.

That’s why Leo Festian of Clinton Township has been bringing his clocks to the store for the past 15 years. He recently brought his mother’s antique mantel clock to the store after it fell off a table and the pendulum broke off.

“You’re friend or neighbor can’t fix it,” Festian said. “Department stores can’t help you, but they’ll sell you a new one.”

The mass-merchandising approach of the mega-retailers also creates opportunity for small stores, noted Charlie Owens, Michigan director for the National Federation of Independent Businesses.

“The weakness of big boxes is that they carry standard products,” Owens said. “Nothing is specialized.”

And that simply won’t do for the Rev. Dr. Althea Brown.

Brown hates showing up at an event in the same clothes someone else is wearing, so the 52-year-old Farmington Hills resident bypasses Neiman Marcus, Macy’s and other major department stores for Tipper’s, a small, independently owned women’s clothing boutique in Southfield that sells upscale new and resale fashions such as Armani, St. John, Dana Bachman and Escada.

Brown has been shopping at Tipper’s for four years and knows that she’ll find exactly what she wants every time she goes in the store. If the outfit isn’t there, owner Bobbi Salaam, 54, of Southfield, will contact one of her manufacturers to get the item her customers want. Salaam gives all her customers some kind of discount and will replace any item that gets damaged, even if it’s the customer’s fault.

“All those things are very important to me,” Brown said. “Where else can you get all that?”

That kind of personal service and relationship-building neutralizes the major weapon big retailers wield against small stores — price.

If Brown has to pay a little bit more, she said she’d do it if she’s wearing something unique. “It’s worth a few extra dollars if I don’t see someone else wearing my outfit,” Brown said. “If I like it, cost doesn’t matter.”

That approach has built Salaam’s 14-year-old business to the point where Tipper’s grosses $300,000 to $350,000 a year, even as the region’s struggling economy forces store closings on some of the big chains.

Salaam’s strategy also extends to her location — there are no malls or big chain stores near Tipper’s — and merchandise. The clientele, which is mostly women 40 years and up, wouldn’t find anything in a mall, which caters to the younger generation, or at a department store, where the clothes tend to be trendy and the service isn’t all that it could be at a smaller shop.

In addition to her own merchandise, Salaam’s boutique shares space with Secret Seconds, a boutique run by Pat Upchurch, 49, of Farmington Hills. Secret Seconds carries resale clothing from size 2 to 26 and new plus-sized fashions.

Between her store and Salaam’s business, women can find just about anything they want.

“I think we found a niche,” said Upchurch. “I really do believe that was key to our success.”

The result is plenty of repeat business, Salaam noted.

“That tells me I’m doing something right.”

9 Responses to “How Wal-Mart Helps Small Business”

  • Roseville is no Detroit. And what I mean by that is that Roseville is known for being an affluent area. And generally speaking the residents of Roseville have the $$ to buy in those shops referenced in the article. However, if you were to build a Walmart in the east side of Detroit I’m sure you would just have the Walmart, because unfortunately those residents do not have the additional bucks to purchase Armani fashions even @ resale prices.

  • But then I bet you would have more employment and cheaper products, a benefit of Wal-Mart that is especially beneficial to poor areas.

  • Ok, now we’re diverting from the article, LOL. Let’s make a deal if Walmart opens a store in Detroit I will rethink my whole stance on Walmart. However, I think that is highly unlikely. Detroit not too long ago lost its last last supermarket chain store. Sad to see my city fall like that.

  • Yep, and lets not forget that Detroit is controlled by unions…a coincidence? I don’t think so.

  • Oh, no. We’re not going to go that route. In case you haven’t heard, but the unions no longer have the bargaining power they once had. And to give credit to city workers the majority took pay cuts to 1. Keep their jobs and 2. to help the city. I blame this on mismanagment by the City’s administration and the voting people of Detroit that keep on re-electing idiots into office. An example of what voters reelected – The mayor leased on the city’s dime a Lincoln Navigator and then when found out he tried to deny it. He was re-relected last year.

  • That also makes sense…politicians in general are notorious for destroying economies.

  • Roseville is not an affluent area. It is quite blue collar & also has a large homeless population. I watch them walk by daily with their bags & buggies, they ask me for bus fair when I know they live in the cars in the trans shop next door. We do not have money for armani in Roseville (10.5 & Gratiot), or in Eastpointe where I live (Toepher & Gratiot).
    For what I believe to be ethical reasoning I made sure to price my drinks so that everyone can afford something and those who can afford more can get something froofy if they wish. What makes us different & exciting is that we are a haven for the arts. That’s the only reason we survive here. I hope one day to bring my business to Detroit…but it is easier when you are big…and currently I am small.
    On a completely different note, I’m curious…Why don’t you shop at Detroit’s most famous (and now even trendy) Eastern Market. They have vastly improved the parking since Ford Field opened across the way & it seems to be a bit more cleaned up as well. 🙂

  • You know what Trixie, you totally got me on the Roseville – my apologies. I could’ve addressed Farmington Hills,Ann Arbor or even Southfield. Roseville and neighboring cities such as Fraser, Eastpointe have taken a number of hits with people leaving and unemployment. As for your busines I wish you much success.

    In regards to Eastern Market – tradition in my family for years. Was just there on July 3rd. Where else can you fruits and vegetables for less than $10!!! 🙂

  • I love Eastern Market!!! Everything tastes fresher & the kiosk owners usually have great recipe ideas.

    Thankyou for the good wishes!

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