NewswireToday - /newswire/ -
Rochester Hills, MI, United States, 2006/12/13 - JJ's House of Music will close at the end of December, unable to find a successful strategy to compete with Kmart, Wal-Mart, and the Internet. Story reveals how any business can compete against the retail giants.
Bristol is very unique in that it is one very few American cities whose borders transgress a state line. Some of the city is in the state of Tennessee while the rest of the city is located in Virginia. What is not unique about Bristol, TN/VA, is that the Bristol Herald Courier quoted store manager Leon Peters as blaming the business failure on Kmart and Wal-Mart®.
In an interview with Peters, Multicultural Business Council's Together News discovered that although he did mention to national retail chains, he emphasized it was only part of the problem. The root problem, according to Peters, is that competition of the major chains and the Internet caused deterioration in JJ's sales volume.
Once known for offering custom guitars and other musical instruments, the store eliminated those items from their merchandise mix about a year ago. They were finding it difficult to sell these items while the chain stores offered opening price points at mass-production retails as opposed to JJ's higher-priced handmade products.
The secret behind Wal-Mart is very simple -- sell only items they create tremendous volume. Each merchandise category consists of the best-selling items that can be ordered in bulk. This creates tremendous efficiencies throughout their entire distribution network.
Wal-Mart's philosophy requires carrying only items appealing to broad demographics. This leaves local businesses the opportunity to reach out to sub-demographics not reported by the U.S. Census Bureau or Nielsen.
In Bristol, opportunities existed by reaching out to South American, Latin American, and African students attending the local colleges. Creating a cultural experience the students and local grass roots musical talent would have resulted in a differentiated marketing plan enough that Wal-Mart wouldn't even attempt to compete against.
Local communities will continue to suffer the loss of local businesses if they don't realize that local demographics are changing faster been Wal-Mart can or will adapt, according to Multicultural Business Council (MBC).
“Wal-Mart's distribution and merchandise philosophy prevents it from addressing localized sub-demographics,” says Rick Weaver, MBC spokesman and retail expert. “For Wal-Mart's pricing structure to work, they need to ship truckloads to a single location. For example, in some suburbs of Metropolitan Detroit, the South Asian population represents up to 15% of the population. This is far below what Wal-Mart can address, however it represents hundreds of millions of dollars in annualized shopping power throughout the region -- enough to support up to 200 local businesses.”
MBC helps local and international companies develop strategies to compete in the local and international marketplace. They find local businesspeople focus on competing with Wal-Mart on a price basis.
With Wal-Mart's volume and low mark-on structure Wal-Mart is guaranteed to win any price-war. However local businesses are successful when they reach out to customers with products not fitting Wal-Mart's high-volume requirement. When this occurs, local businesses find success.
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