How to Compete Against Wal-Mart: A Cellular Retailer’s Dilemma

By Allan Pulga

Like most people, I have mixed feelings about Wal-Mart and all big-box retailers, for that matter. Beyond the common political and ethical arguments over Wal-Mart – its labour practices, its impact on small-town business and urban sprawl, its alleged affiliation to sweatshops worldwide, etc. – many of us have simple issues with the department store behemoth.

For example, I like low prices (who doesn’t?), but I hate long line-ups at the cash till. I like the convenience of having literally everything in a single store, but I hate how long it takes to find all the specific items you need. I like shopping for brand-name merchandise, but I hate how none of the employees know anything about what they’re selling me.

To compete against the Wal-Marts and Best Buys of today’s market, smaller, specialized retailers (like cellular dealers) need take advantage of this widespread consumer ambivalence. Identifying what people like and dislike about shopping at big-box stores can help you focus efforts on all fronts: challenge Wal-Mart’s strengths and exploit its weaknesses.

Low prices are the primary reason why Wal-Mart is so successful. Most consumers are willing to look past the corporation’s iniquities for the sake of saving a few dollars. Although it’s difficult for the little guys to undersell the big boxes, they can lower their prices as close as possible and let superior customer service and care do the rest. The inherent challenge is convincing customers that shopping for a cellphone at their store is a more pleasant and satisfying experience than dueling the Wal-Mart hordes – that it’s worth the extra couple of bucks.

“A firm’s profitability and ultimate survival (are not) based solely on its ability to compete on the basis of price,” says Michael B. Septon, a Marketing professor at Missouri Western State College. “It is imperative (to) understand that customers buy for reasons other than price and that a firm offering good value and service for the dollar can compete successfully against lower priced rivals.”

Another thing I like about Wal-Mart is it’s convenient. There’s always a parking spot available. If you need to get film developed you can drop it off at the beginning of your visit and pick up your pictures on the way out. Regardless of how unrelated (and generic) the items on your shopping list are, you’ll knock them all off: a loaf of bread? Sure. Toilet paper? No problem. A set of new floor mats for your car? Done.

However, when shopping for something specific that requires time and careful examination (like a cellphone), a big-box like Wal-Mart might not be the best place to do to look. Fact is, when I’m shopping for a cellphone or electronic goods, I find it’s simply inconvenient to do it at Wal-Mart. There are too many distractions. Of course, one could argue that an electronics-only big box like Best Buy can offer more selection and savvy salespeople than Wal-Mart, in which case independent dealers need to compete on those aspects as well.

That being said, independent dealers should create a store environment that offers all the benefits of the cellphone departments in big-box stores (attractive displays, wide product selection) while eliminating the annoyances (crowded areas, underqualified staff).

Anybody who’s ever shopped at Wal-Mart knows they’re in for a crowd. As I mentioned earlier, the place is full of unwanted distractions: shopping-cart traffic jams, children running around, babies crying, and scores of people wandering aimlessly. And because the store is so huge, you find yourself wandering aimlessly as well. These are obvious disadvantages that large department stores face when competing with small specialty retailers.

Cellular retailers should pounce on this opportunity to distinguish themselves from the Wal-Marts. Make it clear to every customer walking in that your store is different, that you are offering a different cellphone-shopping experience. The shopping area must be spacious, accessible and confusion-free.

Take IMO, for example. This Waltham, Massachusetts-based cellular dealer modelled its stores after Apple electronics boutiques – it offers a comfortable, user-friendly shopping atmosphere as an alternative to the big box stores that simply shuffle customers along. Take a look at the company’s virtual store: http://www.imo.com/index.html. The minimalist décor and zen-like theme reassure shoppers that they won’t be disturbed by inconsiderate passersby.

Likewise, your staff should know the products and services exceptionally well – this is a big differentiator from the Wal-Marts too. Customers need to feel more informed, more attended to than they do at the big-box stores. Your salespeople should “go the extra mile” to demonstrate their expertise and their commitment to better customer service. The goal is to appear more knowledgeable than the generic Wal-Mart cellphone clerk, more caring, and more genuine. Furthermore, an effective post-sale follow-up (a personalized e-mail or a phone call) goes a long way in showing your customers you care about them and their needs. Personally, I don’t mind spending a few extra dollars for a more pleasant shopping experience and outstanding service.

So, to do battle with Wal-Mart, independent retailers need to declare themselves as different. If you can’t beat the big box on price, you must convince customers that you’ll beat them on value: comfort, expertise and good old customer service. Though this approach won’t win everybody over, it will ensure you make the most of your business opportunities in the cutthroat world of David-versus-Goliath retail.